CNB (CNBW) 10-Q 2001 Q1 Quarterly report

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934


For the quarterly period ended            March 31, 2001                

                                             OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the transition period from                      to                   


                                                  


For Quarter EndedMarch 31, 2001               Commission file number:  2-96350 


                                     CNB Corporation                             
                  (Exact name of registrant as specified in its charter)


  South Carolina                                            57-0792402           
 (State or other jurisdiction of                          (I.R.S. Employer
  incorporation or organization)                           Identification No.)

P.O. Box 320, Conway, South Carolina                      29528                  
(Address of principal executive offices)                 (Zip Code)


(Registrant's telephone number, including area code):  (843) 248-5721           

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

The number of shares outstanding of the issuer's $10.00 par value common stock as of March 31, 2001 was 714,616.

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CNB Corporation
                                                                         Page

PART I.    FINANCIAL INFORMATION


Item 1.    Financial Statements:

           Consolidated Balance Sheets as of March 31, 2001,               1
           December 31, 2000 and March 31, 2000

           Consolidated Statement of Income for the Three Months           2
           Ended March 31, 2001 and 2000

           Consolidated Statement of Comprehensive Income                  3
           for the Three Months Ended March 31, 2001 and 2000

           Consolidated Statement of Changes in Stockholders'              4
           Equity for the Three Months Ended March 31, 2001
           and 2000

           Consolidated Statement of Cash Flows for the Three Months       5
           Ended March 31, 2001 and 2000

           Notes to Consolidated Financial Statements                   6-13

Item 2.    Management's Discussion and Analysis of Financial           14-20
           Condition and Results of Operations

PART II.   OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K                               21


SIGNATURE                                                                  21































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CNB Corporation and Subsidiary
Consolidated Balance Sheets
(All Dollar Amounts, Except Per Share Data, in Thousands)
(Unaudited)

ASSETS:

    Cash and due from banks
    Interest bearing deposits with banks
    Investment Securities
      (Fair values of $34,170 at
       March 31, 2001, $42,506 at
       December 31, 2000, and $54,430
       at March 31, 2000)
    Securities Available for Sale
      (Amortized cost of $103,829 at
       March 31, 2001, $88,811 at
       December 31, 2000, and $91,650
       at March 31, 2000)
    Federal Funds sold and securities
       purchased under agreement
       to resell
    Loans:
       Loans
       Less reserve for possible
          loan losses
         Net loans
    Bank premises and equipment
    Other assets
Total assets

LIABILITIES AND STOCKHOLDERS' EQUITY:
    Deposits:
       Non-interest bearing
       Interest-bearing
          Total deposits
    Federal funds purchased and
       securities sold under agreement
       to repurchase
    Other short-term borrowings
    Other liabilities
 Total liabilities
   Stockholders' equity:
       Common stock, par value $10 per
       share: Authorized 1,500,000 in
       2001 and 2000; issued 598,681
       in 2000 and 718,246 in 2001
       Surplus
       Undivided Profits
       Net Unrealized Holding
       Gains (Losses) on
        Available-For-Sale Securities
         Less: Treasury stock
            Total stockholders' equity
           Total liabilities
             and stockholders' equity March 31,
  2001  
$ 18,573 
0 
 33,550 




105,099 






26,625 

297,268 
 (3,816)
293,452 
 11,463 
  9,408 
498,170 



77,078 
 335,614 
 412,692 


27,857 
2,403 
   4,620 
 447,572 




7,182 
34,746 
8,263 
762


    (355)
  50,598 

 498,170  December 31,
 2000   
$ 20,239 
0 
42,215 




88,975 






9,875 

295,648 
  (3,782)
 291,866 
   9,795 
   8,111 
 471,076 



76,342 
 314,388 
 390,730 


22,567 
3,484 
   5,689 
 422,470 




7,182 
34,732 
6,898 
98 


    (304)
  48,606 

 471,076  March 31,
 2000  
$ 18,237 
0 
49,912 




89,614 






8,650 
 
 275,866 
   3,675 
272,191 
8,905 
   8,752 
 456,261 



79,187 
 298,614 
 377,801 


28,195 
1,608 
   3,531 
 411,135 




5,987 
24,556 
16,033 
(1,221)


    (229)
  45,126 

 456,126 

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CNB Corporation and Subsidiary
Consolidated Statement of Income
(All Dollar Amounts, Except Per Share Data, in Thousands)
(Unaudited)

Interest Income:   Interest and fees on loans   Interest on investment securities:     Taxable investment securities     Tax-exempt investment securities     Other securities   Interest on federal funds sold and securities     purchased under agreement to resell       Total interest income Interest Expense:   Interest on deposits   Interest on federal funds purchased and securities     sold under agreement to repurchase   Interest on other short-term borrowings       Total interest expense   Net interest income   Provision for possible loan losses   Net interest income after provision for possible     loan losses   Other income:     Service charges on deposit accounts     Gains/(Losses) on securities     Other operating income         Total other income   Other expenses:     Salaries and employee benefits     Occupancy expense     Other operating expenses         Total operating expenses   Income before income taxes     Income tax provision   Net income    *Per share data:     Net income per weighted average shares      outstanding     Cash dividend paid per share     Book value per actual number of shares      outstanding     Weighted average number of shares outstanding     Actual number of shares outstanding    *Restated for a 20% stock dividend issued during     2000.	Three Months Ended  March 31,
	2001   $  6,691 1,579 230 0      407    8,907    4,010 343       51    4,404    4,503      190    4,313      709 0      424    1,133    2,180      483      802    3,465    1,981      615    1,366 $   1.91 $      0 $  70.80  714,790  714,616	2000   $  6,133 1,865 193 0      110    8,301 3,065 329       26    3,420    4,881      240   4,641 683 0      344    1,027    2,031      451      850    3,332    2,336      771    1,565 $   2.19 $      0 $  63.04  715,906  715,793

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CNB Corporation and Subsidiary
Consolidated Statements of Comprehensive Income
(All Dollar Amounts, Except Per Share Data, in Thousands)
(Unaudited)

Net Income	Three Months      Ended         March 31,
	2001		2000
	$1,366	$1,565
Other comprehensive income, net of tax     Unrealized gains/(losses)       on securities:     Unrealized holding gains/(losses)       during period	644	(210)
Net Comprehensive Income	$2,030	$1,355

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CNB Corporation and Subsidiary
Consolidated Statement of Changes in Stockholders' Equity
(All Dollar Amounts in Thousands)
(Unaudited)

Common Stock: ($10 par value; 1,500,000 shares authorized) Balance, January 1 Issuance of Common Stock Balance at end of period	Nine Months Ended March 31,
	2001	2000
	7,182        0    7,182	5,987     None    5,987
Surplus: Balance, January 1 Issuance of Common Stock Gain on sale of Treasury stock Balance at end of period	34,732  None       14   34,746	24,546  None       10   24,556
Undivided profits: Balance, January 1 Net Income Cash dividends declared Balance at end of period	6,898  1,366     None    8,263	14,467  1,565     None   16,033
Net unrealized holding gains/(losses) on Available-for-sale securities: Balance, January 1 Change in net unrealized gains/(losses) Balance at end of period	98      664      762	(1,011)    (210)  (1,221)
Treasury stock: Balance, January 1 (3,256 shares in 2001; 2,722 shares in 2000) Purchase of treasury stock Reissue of treasury stock Balance at end of period (3,630 shares in 2001; 2,187 shares in 2000) Total stockholders' equity	(304) (156)     105     (355)           50,598	(277) (46)      94     (229)           45,126

Note:  Columns may not add due to rounding

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CNB CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

OPERATING ACTIVITIES   Net Income   Adjustments to reconcile net income to     net cash provided by operating activities     Depreciation     Provision for loan losses     Provision for deferred income taxes     Loss (gain) on sale of investment      securities     (Increase) decrease in accrued interest      receivable     (Increase) decrease in other assets     (Decrease) increase in other liabilities	For the three-month period ended            March 31,                    2001               2000
	$  1,366  156  190  443  0  122  (1,598)      534	$  1,565  131  240  (291) 0  (346) (35)      249
Net cash provided by operating           activities	1,213	1,513
INVESTING ACTIVITIES   Proceeds from sale of investment securities    available for sale   Proceeds from maturities of investment    securities held to maturity   Proceeds from maturities of investment    securities available for sale   Purchase of investment securities held to    maturity   Purchase of investment securities    available for sale   Decrease (increase) in interest-bearing     deposits in banks   (Increase) decrease in federal funds sold   (Increase) decrease in loans   Premises and equipment expenditures	0  8,665  15,057  0  (30,075) 0  (16,750) (1,620)   (1,824)	0  4,956  1,000  0  (1,463) 0  2,500  (8,725)    (532)
Net cash provided by (used for)           investing activities	(26,547)	(2,264)
FINANCING ACTIVITIES   Dividends paid   Increase (Decrease) in deposits   (Decrease) increase in securities sold     under repurchase agreement   (Decrease) increase in other     short-term borrowings	(2,503) 21,962  5,290    (1,081)	(2,086) 2,298  718   (2,201)
Net cash provided by (used for)           financing activities         Net increase (decrease) in cash           and due from banks CASH AND DUE FROM BANKS, BEGINNING OF YEAR CASH AND DUE FROM BANKS, March 31, 2001 AND 2000 CASH PAID (RECEIVED) FOR:   Interest   Income taxes	23,668  (1,666)   20,239  $ 18,573  $  3,918  $    144	(1,271) (2,022)   20,259  $ 18,237  $  3,808  $     29

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CNB CORPORATION AND SUBSIDIARY (The "Corporation")

CNB CORPORATION (The "Parent")

THE CONWAY NATIONAL BANK (The "Bank")


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All Dollar Amounts in Thousands)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Net income per share - Net income per share is computed on the basis of the weighted average number of common shares outstanding, 714,790 for the three-month period ended March 31, 2001 and 715,906 for the three-month period ended March 31, 2000 adjusted for the effect of a 20% stock dividend issued during 2000.

NOTE 2 - RESTRICTIONS ON CASH AND DUE FROM BANKS

The Bank is required to maintain average reserve balances either at the Bank or on deposit with the Federal Reserve Bank. The average amount of these reserve balances for the three-month period ended March 31, 2001 and for the years ended December 31, 2000 and 1999 were approximately $8,355, $8,852, and $8,300, respectively.

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NOTE 3 - INVESTMENT SECURITIES

Investment securities with a par value of approximately $92,695 at March 31, 2001 and $90,870 at December 31, 2000 were pledged to secure public deposits and for other purposes required by law.

The following summaries reflect the book value, unrealized gains and losses, approximate market value, and tax-equivalent yields of investment securities at March 31, 2001 and at December 31, 2000.

AVAILABLE FOR SALE   United States Treasury    Within one year    One to five years	March 31, 2001               Book  Unrealized Holding Fair            Value   Gains   Losses   Value Yield(1)
	$  7,029    4,024   11,053	$    93     80    173	$    -      -      -	$  7,122    4,104   11,226	6.04% 6.05  6.05
Federal agencies    Within one year    One to five years    Six to ten years	20,957 56,319    8,137   85,413	75 558    204    837	- - 24      4     28	21,032 56,853    8,337   86,222	5.57  5.83  5.94  5.77
State, county and   municipal    One to five years    Six to ten years    After ten years   Other Securities   Total available for sale	668 5,909      522    7,099      264 $103,829	18 254     16    288      - $1,298	- - - -      -      -      - $   28	686 6,163      538    7,387      264 $105,099	6.63  6.68  6.84  6.69     -  5.87%
HELD TO MATURITY   United States Treasury    Within one year	1,004	10	-	1,014	5.76
Federal agencies    Within one year    One to Five years	9,018   11,068   20,086	48    249    297	- -      -      -	9,066   11,317   20,383	6.55  6.29  6.41
State, county and   municipal    Within one year    One to five years    Six to ten years        Total held to maturity	2,205   6,579    3,676   12,460 $ 33,550	14 155    144    313 $  620	- - - -      -      - $    -	2,219 6,734    3,820   12,773 $ 34,170	7.08% 6.22  6.51  6.46  6.41%

(1) Tax equivalent adjustment based on a 34% tax rate

As of the quarter ended March 31, 2001, the Bank did not hold any securities of an issuer that exceeded 10% of stockholders' equity. The net unrealized holding gains/(losses) on available-for-sale securities component of capital is $762 as of March 31, 2001.

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NOTE 3 - INVESTMENT SECURITIES (Continued)

AVAILABLE FOR SALE   United States Treasury    Within one year	December 31, 2000              Book  Unrealized Holding Fair            Value   Gains   Losses   Value Yield(1)
	_______ $14,066	______ $   65	______ $    -	_______ $14,131	_____ 6.05%
Federal agencies    Within one year    One to five years	25,059  41,517  66,576	19    129    148	52    207    259	25,026  41,439  66,465	5.68  5.99  5.87
State, county and   municipal    One to five years    Six to ten years    After ten years   Other -restricted    Federal Reserve     Bank and FHLB Stock    CRA Qualified Investment     Fund   Total available for sale	453 4,711   1,357   6,521    1,394     254   1,648 $88,811	5 134     71    210 -      -      - $  423	- - - -      -      - -      -      - $  259	458 4,845   1,428   6,731 1,394     254   1,648 $88,975	6.65  6.54  7.40  6.73  -     -     -  5.96%
HELD TO MATURITY   United States Treasury    Within one year	1,006	1	-	1,007	5.76
Federal agencies    Within one year    One to Five years	13,026  15,082  28,108	23    129    152	2     22     24	13,047  15,189  28,236	6.45  6.27  6.36
State, county and   municipal    Within one year    One to five years    Six to ten years           Total held to maturity	2,415 6,322   4,364  13,101 $42,215	11 50    112    173 $  326	- - 4      7     11 $   35	2,426 6,368   4,469  13,263 $42,506	7.42% 6.17  6.52  6.52  6.39%

(1) Tax equivalent adjustment based on a 34% tax rate

As of the quarter ended December 31, 2000, the Bank did not hold any securities of an issuer that exceeded 10% of stockholders' equity. The net unrealized holding gains/(losses) on available-for-sale securities component of capital is $98 as of December 31, 2000.

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NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES

     The following is a summary of loans at March 31, 2001 and December 31, 2000 by major classification:

Real estate loans - mortage                   - construction Commercial and industrial loans Loans to individuals for household,   family and other consumer expenditures Agriculture All other loans, including overdrafts      Gross loans        Less reserve for loan losses          Net loans	March 31,  December 31,    2001         2000
	$190,433  22,309  48,381  32,631  1,949     1,565   297,268    (3,816)  293,452	$191,329  20,590  45,929  34,726  1,376     1,698   295,648    (3,782)  291,866

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NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES, continued

     Changes in the reserve for loan losses for the quarter ended March 31, 2001 and 2000 and the year ended December 31, 2000 are summarized as follows:

	Quarter Ended                 March 31,      December 31,   2001     2000       2000
Balance, beginning of period Charge-offs:    Commercial, financial, and agricultural    Real Estate - construction and mortgage    Loans to individuals        Total charge-offs Recoveries:    Commercial, financial, and agricultural    Real Estate - construction and mortgage    Loans to individuals        Total recoveries Net charge-offs/(recoveries) Additions charge to operations Balance, end of period	$ 3,782 43 25     134 $   202 $    11 2      33 $    46 $   156 $   190 $ 3,816	$ 3,451 14 2      79 $    95 $    18 10      51 $    79 $    16 $   240 $ 3,675	$ 3,451    186    134        426    $   746    $    92    19        146    $   257    $   489    $   820    $ 3,782
Ratio of net charge-offs during the period  to average loans outstanding during the  period.	.05%	.02%	.17%

The entire balance is available to absorb future loan losses.

At March 31, 2001 and December 31, 2000 loans on which no interest was being accrued totalled approximately $204 and $305, respectively; foreclosed real estate totalled $0 and $0, respectively; and loans 90 days past due and still accruing totalled $143 and $189, respectively.

OTHER INTEREST-BEARING ASSETS

As of March 31, 2001, the Company does not have any interest-bearing assets that would be required to be disclosed under Item III.C.1. or 2. if such assets were loans.

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NOTE 5 - PREMISES AND EQUIPMENT

     Property at March 31, 2001 and December 31, 2000 is summarized as follows:

Land and buildings
Furniture, fixtures and equipment
Construction in progress

Less accumulated depreciation and
   amortization March 31  
  2001    

$ 13,973  
5,887  
     117  
$ 19,977  

   8,514  
$ 11,463   December 31,
  2000    

$ 12,267  
5,826  
     61  
$ 18,154  

   8,359  
$  9,795  

     Depreciation and amortization of bank premises and equipment charged to operating expense was $156 for the quarter ended March 31, 2001 and $586 for the year ended December 31, 2000.

NOTE 6 - CERTIFICATES OF DEPOSIT IN EXCESS OF $100,000

     At March 31, 2001 and December 31, 2000, certificates of deposit of $100,000 or more included in time deposits totalled approximately $95,578 and $85,981 respectively. Interest expense on these deposits was approximately $1,499 for the quarter ended March 31, 2001 and $3,915 for the year ended December 31, 2000.

NOTE 7 - SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

     At March 31, 2001 and December 31, 2000, securities sold under repurchase agreements totalled $27,857 and $22,567. U.S. Government securities with a book value of $37,541 ($38,061 market value) and $38,592 ($38,626 market value), respectively, are used as collateral for the agreements. The weighted-average interest rate of these agreements was 4.43 percent and 5.00 percent at March 31, 2001 and December 31, 2000.

NOTE 8 - LINES OF CREDIT

     At March 31, 2001, the Bank had unused short-term lines of credit to purchase Federal Funds from unrelated banks totalling $23,000. These lines of credit are available on a one to seven day basis for general corporate purposes of the Bank. All of the lenders have reserved the right to withdraw these lines at their option.

     The Bank has a demand note through the U.S. Treasury, Tax and Loan system with the Federal Reserve Bank of Richmond. The Bank may borrow up to $7,000 under the arrangement at a variable interest rate. The note is secured by U.S. Treasury and Agency Securities with a market value of $6,964 at March 31, 2001. The amount outstanding under the note totalled $753 and $1,834 at March 31, 2001 and December 31, 2000, respectively.

     The Bank also has a line of credit from the Federal Home Loan Bank of Atlanta for $70,530 secured by a lien on the Bank's 1-4 family mortgages. Allowable terms range from overnight to twenty years at varying rates set daily by the FHLB. The amount outstanding under the agreement totalled $1,650 and $1,650 at March 31, 2001 and December 31, 2000, respectfully.

NOTE 9 - INCOME TAXES

     Income tax expense for the quarter ended March 31, 2001 and March 31, 2000 on pretax income of $1,981 and $2,336 totalled $615 and $771, respectively. The provision for federal income taxes is calculated by applying the 34% statutory federal income tax rate and increasing or reducing this amount due to any tax-exempt interest, state bank tax (net of federal benefit), business credits, surtax exemption, tax preferences, alternative minimum tax calculations, or other factor. A summary of income tax components and a reconciliation of income taxes to the federal statutory rate is included in fiscal year-end reports.

     The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes".

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NOTE 10 - COMMITMENTS AND CONTINGENT LIABILITIES

     From time to time the bank subsidiary is a party to various litigation, both as plaintiff and as defendant, arising from its normal operations. No material losses are anticipated in connection with any of these matters at March 31, 2001.

     Also, in the normal course of business, the bank subsidiary has outstanding commitments to extend credit and other contingent liabilities, which are not reflected in the accompanying financial statements. At March 31, 2001, commitments to extend credit totalled $24,798; financial standby letters of credit totalled $857; and performance standby letters of credit totalled $137. In the opinion of management, no material losses or liabilities are expected as a result of these transactions.

NOTE 11 - EMPLOYEE BENEFIT PLAN

     The Bank has a defined contribution pension plan covering all employees who have attained age twenty-one and have a minimum of one year of service. Upon ongoing approval of the Board of Directors, the Bank matches one-hundred percent of employee contributions up to three percent of employee salary deferred and fifty percent of employee contributions in excess of three percent and up to five percent of salary deferred. The Board of Directors may also make discretionary contributions to the Plan. For the quarter ended March 31, 2001 and years ended December 31, 2000, 1999 and 1998, $119, $404, $423, and $378, respectively, was charged to operations under the plan.

NOTE 12 - REGULATORY MATTERS

     The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory -and possibly additional discretionary - - actions by regulators that, if undertaken, could have a direct material effect on the financial statements. The regulations require the Bank to meet specific capital adequacy guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital classification is also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

     Quantitative measures established by regulation to ensure capital adequacy require the maintenance of minimum amounts and ratios (set forth in the table below) of Tier I capital to adjusted total assets (Leverage Capital ratio) and minimum ratios of Tier I and total capital to risk-weighted assets. To be considered adequately capitalized under the regulatory framework for prompt corrective action, the Bank must maintain minimum Tier I leverage, Tier I risk-based and total risked-based ratios as set forth in the table. The Bank's actual capital ratios are also presented in the table below as of March 31, 2001:

Total Capital (to  risk weighted assets) Tier I Capital (to  risk weighted assets) Tier I Capital (to  avg.assets	To be      well capitalized For           under prompt  Capital adequacy corrective action                      Purposes         provisions        Actual           Minimum           Minimum     Amount  Ratio     Amount   Ratio  Amount    Ratio
	$50,415 46,599 46,599	16.35% 15.12  9.37	$24,663 12,331 19,543	8.0% 4.0  4.0	$30,828 18,497 24,429	10.0% 6.0  5.0

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NOTE 13 - CONDENSED FINANCIAL INFORMATION

     Following is condensed financial information of CNB Corporation (parent company only):

CONDENSED BALANCED SHEET MARCH 31, 2001 (Unaudited)
ASSETS    Cash    Investment in subsidiary    Fixed assets    Other assets	$  2,194  47,361  1,006        37  $ 50,598
LIABILITIES AND STOCKHOLDERS' EQUITY    Other liability    Stockholders' equity	$      0    50,598  $ 50,598
CONDENSED STATEMENT OF INCOME For the three-month period ended March 31, 2001 (Unaudited)
EQUITY IN NET INCOME OF SUBSIDIARY OTHER INCOME OTHER EXPENSES    Net Income	$  1,409  0       (43) $  1,366

DISCUSSION OF FORWARD-LOOKING STATEMENTS

Information in the enclosed report, other than historical information, may contain forward-looking statements that involve risks and uncertainties, including, but not limited to, timing of certain business initiatives of the Company, the Company's interest rate risk condition, and future regulatory actions of the Comptroller of the Currency and Federal Reserve System. It is important to note that the Company's actual results may differ materially and adversely from those discussed in forward-looking statements.

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<PAGE>

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

Management's Discussion and Analysis is provided to afford a clearer understanding of the major elements of the corporation's results of operations, financial condition, liquidity, and capital resources. The following discussion should be read in conjunction with the corporation's financial statements and notes thereto and other detailed information appearing elsewhere in this report. In addition, the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. In the opinion of management, the information contained herein reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. All such adjustments are of a normal and recurring nature.

DISTRIBUTION OF ASSETS AND LIABILITIES

The Company maintains a conservative approach in determining the distribution of assets and liabilities. Loans, net of unearned income, have increased 7.8% from $275,866 at March 31, 2000 to $297,268 at March 31, 2001 but have decreased as a percentage of total assets from 60.5% to 59.7% over the same period as loan demand has lessened in our market. Securities and federal funds sold have increased as a percentage of total assets from 32.4% at March 31, 2000 to 33.1% at March 31, 2001 as lending has slowed. This level of investments and federal funds sold provides for a more than adequate supply of secondary liquidity. Management has sought to build the deposit base with stable, relatively non-interest-sensitive deposits by offering the small to medium deposit account holders a wide array of deposit instruments at competitive rates. Non-interest-bearing demand deposits decreased as a percentage of total assets from 17.4% at March 31, 2000 to 15.5% at March 31, 2001. As more customers, both business and personal, are attracted to interest-bearing deposit accounts, we expect the percentage of demand deposits to decline over the long-term. Interest-bearing deposits have increased from 65.4% of total assets at March 31, 2000 to 67.3% at March 31, 2001 while securities sold under agreement to repurchase have decreased from 6.2% to 5.6% over the same period.

The following table sets forth the percentage relationship to total assets of significant component's of the corporation's balance sheet as of March 31, 2001 and 2000:

Assets:    Earning assets:    Loans    Investment securities    Securities Available for Sale    Federal funds sold and securities purchased      under agreement to resell    Other earning assets       Total earning assets    Other assets       Total assets	March 31,    2001    2000
	59.7% 6.7  21.1  5.3      -   92.8    7.2  100.0%	60.5% 10.9  19.6  1.9      -   92.9    7.1  100.0%
Liabilities and stockholder's equity:   Interest-bearing liabilities:     Interest-bearing deposits     Federal funds purchased and securities sold       under agreement to resell     Other short-term borrowings         Total interest-bearing liabilities           Noninterest-bearing deposits     Other liabilities     Stockholders' equity         Total liabilities and stockholders' equity	67.3% 5.6     .5   73.4   15.5  .9   10.2  100.0%	65.4% 6.2     .4   72.0  17.4  .7    9.9  100.0%

                                      -14-

<PAGE>

RESULTS OF OPERATION

CNB Corporation experienced earnings for the three-month period ended March 31, 2001 and 2000 of $1,366 and $1,566, respectively, resulting in a return on average assets of 1.12% and 1.38% and a return on average stockholders' equity of 11.05% and 14.04%.

The earnings were primarily attributable to net interest margins in each period (see Net Income-Net Interest Income). Other factors include management's ongoing effort to maintain other income at adequate levels (see Net Income - Other Income) and to control other expenses (see Net Income - Other Expenses). This level of earnings, coupled with a conservative dividend policy, have supplied the necessary capital funds to support the growth in total assets. Total assets have increased $41,909 or 9.2% from $456,261 at March 31, 2000 to $498,170 at March 31, 2001. The following table sets forth the financial highlights for the three-month periods ending March 31, 2001 and March 31, 2000:

CNB Corporation CNB Corporation and Subsidiary FINANCIAL HIGHLIGHTS (All Dollar Amounts, Except Per Share Data, in Thousands) Three-Month Period Ended March 31,
Net interest income after provision     for loan losses Income before income taxes Net Income Per Share* Cash dividends declared    Per Share Total assets Total deposits Loans Investment securities Stockholders' equity     Book value per share* Ratios: Annualized return on average total   assets Annualized return on average   stockholders' Equity * Restated for a 20% stock dividend issued during 2000.	Percent   Increase    2001        2000     (Decrease)
	4,313  1,981  1,366  1.91  0  0  498,170  412,692  297,268  138,649  50,598  70.80  1.12% 11.05%	4,641  2,336  1,565  2.19  0  0  456,421  377,801  275,866  139,526  45,126  63.04  1.38% 14.04%	( 7.1)% (15.2)  (12.7)  (12.8)  0   0   9.1%  9.2   7.8   (  .6)  12.1   12.3   (18.8)% (21.3)%

(1)  For the three-month period ended March 31, 2001 and March 31, 2000, average
     total assets amounted to $488,570 and $452,584 with average stockholders'
     equity totaling $49,440 and $44,587, respectively.

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<PAGE>

NET INCOME

Net Interest Income - Earnings are dependent to a large degree on net interest income, defined as the difference between gross interest and fees earned on earning assets, primarily loans and securities, and interest paid on deposits and borrowed funds. Net interest income is effected by the interest rates earned or paid and by volume changes in loans, securities, deposits, and borrowed funds.

Interest rates paid on deposits and borrowed funds and earned on loans and investments have generally followed the fluctuations in market interest rates in 2001 and 2000. However, fluctuations in market interest rates do not necessarily have a significant impact on net interest income, depending on the bank's rate sensitivity position. A rate sensitive asset (RSA) is any loan or investment that can be repriced either up or down in interest rate within a certain time interval. A rate sensitive liability (RSL) is an interest paying deposit or other liability that can be repriced either up or down in interest rate within a certain time interval. When a proper balance between RSA and RSL exists, market interest rate fluctuations should not have a significant impact on earnings. The larger the imbalance, the greater the interest rate risk assumed by the bank and the greater the positive or negative impact of interest rate fluctuations on earnings. The bank seeks to manage its assets and liabilities in a manner that will limit interest rate risk and thus stabilize long-run earning power. Management believes that a rise or fall in interest rates will not materially effect earnings.

The Bank has maintained adequate net interest margins for the three-month period ended March 31, 2001 and 2000 by earning satisfactory yields on loans and investments and funding these assets with a favorable deposit mix containing a significant level Of noninterest-bearing demand deposits. However, margins have tightened due to strong competition for deposits coupled with a decline in non-interest-bearing balances.

Fully-tax-equivalent net interest income showed a 7.2% decrease from $4,980 for the three-month period ended March 31, 2000 to $4,621 for the three-month period ended March 31, 2001. During the same period, total fully-tax-equivalent interest income increased by 7.4% from $8,400 to $9,025 and total interest expense increased by 28.8% from $3,420 to $4,404. Fully-tax-equivalent net interest income as a percentage of total earning assets has shown a decrease of .65% from 4.70% for the three-month period ended March 31, 2000 to 4.05% for the three-month period ended March 31, 2001.

The tables on the following two pages present selected financial data and an analysis of net interest income.

- -16-

<PAGE>

CNB Corporation and Subsidiary Selected Financial Data
Assets:   Earning assets:    Loans    Securities:     Taxable     Tax-exempt    Federal funds sold and     securities purchased under     agreement to resell    Other earning assets       Total earning assets   Other assets       Total assets Liabilities and stockholder equity    Interest-bearing liabilities:    Interest-bearing deposits    Federal funds purchased and     securities sold under     agreement to repurchase    Other short-term borrowings        Total interest-bearing          liabilities    Noninterest-bearing deposits    Other liabilities    Stockholders' equity          Total liabilities and            stockholders' equity    Net interest income as a percent      of total earning assets (1)  Tax-equivalent adjustment      based on a 34% tax rate	Three Months Ended 3/31/01  Three Months Ended 3/31/00   Avg.    Interest Avg. Ann.  Avg.    Interest  Avg. Ann.  Balance Income/  Yield or   Balance Income/    Yield or  Expense    Rate             Expense(1)  Rate
	$296,949 109,053 19,773 30,208        0  455,983   32,587 $488,570 $330,960 28,292    3,257 $362,509   72,619 4,002   49,440 $488,570 $455,983	$  6,691 1,579 348 407        0    9,025 4,010 343       51 $  4,404 $  4,621 $    118	9.01% 5.79  7.04  5.39  - -  7.92  4.85  4.85  6.26  4.86  4.05	$271,873 127,973 16,203 7,993        0  424,042   28,542 $452,584 $301,199 29,012    1,595 $331,806 72,895 3,296   44,587 $452,584 $424,042	$  6,133 1,865 292 110        0    8,400 $  3,065 329       26 $  3,420 $  4,980 $     99	9.02% 5.83  7.21  5.50  - -  7.92  4.07  4.54  6.52  4.12  4.70
Ratios: Annualized return on average total assets Annualized return on average stockholders' equity Cash dividends declared as a percent of net income Average stockholders' equity as a percent of:   Average total assets   Average total deposits   Average loans Average earning assets as a percent of average total assets			1.12  11.05  0  10.12  12.25  16.65  93.33	1.38  14.04  0  9.85  11.92  16.40  93.69

- -17-

<PAGE>

CNB Corporation and Subsidiary
Rate/Volume Variance Analysis
For the Three Months Ended March 31, 2001 and 2000
(Dollars in Thousands)

Earning Assets:
Loans, Net of unearned
 Income (2)
Investment securities:
 Taxable
 Tax-exempt
Federal funds sold and
 Securities purchased under
 agreement to resell
Other earning assets

Total Earning Assets

Interest-bearing
 Liabilities:

Interest-bearing deposits
Federal funds purchased and
 securities sold under
 agreement to repurchase
Other short-term borrowings

Total Interest-bearing
 Liabilities
Interest-free Funds
 Supporting Earning Assets

Total Funds Supporting
Earning Assets

Interest Rate Spread
Impact of Non-interest-
 bearing Funds on Net Yield
 on Earning Assets

Net Yield on Earning Assets
Average
Volume
2001 



296,949

109,053
19,773


30,208
      0

455,983




330,960


28,292
  3,257


362,509

 93,474

       
455,983
Average
Volume
2000 



271,873

127,973
16,203


7,993
      0

424,042




301,199


29,012
  1,595


331,806

 92,236

       
424,042

Yield/Rate
2001 (1) 



9.01% 

5.79% 
7.04% 


5.39% 
   -  

7.92% 




4.85% 


4.85% 
6.26% 


4.86% 



      
3.87% 

3.06% 


 .99% 

4.05% 

Yield/Rate
2000 (1) 



9.02%  

5.83%  
7.21%  


5.50%  
   -   

7.92%  




4.07%  


4.54%  
6.52%  


4.12%  



       
3.22%  

3.80%  


 .90%  

4.70%  
Interest  
Earned/Paid 
2001 (1)  



6,691  

1,579  
348  


407  
    0  

9,025  




4,010  


343  
   51  


4,404  



       
4,404  





       
4,621  
Interest  
Earned/Paid 
2000 (1)  



6,133  

1,865  
292  


110  
    0  

8,400  




3,065  


329  
   26  


3,420  



       
3,420  





       
4,980  


Variance



558 

(286)
56 


297 
    0 

  625 




945 


14 
   25 


  984 



      
  984 
Change
Due to
Rate 



(7)

(11)
(7)


(2)
    - 

 (27)




587 


22 
   (1)


  608 



     
 608 
Change
Due to
Volume



565 

(276)
64 


305 
   - 

 658 




303 


(8)
  27 


 322 



     
 322  Change
Due to
Rate X
Volume



- - 

1 
(1)


(6)
   - 

  (6)




55 


- - 
  (1)


  54 



     
  54 

(1)  Tax-equivalent adjustment based on a 34% tax rate.

(2)  Includes non-accruing loans which does not have a material effect on the Net Yield on Earning Assets.

- -18-

<PAGE>

NET INCOME (continued)

Provision for Possible Loan Losses - It is the policy of the bank to maintain the reserve for possible loan losses at the greater of 1.20% of net loans or the percentage based on the actual loan loss experience over the previous five years. In addition, management may increase the reserve to a level above these guidelines to cover potential losses identified in the portfolio.

The provision for possible loan losses was $190 for the three-month period ended March 31, 2001 and $240 for the three-month period ended March 31, 2000. Net loan charge-offs totalled $156 for the three-month period ended March 31, 2001 and $16 for the same period in 2000.

The reserve for possible loan losses as a percentage of net loans was 1.30% at March 31, 2001 and 1.35% at March 31, 2000. The provision for possible loan losses decreased from $240 during the first quarter of 2000 to $190 during the first quarter of 2001 due to a decrease in the rate of loan growth.

Securities Transactions - The bank had no security sales during the first quarter of 2001 or 2000. At March 31, 2001, December 31, 2000, and March 31, 2000 market value appreciation/(depreciation) in the investment portfolio totalled $1,890, $455, and $(2,665), respectively. As indicated, market values have increased due to lower market interest rates.

Other Income - Other income, net of any gains/losses on security transactions, increased by 10.3% from $1,027 for the three-month period ended March 31, 2000 to $1,133 for the three-month period ended March 31, 2001 primarily due to an increase in deposit account volumes and higher merchant discount income. Effective July 1, 2001, overall service charge rates will be increased which will correspondingly increase future non-interest income levels.

Other Expenses - Other expenses increased by 4.0% from $3,332 for the three-month period ended March 31, 2000 to $3,465 for the three-month period ended March 31, 2001. The major components of other expenses are salaries and employee benefits which increased 7.3% from $2,031 to $2,180; occupancy expense which increased 7.1% from $451 to $483; and other operating expenses which decreased by 5.6% from $850 to $802. The increase in the three-month period ended March 31, 2001 salaries and employee benefits was due to normal pay increments and the increased costs of providing employee benefits, particularly health insurance coverage. Occupancy expense was impacted by costs associated with the new Murrells Inlet office and the purchase of the Surfside Office which was previously a leasehold interest. Other operating expenses have decreased due to lower credit card department related costs in the merchant discount income area.

Income Taxes - Provisions for income taxes decreased 20.2% from $771 for the three-month period ended March 31, 2000 to $615 for the three-month period ended March 31, 2001. Income before income taxes less interest of tax-exempt investment securities decreased by 18.3% from $2,143 for the three-month period ended March 31, 2000 to $1,751 for the same period in 2001. State tax liability decreased as income before income taxes decreased 15.2% from $2,336 to $1,981 during the same period.

LIQUIDITY

The bank's liquidity position is primarily dependent on short-term demands for funds caused by customer credit needs and deposit withdrawals and upon the liquidity of bank assets to meet these needs. The bank's liquidity sources include cash and due from banks, federal funds sold, and short-term investments. In addition, the bank has established federal funds lines of credit from correspondent banks and has the ability to borrow funds from the Federal Reserve System and the Federal Home Loan Bank of Atlanta. Management feels that short-term and long-term liquidity sources are more than adequate to meet funding needs.

- -19-

<PAGE>
CAPITAL RESOURCES

Total stockholders' equity was $50,598, $48,606, $43,712 and $41,201 at March 31, 2001, December 31, 2000, December 31, 1999, and December 31, 1998, representing 10.16%, 10.32%, 9.59%, and 9.66% of total assets, respectively. At March 31, 2001, the Bank exceeds quantitative measures established by regulation to ensure capital adequacy (see NOTE 12 - REGULATORY MATTERS). Capital is considered sufficient by management to meet current and prospective capital requirements and to support anticipated growth in bank operations.

The Company paid an approximate 20% stock dividend in September 2000. The Board maintained the annual cash dividend at $3.50 per share which increased the cash dividend payout ratio and cash dividend yield.

EFFECTS OF REGULATORY ACTION

The Federal Deposit Insurance Corporation (FDIC) reduced FDIC insurance premium rates during the third quarter of 1995 which has had a positive effect on subsequent earnings and should favorably impact future year's income. Effective March 11, 2000, the Gramm-Leach-Bliley Act of 1999 allows bank holding companies to elect to be treated as financial holding companies which may engage in a broad range of securities, insurance, and other financial activities. At this time, neither the Company nor the Bank plan to enter these new lines of business. The management of the Company and the Bank is not aware of any current recommendations by the regulatory authorities which, if they were to be implemented, would have a material effect on liquidity, capital resources, or operations.

ACCOUNTING ISSUES

In June 1998, the FASB issued SFAS 133, "Accounting for Derivative Instrument and Hedging Activities." All derivatives are to be measured at fair value and recognized in the balance sheet as assets or liabilities. The statement is effective for fiscal years and quarters beginning after June 15, 2000. Because the Company does not use derivative transactions at this time, management does not expect that this standard will have a significant effect on the Company.

- -20-

<PAGE>

EXHIBITS AND REPORTS ON FORM 8-K

See Exhibit Index appearing below.

(b)  Reports on Form 8-K - No reports on Form 8-K were filed during the quarter      covered by this report.

EXHIBIT INDEX

Exhibit
Number

   27          Financial Data Schedule - Article 9 Financial Data Schedule for
               10-Q for electronic filers (page 22).

All other exhibits, the filing of which are required with this Form, are not applicable.

CNB Corporation

SIGNATURE


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

                                    CNB Corporation
                                    (Registrant)


                                    Paul R. Dusenbury                        

                                    Paul R. Dusenbury
                                    Treasurer
                                    (Chief Financial and Accounting Officer)



Date:  May 14, 2001

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