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                    U.S. Securities And Exchange Commission
                            Washington, D.C. 20549

                                  Form 10-KSB
(Mark One)
 X    Annual Report under Section 13 or 15(d) of the Securities Exchange Act of
---
      1934 (Fee required) For the fiscal year ended December 31, 2000
                                      or
___   Transition Report under Section 13 or 15(d) of the Securities Exchange Act
      of 1934 (No fee required) For the transition period from ______ to ______

          Commission file no. 33-69326

                              CNB HOLDINGS, INC.
                       --------------------------------
                (Name of small business issuer in its charter)

               Virginia                            54-1663340
               --------                           ------------
      (State or other jurisdiction               (IRS Employer
      of incorporation or organization)       Identification No.)

           900 Memorial Drive
           Pulaski, Virginia                          24301

       ------------------                             -----
      (Address of principal executive offices)               (Zip Code)

                                (540) 994-0831
                                --------------
       Issuer's telephone number, including area code

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

Securities registered pursuant to Section 12(g) of the Act:
           Common Stock, par value $5.00 per share
           ---------------------------------------

Title of Class

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for past 90 days.
  Yes   X   No_____
      -----
Check if there is no disclosure of delinquent filers in response to Item 405 of
regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

The issuer's revenues for its most recent fiscal year were $4,081,785.

The aggregate market value of the voting stock as of March 21, 2001, held by
non-affiliates of the registrant computed by reference to the price at which

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the stock was sold, or the average bid and asked prices of such stock, as of a
specified date within the last 60 days was $9,263,990.

926,399 shares of the Issuer's common stock were issued and outstanding as of
March 21, 2001.

Transitional Small Business Disclosure Format. (Check one):  Yes___  No  X
                                                                        ---
                      DOCUMENTS INCORPORATED BY REFERENCE

The annual report to security holders for fiscal year ended December 31, 2000 is
incorporated by reference into Form 10-KSB Part II, Items 7 and 8, and Part III,
Item 13. The issuer's Proxy Statement dated March 9, 2001 is incorporated by
reference into Form 10-KSB Part III, Items 9, 10, 11 and 12.


                                    PART I
                                    ------

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

GENERAL

CNB Holdings, Inc. (the "Company") was incorporated as a Virginia stock
corporation on April 29, 1993, primarily to own and control all of the capital
stock of Community National Bank (the "Bank"). The Company presently engages in
no business other than owning and managing the Bank. The Bank is a national
banking association which engages in a commercial banking business from its main
office in Pulaski, Virginia. The Bank's deposits are insured by the Federal
Deposit Insurance Corporation (the "FDIC"), and it is a member of the Federal
Reserve System.

In July 1994, the Company completed its initial public offering of 437,225
shares of its common stock, $5.00 par value per share (the "Common Stock"), at a
price of $10.00 per share, pursuant to its Prospectus dated November 16, 1993.
The Company received final approval of its application to charter the Bank from
the Office of Comptroller of the Currency (the "OCC") and final

approval of its application for deposit insurance for the bank from the Federal
Deposit Insurance Corporation ("FDIC") on August 29, 1994. On August 29, 1994,
the Bank opened for business.

During 1997, the Board of Directors approved a 25% stock dividend for
shareholders of record as of May 1, 1997. Also during 1997, the Company filed
for and received approval from the SEC for a secondary stock offering of up to
380,000 shares of its common stock, $5.00 par value per share (the "Common
Stock"), at a price of $9.00 per share, pursuant to its Prospectus dated
December 11, 1997. All 380,000 shares were sold during the first quarter of
1998. Net proceeds were approximately $3.1 million and were used for general
banking purposes.

On July 11, 2000, the Company announced plans to affiliate with FNB Corporation
("FNB"), a bank holding company headquartered in Christiansburg, Virginia. Under
the terms of the agreement, shareholders of the Company will receive
consideration valued at $10.60 for each share of common stock, in the form of
cash, stock of FNB, or a combination of cash and stock, at each CNB Holdings,
Inc. shareholder's election. The cash and FNB stock portion of the
consideration, however, will each be limited to 50 percent of the total
consideration paid.

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The transaction will be structured as a tax-free reorganization to the extent of
the shares exchanged and accounted for under the purchase method of accounting.
The plan is subject to approval by the shareholders of CNB Holdings, Inc.

The agreement contains standard conditions for transactions of that sort,
including a condition that no material adverse change in the condition or
business of the Company shall have occurred since December 31, 1999.  In light
of this condition in the merger agreement, and because of the existing
uncertainties relating to the ultimate outcome of the litigation against the
Bank described in Item 3 herein, the Company has agreed to delay submission of
the affiliation to shareholders of the Company for approval. However, because
the case is in the early stages, and in view of the amount of damages claimed,
the pending merger between the Company and FNB may be adversely affected; and
the closing deadline currently in effect expires on March 31, 2001.

LOCATION AND SERVICE AREA

The Bank's primary service area is Pulaski County and the City of Radford,
Virginia. The Bank conducts a general commercial banking business in its service
area, emphasizing the banking needs of small-to-medium sized businesses,
professional concerns and individuals. The Bank operates from its main office at
900 Memorial Drive, Pulaski, Virginia, which is at the corner of Memorial Drive
and Lee Highway (U.S. Route 11). See "Item 2. Description of Property" below.
The Bank draws most of its customer deposits and conducts most of its lending
transactions from within its primary service area. The Bank is the only locally
owned and operated commercial bank in Pulaski County.

Pulaski County is located in the New River Valley area of Southwest Virginia.
Pulaski, the county seat, is approximately 53 miles southwest of Roanoke, 90
miles northeast of the Tri-Cities, Tennessee (Johnson City, Kingsport and
Bristol), and 150 miles north of Charlotte, North Carolina. Pulaski County had a
population of 34,500 in 1994 and a median family income of $28,057 in 1989.
Virginia Polytechnic Institute and State University ("Virginia Tech"), a four-
year, comprehensive land grant university with over 22,000 students, is located
approximately 15 miles from Pulaski County.

The principal components of the economy of Pulaski County are manufacturing
(which accounts for the largest share of all economic activity), agriculture,
and tourism. Manufacturing employment is concentrated in the automotive,
furniture and textile industries. The largest industrial employers in the county
include Volvo-GM Heavy Trucks (2,800 employees), Pulaski Furniture (1,000
employees) Renfro Corporation (a textile manufacturer with 1,000 employees) and
Jefferson Mills, Inc. (350 employees). Agricultural production, consisting
primarily of beef cattle and dairy farming contributes over $12 million per year
to the county's economy. Claytor Lake State Park, located in the county,
attracts over 800,000 visitors each year, offering swimming, boating, fishing,
hiking and other outdoor sports.

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BANKING SERVICES

The Bank offers a full range of deposit services that are typically available in
most banks and savings and loan associations, including checking accounts, NOW
accounts, savings accounts and other time deposits of various types, ranging
from daily money market accounts to longer-term certificates of deposit. The
transaction accounts and time certificates are tailored to the Bank's principal
market area at rates competitive to those offered in the area. In addition, the
Bank offers certain retirement account services, such as Individual Retirement
Accounts (IRAs). All deposits accounts are insured by the FDIC up to the maximum
amount allowed by law (generally, $100,000 per depositor subject to aggregation
rules). The Bank solicits these accounts from individuals, businesses,
associations, organizations, and governmental entities.

The Bank also offers a full range of short-to-medium term commercial and
personal loans. Commercial loans include both secured and unsecured loans for
working capital (including inventory and receivables), business expansion
(including acquisition of real estate and improvements), and purchase of
equipment and machinery. Consumer loans include secured and unsecured loans for
financing automobiles, home improvements, education and personal investments.
The Bank also makes real estate construction and acquisition loans and
originates and holds fixed and variable rate mortgage loans. The Bank's lending
activities are subject to a variety of lending limits imposed by federal law.
While differing limits apply in certain circumstances based on the type of loan
or the nature of the borrower (including borrowers' relationship to the Bank),
in general the Bank is subject to a loan-to-one borrower limit of an amount
equal to 15% of the Bank's unimpaired capital and surplus, or 25% of the
unimpaired capital and surplus if the excess over 15% is approved by the board
of directors of the Bank and is fully secured by readily marketable collateral.
The Bank may not make loans to any director, officer or 10% shareholder of the
Company or the Bank unless the loan is approved by the Board of Directors of the
Bank and is made on terms not more favorable than would be available to a person
not affiliated with the Bank.

Other bank services include mortgage loan origination, cash management services,
travelers checks, direct deposit of payroll and social security checks, and
automated drafts for various accounts. The Bank is associated with shared
networks of automated teller machines and debit card retail locations that Bank
customers may use throughout Virginia and other regions. The Bank also offers
VISA credit and debit card services.

The Bank does not plan to exercise trust powers during its initial years of
operation. The Bank may in the future offer a full-service trust department, but
cannot do so without the prior approval of the OCC.

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COMPETITION

The banking business is highly competitive. The Bank competes as a financial
intermediary with other commercial banks, savings and loan associations, credit
unions and money market funds operating in Pulaski County and else-where, most
of which are larger and have greater resources than the Bank.

The Bank is the only one of these institutions that is locally owned and
operated. First National Bank of Christiansburg, a community bank which is
headquartered in nearby Montgomery County, operates a branch in Pulaski County.

In addition to the commercial banks described above. Two credit unions also
operate in the county. In addition, the Bank is subject to aggressive
competition from a wide variety of financial service companies offering an
expansive array of financial products and services.

The Company believes that the community focus of the Bank, with its emphasis on
service to small businesses, individuals, and professional concerns, gives it an
advantage in some segments of this market.


EMPLOYEES

The Bank presently has 22 full-time equivalent employees. The Company does not
have any employees other than its officers, none of whom receive any
remuneration for their services to the Company.

SUPERVISION AND REGULATION

The Company and the Bank are subject to state and federal banking laws and
regulations. These impose specific requirements and restrictions and provide for
general regulatory oversight with respect to virtually all aspects of
operations. These laws and regulations are generally intended to protect
depositors, not shareholders. To the extent that the following summary describes
statutory or regulatory provisions, it is qualified in its entirety by reference
to the particular statutory and regulatory provisions. Any change in applicable
laws or regulations may have a material effect on the business and prospects of
the Company. Beginning with the enactment of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 ("FIRREA") and following with the Federal
Deposit Insurance Corporation Improvement Act ("FDICIA"), enacted in 1991,
numerous additional regulatory requirements have been placed on the banking
industry in the past five years, and additional changes have been proposed. The
operations of the Company and the Bank may be affected by legislative changes
and the policies of various regulatory authorities. The Company is unable to
predict the nature or the extent of the effect on its business and earnings that
fiscal or monetary policies, economic control, or new federal or state
legislation may have in the future.

Federal Bank Holding Company Regulation

The Company is a bank holding company within the meaning of the Bank Holding
Company Act of 1956 (the "BHCA"), Under the BHCA, the Company is subject to
periodic examination by the Board of Governors of the Federal Reserve System
(the "Federal Reserve") and is required to file periodic reports of it's
operations and such information as the Federal Reserve may require. Company and
Bank activities are limited to banking, managing or controlling banks,
furnishing services to or performing services for its subsidiaries, or engaging
in any other activity that the Federal Reserve determines to be so

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closely related to banking or managing or controlling banks as to be a proper
incident thereto.

Investments, Control, and Activities. With certain limited exceptions, the BHCA
requires every bank holding company to obtain the prior approval of the Federal
Reserve before (i) acquiring substantially all the assets of any bank, (ii)
acquiring direct or indirect ownership or control of any voting shares of any
bank if after such an acquisition it would own or control more than 5% of the
voting shares of such bank (unless it already owns or controls the majority of
such shares), or (iii) merging or consolidating with another bank holding
company.

In addition, and subject to certain exceptions, the BHCA and the Change in Bank
Control Act, together with regulations thereunder, require Federal Reserve
approval (or, depending on the circumstances, no notice of disapproval) prior to
any person or company acquiring "control" of a bank holding company, such as the
Company. Control is conclusively presumed to exist if an individual or company
acquires 25% or more of any class of voting securities of the bank holding
company. In the case of the Company, under Federal Reserve regulations control
will be rebuttably presumed to exist if a person acquires at least 10% of the
outstanding shares of any class of voting securities once the Company's Common
Stock is registered under the Securities Exchange Act of 1934 (the "Exchange
Act"). The Company registered the Common Stock under the Exchange Act by April
30, 1995. The regulations provide a procedure for challenge of the rebuttable
control presumption.

Under the BHCA, the Company is generally prohibited from engaging in, or
acquiring direct or indirect control of more than 5% of the voting shares of any
company engaged in, nonbanking activities, unless the Federal Reserve, by order
or regulation, has found those activities to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto. Some of the
activities that the Federal Reserve has determined by regulation to be proper
incidents to the business of banking include making or servicing loans and
certain types of leases, engaging in certain insurance and discount brokerage
activities, performing certain data processing services, acting in certain
circumstances as a fiduciary or investment or financial advisor, owning savings
associations, and making investments in certain corporations or projects
designed primarily to promote community welfare.

Source of Strength; Cross-Guarantee. In accordance with Federal Reserve policy,
the Company is expected to act as a source of financial strength to the Bank and
to commit resources to support the Bank in circumstances in which the Company
might not otherwise do so. Under the BHCA, the Federal Reserve may require a
bank holding company to terminate any activity or relinquish control of a
nonbank subsidiary (other than a nonbank subsidiary of a bank) upon the Federal
Reserve's determination that such activity or control constitutes a serious risk
to the financial soundness or stability of any subsidiary depository institution
of the bank holding company. Further, federal bank regulatory authorities have
additional discretion to require a bank holding company to divest itself of any
bank or nonbank subsidiary if the agency determines that divestiture may aid the
depository institution's financial condition. The Bank may be required to
indemnify, or cross-guarantee, the FDIC against losses it incurs with respect to
any other bank which the Company controls, which in effect makes the Company's
equity investments in healthy bank subsidiaries available to the FDIC to assist
any failing or failed bank subsidiary of the Company.

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Virginia Bank Holding Company Regulation

All Virginia bank holding companies must register with the Virginia State
Corporation Commission (the "Virginia Commission") under Title 6.1 of the Code
of Virginia (the "Virginia Act"). A registered bank holding company must provide
the Virginia Commission with information with respect to the financial
condition, operations, management, and intercompany relationships of the holding
company and its subsidiaries. The Virginia Commission may also require such
other information as is necessary to keep itself informed about whether the
provisions of Virginia law and the regulations and orders issued thereunder by
the Virginia Commission have been complied with, and may make examinations of
any bank holding company and its subsidiaries.

Under the Virginia Act, it is unlawful without prior approval of the Virginia
Commission for any company to acquire 25% or more of the voting securities of
any bank and for any Virginia bank holding company to acquire direct to indirect
ownership or control of more than 5% of the voting securities of any bank or
other bank holding company. In addition, the Virginia Act allows regional
interstate banking by permitting banking organizations in certain Southeastern
states to acquire Virginia banking organizations if Virginia banking
associations are allowed to acquire banking organizations in their states and
the Virginia banking organization to be acquired has been in existence and
continuously operated as a bank for a period of two years. As a result of this
reciprocal banking provisions, banking organizations in other states, most
significantly North Carolina, have entered the Virginia market through
acquisitions of Virginia institutions. Those acquisitions are subject to federal
and Virginia approval. Recent legislation has broadened these statutes to permit
nationwide reciprocal bank acquisitions. See "The Bank-Branching" below.

THE BANK

General. The Company is the holding company for the bank, which is a national
banking association. Substantially all company revenues are earned through the
operations of the bank. The Office of Comptroller of the Currency (the "OCC") is
the primary regulator for the Bank. The OCC regulates or monitors all areas of
the Bank's operations, including security devices and procedures, adequacy of
capitalization and loss reserves, loans, investments, borrowings, deposits,
mergers, issuances of securities, payment of dividends, interest rates payable
on deposits, interest rates or fees chargeable on loans, establishment of
branches, corporate reorganizations, maintenance of books and records, and
adequacy of staff training to carry on safe lending and deposit gathering
practices. The Bank must maintain certain capital ratios and is subject to
limitations on aggregate investments in real estate, bank premises, and
furniture and fixtures.

Under FDICIA, all insured institutions must undergo regular on-site examinations
by their appropriate banking agency. The cost of examinations of insured
depository institutions and any affiliates may be assessed by the appropriate
agency against each institution or affiliate as it deems necessary or
appropriate. Insured institutions are required to submit annual reports to the
Federal Deposit Insurance Corporation ("FDIC") and the appropriate agency (and
state supervisor when applicable). FDICIA also directs the FDIC to develop with
other appropriate agencies a method for insured depository institutions to
provide supplemental disclosure of the estimated fair market value of assets and
liabilities, to the extent feasible and practicable, in any balance sheet,
financial statement, report of condition or any other

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report of any insured depository institution. FDICIA also requires the Federal
banking regulatory agencies to prescribe, by regulation, standards for all
insured depository institutions and depository institution holding companies
relating, among other things, to: (i) internal controls, in-formation systems
and audit systems; (ii) loan documentation; (iii) credit underwriting; (iv)
interest rate risk exposure; and (v) asset quality.

Transactions With Affiliates and Insiders. The Bank is subject to the provisions
on Section 23A of the Federal Reserve Act, which place limits on the amount of
loans or extensions of credit to, or investments in, or certain other
transactions with, affiliates and on the amount of advances to third parties
collateralized by the securities or obligations of affiliates. In addition, most
of these loans and certain other transactions must be secured in prescribed
amounts. The Bank is also subject to the provisions of Section 23B of the
Federal Reserve Act that, amoung other things, prohibit an institution from
engaging in certain transactions with certain affiliates unless the transactions
are on terms substantially the same, or at least as favorable to such
institution or its subsidiaries, as those prevailing at the time for comparable
transactions with non-affiliated companies. The Bank is subject to certain
restrictions on extensions of credit to executive officers, directors, certain
principal shareholders and their related interests. Such extensions of credit
(i) must be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
third parties and (ii) must not involve more than the normal risk of repayment
or present other unfavorable features.

The Bank is permitted to branch freely within the state of Virginia. The
Virginia Act permits statewide branching for Virginia state banks. As a national
bank located in Virginia, these state branch banking laws also apply to the
Bank. On September 29, 1994, the federal Interstate Banking Efficiency Act (the
"Interstate Act), which expands the ability of banks to compete interstate, was
enacted. The Interstate Act permits nationwide interstate acquisitions of banks
by bank holding companies beginning September 29, 1995, and permits nationwide
interstate mergers of banks beginning June 1, 1997. States can legislatively opt
not to permit inter state banks mergers or can legislatively opt to permit
interstate bank merges before the June 1, 1997, effective date. The Virginia
General Assembly has adopted legislation which opts to permit nationwide
interstate bank mergers effective July 1, 1995.

Community Reinvestment Act. The Community Reinvestment Act (the "CRA") requires
that, in connection with examinations of financial institutions within their
respective jurisdictions, the federal regulators of financial institutions to
evaluate the record of the financial institutions in meeting the credit needs of
their local communities, including low and moderate income neighborhoods,
consistent with the safe and sound operation of those institutions. These
factors are also considered in evaluating mergers, acquisitions, and
applications to open a branch or facility. The Bank has received a satisfactory
CRA evaluation.

Other Regulations. Interest and certain other charges collected or contracted by
the Bank are subject to state usury laws and certain federal laws concerning
interest rates. The Bank's loan operations are also subject to certain federal
laws applicable to credit transactions, such as the federal Truth-In-Lending Act
governing disclosures of credit terms to consumer borrowed, the Home Mortgage
Disclosure Act of 1975 requiring financial institutions to provide information
to enable the public and public officials

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to determine whether a financial institution is fulfilling its obligation to
help meet the housing needs of the community it serves, the Equal Credit
Opportunity Act prohibiting discrimination on the basis of race, creed, or other
prohibited factors in extending credit, the Fair Credit Reporting Act of 1978
governing the use and provision of information to credit reporting agencies, the
Fair Debt Collection Act governing the manner in which consumer debts may be
collected by collection agencies, and the rules and regulations of the various
federal agencies charged with the responsibility of implementing such federal
laws. The deposit operations of the Bank also are subject to Truth-In-Savings
Act, which requires detailed disclosure of the yield and terms of deposit
products, the Right to Financial Privacy Act, which imposes a duty to maintain
confidentiality of consumer financial records and prescribes procedures for
complying with administrative subpoena of financial records, and the Electronic
Funds Transfer Act and Regulation E issued by the Federal Reserve Board to
implement that act, which governs automatic deposits to and withdrawals from
deposit accounts and customers' rights and liabilities arising from the use of
automated teller machines and other electronic banking services.

Deposit Insurance

The deposits of the Bank are currently insured to a maximum of $100,000 per
depositor, subject to certain aggregation rules. The FDIC establishes rates for
the payment of premiums by federally insured banks and thrifts for deposit
insurance. Separate insurance funds (BIF and SAIF) are maintained for commercial
banks and thrifts, with insurance premiums from the industry used to offset
losses from insurance payouts when banks and thrifts fail. Due to the lower rate
of failures in recent years, the fees Banks and thrifts pay BIF and SAIF have
decreased. The FDIC has adopted a risk-based deposit insurance premium system
for all insured depository institutions, including the Bank, which requires that
a depository institution pay to BIF or SAIF from $.00 to $.27 per $100 of
insured deposits depending on its capital levels and risk profile, as determined
by its primary federal regulator on a semiannual basis. The current assessment
rate per $100 of insured deposits of the Bank is $.00, or a minimum of $2,000
annually.

Dividends

The principal source of the Company's cash revenues comes from dividends
received from the Bank. The amount of dividends that may be paid by the Bank to
the Company depends on the Bank's earnings and capital position and is limited
by federal law, regulations and policies. As a national bank, the Bank may not
pay dividends from its paid-in-capital. All dividends must be paid out of
undivided profits then on hand, after de-ducting expenses, including reserves
from losses and bad debts. In addition, a national bank is prohibited from
declaring a dividend on its shares of common stock until its surplus equals its
stated capital, unless there has been transferred to surplus no less than one-
tenth of the bank's net profits of the preceding two consecutive half-year
periods (in the case of an annual dividend). The approval of the OCC is required
if the total of all dividends declared by a national bank in any calendar year
exceeds the total if its net profits for that year combined with its retained
net profits for the preceding two years, less any required transfers to surplus.
Under FDICIA, the Bank may not pay a dividend if, after paying the dividend, the
Bank would be undercapitalized. See "Capital Regulations" below.

Capital Regulations

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The federal bank regulatory authorities have adopted risk-based capital
guidelines for banks and bank holding companies that are designed to make
regulatory capital requirements more sensitive to differences in risk profile
among banks and bank holding companies, account for off-balance sheet exposure,
and minimize disincentives for holding liquid assets. The resulting capital
ratios represent qualifying capital as a percentage of total risk-weighted
assets and off-balance sheet items. The guidelines are minimums, and the federal
regulators have noted that banks and bank holding companies contemplating
significant expansion programs should not allow expansion to diminish their
capital ratios and should maintain ratios well in excess of the minimums. The
current guidelines require all federally regulated banks and bank holding
companies to maintain a minimum risk-based total capital ratio equal to 8%, of
which at least 4% must be Tier 1 capital. Tier 1 capital includes common
shareholders' equity, qualifying perpetual preferred stock, and minority
interests in equity accounts of consolidated subsidiaries, but excludes goodwill
and most other intangibles and excludes the allowance for loan and lease losses.
Tier 2 capital includes the excess of any preferred stock not included in Tier 1
capital, mandatory convertible securities, hybrid capital instruments,
subordinated debt and intermediate term-preferred stock, and general reserves
for loan and lease losses up to 1.25% of risk-weighted assets.

Under these guidelines, banks' and bank holding companies' assets are given
risk-weights of 0%, 20%, 50% or 100%. In addition, certain off-balance sheet
items are given credit conversion factors to convert them to asset equivalent
amounts to which an appropriate risk-weight will apply. These computations
result in the total risk-weighted assets. Most loans are assigned to the 100%
risk category, except for first mortgage loans fully secured by residential
property and, under certain circumstances, residential construction loans, both
of which carry a 50% rating. Most investment securities are assigned to the 20%
category, except for municipal or state revenue bonds, which have a 50% rating,
and direct obligations of or obligations guaranteed by the United States
Treasury of United States Government agencies, which have a 0% rating.

The federal bank regulator authorities have also implemented a leverage ratio,
which is Tier 1 capital as a percentage of average total assets less
intangibles, to be used as a supplement to the risk-based guidelines. The
principal objective of the leverage ratio is to place a constraint on the
maximum degree to which a bank or bank holding company may leverage its equity
capital base. The minimum required leverage ratio for top-rated institutions is
3%, but most institutions are required to maintain an additional cushion of at
least 100 to 200 basis points.

These guidelines apply on a consolidated basis to bank holding companies with
total consolidated assets of $150 million or more. For bank holding companies
with less than $150 million in total consolidated assets (such as the Company),
the guidelines will be applied on a bank only basis unless the bank holding
company is engaged in a nonbanking activity involving significant leverage or
has a significant amount of debt outstanding that is held by the general public.

FDICIA established a new capital-based regulatory scheme designed to promote
early intervention for troubled banks and requires the FDIC to choose the least
expensive resolution of bank failures. The new capital based regulatory
framework contains five categories of compliance with regulatory capital
requirements, including "well capitalized," "adequately capitalized,"

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"undercapitalized," "significantly undercapitalized," and "critically
undercapitalized." To qualify as "well capitalized" institution, a bank must
have a leverage ratio of no less the 5%, a Tier 1 risk-based ratio of no less
than 6%, and a total risk-based capital ratio of no less than 10%, and the bank
must not be under any order or directive from the appropriate regulatory agency
to meet and maintain a specific capital level. As of December 31, 1996, the Bank
qualified as "well-capitalized." See "Item 6. Management's Discussion and
Analysis or Plan of Operation."

Under the FDICIA regulations, the applicable agency can treat an institution as
if it were in the next lower category of the agency determines (after notice and
an opportunity for hearing) that the institution is in an unsafe or unsound
condition or is engaging in an unsafe or unsound practice. The degree of
regulatory scrutiny of a financial institution will increase, and the
permissible activities of the institution will decrease, as it moves downward
through the capital categories. Institutions that fall into one of the other
three undercapitalized categories may be required to (i)submit a capital
restoration plan; (ii) raise additional capital; (iii) restrict their growth,
deposit interest rates, and other activities;(iv) improve their management; (v)
eliminate management fees; or (vi) divest themselves of all or part of their
operations. Bank holding companies controlling financial institutions can be
called upon to boost the institutions' capital and to partially guarantee the
institutions' performance under their capital restoration plans.

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These capital guidelines can affect the Company in several ways. Rapid growth,
poor loan portfolio performance, or poor earnings performance, or a combination
of these factors, could change the Company's capital position in a relatively
short period of time, making additional capital infusion necessary.

FDICIA requires the federal banking regulators to revise the risk-based capital
standards to provide for explicit consideration of interest-rate risk,
concentration of credit risk, and the risks of non-traditional activities. It is
uncertain what affect these regulations, when implemented, would have on the
Company and the Bank.

Recent Legislative Developments

From time to time, various bills are introduced in the United States Congress
with respect to the regulation of financial institutions. Certain of these
proposals, if adopted, could significantly change the regulation of banks and
the financial services industry. The Company cannot predict whether any of these
proposals will be adopted or, if adopted, how these proposals would affect the
Company.

ITEM 2. DESCRIPTION OF PROPERTY.

Company and Bank main offices are located on a 4.9 acre plot at 900 Memorial
Drive in Pulaski. The Bank opened for business on August 29, 1994, in a
temporary modular building on the site and utilized the temporary facility for
16 months while the permanent Bank facility was constructed. The Bank began
construction on the permanent facility on March 28, 1995. Construction was
completed on December 1, 1995. The cost of the building was $933,000. The
furniture, fixtures and equipment for the facility cost $143,000. The permanent
facility is a two-story brick building and contains approximately 10,500 square
feet. It features five inside teller windows, three drive-up lanes, a drive-up
night depository and a drive up automated teller machine and safe-deposit boxes.

The main office site was purchased from a partnership 100% owned by Jack W.
Bowling, a director of the Company, and five members of his immediate family in
an exchange transaction for 25,000 shares of common stock. See "Item 12. Certain
Relationships and Related Transactions."

The second branch office of the Bank, which opened October 4, 1997, is located
at 202 N. Washington Ave, Pulaski, Virginia in CNB Center at the site of a
regional bank's former branch office. It is a full-service branch, with three
inside teller windows, a drive-up lane, a night depository, and safety deposit
boxes. The Bank also has installed a stand-alone automated teller machines on
the campus of the New River Community College in Dublin, Virginia and Pulaski
Community Hospital in Pulaski Virginia.

CNB Center was purchased in 1997 from NationsBank for $187,000. This three story
building has approximately 20,000 square feet. In addition to the branch, the
building houses the Bank's operations department. The second and third floors
are leased to unrelated third parties and is available for future expansion.

In the normal course of business, the Bank invests in debt securities
collateralized by real estate mortgages on residential properties. The Bank's
policies regarding investment in mortgage-backed securities are subject to

                                       12
<PAGE>

change by the Board of Directors without a vote of stockholders. The Bank also
originates and holds real estate mortgages. These are secured by first and
second deeds of trust on residential and commercial properties.

ITEM 3. LEGAL PRCEEDINGS.

Community National Bank (the Bank), the wholly-owned subsidiary of CNB Holdings,
Inc., is the defendant in a suit filed on November 22, 2000 by another bank in
the United States District Court for the Western District of Virginia, Roanoke
Division. The suit seeks to recover damages in the total amount of $3.4 million
arising from an apparent check-kiting scheme engaged in by a mutual customer.
The amount claimed includes the amount represented by checks deposited by the
plaintiff and returned unpaid by the Bank, and $1.0 million in alleged
consequential damages.

The Bank has filed a responsive pleading denying any liability to the plaintiff.
The bank has also filed a third party complaint seeking judgment against the
correspondent bank which handled the notice of return, in the event the
plaintiff is able to establish that the Bank is liable to it for certain of the
returned checks. The case is in the preliminary stages, and no discovery has yet
been taken by either party.

The Bank intends to contest this suit vigorously, and believes that it has
substantial defenses to liability, an opportunity to develop evidence which may
limit the amount of recoverable damages awarded, if any, and a potential claim
for indemnity from its correspondent bank for damages relating to certain
returned checks.

ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS.

No matter was submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by this report.

                                    PART II
                                    -------

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

The Company's articles of incorporation authorize it to issue up to 10,000,000
shares of common stock, par value $5.00 per share (the "Common Stock"), of which
926,399 were issued and outstanding as of March 21, 2001. There is no
established public trading market in the common stock, and one is not expected
to develop in the near future. The Company's common stock trades thinly,
primarily on the local market. However, three stock brokerage firms, Davenport &
Company, Scott & Stringfellow and Wheat First Securities, have been approved by
the Company as market makers. As of March 21, 2001, there are approximately
1,100 stockholders of record.

The Company has never paid a dividend. It is anticipated that earnings will be
retained for several years to expand the Bank's capital base to support deposit
growth and that no dividends will be paid on the Company's stock for the next
five years. Dividends might not be paid for several years thereafter even though
the Company has achieved profitable operations.

Moreover, the National Banking Act limits dividend payments by national banks,
such as the Bank, which in turn could limit the Company's ability to pay
dividends. The Bank may only pay dividends out of its net profits then on hand,
after deducting expenses, including losses and bad debts. In addition, the Bank
is prohibited from declaring a dividend on its shares of common stock until its
surplus equals its stated capital, unless there has been transferred to this
surplus no less than one-tenth of the Bank's net profits of the preceding two
consecutive half-year periods (in the case of an annual dividend). The approval
of the OCC will be required if the total of all dividends declared in any
calendar year by the Bank exceeds the Banks' net

                                       13
<PAGE>

profits to date, as defined, for that year combined with its retained net
profits for the preceding two years less any required transfers to surplus. At
December 31, 2000, the Bank was not yet cumulatively profitable. The OCC also
has the authority under federal law to enjoin a national bank engaging in what
in its opinion constitutes an unsafe or unsound practice in conducing its
business, including the payment of a dividend under certain circumstances.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Management's Discussion and Analysis is herein incorporated by reference to the
Company's 2000 Annual Report to Stockholders, pages 25 through 39.

ITEM 7.  FINANCIAL STATEMENTS.

The following consolidated financial statements of the registrant and the
Independent Auditors' Report set forth on pages 2 through 24 of the Company's
2000 Annual Reports to Stockholders are incorporated herein by reference:

      1. Independent Auditor's Report
      2. Consolidated Balance Sheets as of December 31, 2000 and 1999
      3. Consolidated Statements of Operations for the years ended December 31,
         2000, 1999, and 1998
      4. Consolidated Statements of Stockholders' Equity for the years and
         period ended December 31, 2000, 1999, and 1998
      5. Consolidated Statements of Cash Flows for the years ended December 31,
         2000, 1999, and 1998
      6. Notes to Consolidated Financial Statements

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

There were no changes in accountants during the year and there were no
disagreements on accounting and financial disclosure.

                                   PART III
                                   --------

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

Executive Officers of the Company as of December 31, 2000 are listed on page 5
of the Company's Proxy statement dated March 9, 2001 and is incorporated herein
by reference. Information with respect to the directors of the Company is set
out under the caption "Election of Directors" on page 2 of The Company's Proxy
statement dated March 9, 2001 which information is incorporated herein by
reference.

The disclosure required by item 405 of regulation S-K is set out under the
caption "Compliance with Section 16 of the Securities Exchange Act" on page 6 of
the Company's Proxy Statement dated March 9, 2001, which information is
incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION.

The information set forth under "Executive and Board Compensation" on page 5 of
the Company's Proxy Statement dated March 9, 2001, is incorporated herein by
reference.

                                       14
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information set forth under "Voting" on page 1, "Security Ownership of
Certain Beneficial Owners and Management" on pages 2 and 3 and under "Election
of Directors" on pages 3 and 4 of the Company's Proxy Statement dated March 9,
2001, is incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information contained under "Certain Relationships and Related Trans-
actions" on page 4 of the Company's Proxy statement dated March 9, 2001, is
incorporated herein by reference.

                                    PART IV
                                    -------

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

The following documents are filed as part of the report:

1. Financial Statements:

The following financial statements are incorporated in this report by
reference to the indicated pages of the 2000 Annual Report to Stockholder

                                                          2000 Annual Report to
                                                        Stockholders page number

                                                        ------------------------

Consolidated Balance Sheets-December 31, 2000 and 1999               2
Consolidated Statements of Operations - Years ended
 December 31, 2000, 1999 and 1998                                    3
Consolidated Statements of Stockholders' Equity - Years
 ended December 31, 2000, 1999 and 1998                              4
Consolidated Statements of Cash Flows - Years ended
 December 31, 2000, 1999 and 1998                                    5
Notes to Consolidated Financial Statements                        6-23
Independent Auditor's Report                                        24
Management's Discussion and Analysis                             25-39


2. Financial Statement Schedules

All schedules are omitted as the required information is inapplicable or the
information is presented in the Consolidated Financial Statements or related
notes.

3. Exhibits:

The exhibits filed as part of this report and exhibits incorporated herein by
reference to other documents are listed in the Index to Exhibits to this Annual
Report on Form 10-K.

 3.1 Amended and Restated Articles of Incorporation (incorporated by reference
     to Exhibit 3.1 to the Company's Registration Statement No. 33-69326 on Form
     S-1).

                                       15
<PAGE>

 3.2 By-laws (incorporated by reference to Exhibit 3.2 to the Company's
     Registration Statement No. 33-69326 on Form S-1).

 4.1 Provisions in the Company's Articles of Incorporation and By-laws defining
     the rights of holders of the Company's Common Stock (incorporated by
     reference to Exhibit 4.1 to the Company's Registration Statement No. 33-
     69326 on Form S-1).

10.1 Construction Agreement dated February 2, 1995, by and between the Bank and
     Turn-Key Financial Builders, Inc. (incorporated by reference to Exhibit
     10.2 to the Company's 1995 Form 10-KSB).

10.2 CNB Holdings, Inc. 1995 Stock Option Plan (incorporated by reference to
     Exhibit 10.4 to the Company's 1995 Form 10-KSB).

12.1 2000 Report to Stockholders.

21.1 Subsidiaries of the Company (incorporated by reference to Exhibit 10.4 to
     the Company's 1995 Form 10-KSB).

22.1 2001 Proxy Statement.

                                       16
<PAGE>

                                  SIGNATURES
                                  ----------

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

                                       CNB HOLDINGS, INC.


Date:   March 25, 2001                 By: /s/ Hiawatha Nicely, Jr.
                                           ------------------------
                                           Hiawatha Nicely, Jr
                                           Chief Executive Officer

In accordance with the Exchange Act, this report has to be signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

      Signature                       Title               Date
      ---------                       -----               ----

/s/ Sybil S. Atkinson
----------------------------
Sybil S. Atkinson                    Director         March 25, 2001

/s/ Jack W. Bowling
----------------------------
Jack W. Bowling                      Director         March 25, 2001

/s/ Jackson M. Bruce
----------------------------
Jackson M. Bruce                     Director         March 25, 2001

/s/ Randolph V. Chrisley
----------------------------
Randolph V. Chrisley                 Director         March 25, 2001

                                     Chairman,
/s/ Hiawatha Nicely, Jr.           President and
----------------------------
Hiawatha Nicely, Jr.              Chief Executive
                                      Officer         March 25, 2001

/s/ A. Carole Pratt
----------------------------
A. Carole Pratt                      Director         March 25, 2001

/s/ David W. Ratcliff, Jr.
----------------------------
David W. Ratcliff, Jr.               Director         March 25, 2001

/s/ Nathanial R. Tuck
----------------------------
Nathaniel R. Tuck                    Director         March 25, 2001


                                       17
<PAGE>

/s/ J. David Wine
----------------------------
J. David Wine                    Director         March 25, 2001

                                       18
<PAGE>

                               INDEX TO EXHIBITS
                               -----------------

                                                                  PAGE NO. IN
EXHIBIT NO.                      DESCRIPTION                    EQUENTIAL SYSTEM
-----------    -----------------------------------------------  ----------------

    3.1        Amended and Restated Articles of
               Incorporation (incorporated by reference
               to Exhibit 3.1 to the Company's Registration
               Statement No. 33-69326 on Form S-1).

    3.2        By-laws (incorporated by reference to Exhibit
               3.2 to the Company's Registration Statement No.
               33-69326 on Form S-1).

    4.1        Provisions in the Company's Articles of
               Incorporation and By-laws defining the rights
               of holders of the Company's Common Stock
               (incorporated by reference to Exhibit 4.1 to
               the Company's Registration Statement No.
               33-69326 on Form S-1).

   10.1        Construction Agreement dated February 2, 1995,
               by and between the Bank and Turn-Key Financial
               Builders, Inc. (incorporated by reference to
               Exhibit 10.2 to the Company's 1995 Form 10-KSB).

   10.2        CNB Holdings, Inc. 1995 Stock Option Plan
               (incorporated by reference to Exhibit 10.4 to the
               Company's 1995 Form 10-KSB).

   12.1        2000 Report to Stockholders.

   21.1        Subsidiaries of the Company (incorporated by
               reference to Exhibit 10.4 to the Company's 1995
               Form 10-KSB).

   22.1        2001 Proxy Statement.

                                       19