CNB : 2020 1st Quarter Statement of Condition

DIRECTORS - CNB CORPORATION AND

CITIZENS NATIONAL BANK

VINCENT J. HILLESHEIM

Chairman, CNB Corporation

Chairman, Citizens National Bank

Retired President, Anchor In Marina

of Northern Michigan, Inc.

STEVEN J. BAKER, D.V.M.

Retired, Indian River Veterinary Clinic

THOMAS J. ELLENBERGER

Audit Committee Chairman,

CNB Corporation

Vice President & Secretary,

Albert Ellenberger Lumber Company

SUSAN A. ENO

Retired President/Chief Executive Officer,

Citizens National Bank & CNB Corporation

MATTHEW E. KEENE

President/Chief Executive Officer,

Citizens National Bank & CNB Corporation

KATHLEEN A. LIEDER

Retired Partner, Bodman LLP

THOMAS J. REDMAN

President, Tube Fab

CHRISTOPHER B. SHEPLER

President, Shepler's Mackinac Island Ferry Service

1. JEFFERY SWADLING
   Vice President, Ken's Village Market

RICK A. TROMBLE

Owner, Tromble Bay Farms

DIRECTORS EMERITI

JOHN P. WARD

JAMES C. CONBOY, JR.

CNB CORPORATION OFFICERS

MATTHEW E. KEENE . . . President & Chief Executive Officer & Treasurer VICTORIA J. HAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Secretary

CITIZENS NATIONAL BANK OFFICERS

LEADERSHIP:

MATTHEW E. KEENE. . . . . . . . . . . . . President & Chief Executive Officer VICTORIA J. HAND . . Executive Vice President, Chief Operating Officer, Cashier & Compliance Officer AMY E. ESSEX . . . . . . . . Senior Vice President & Chief Financial Officer

DAVID A. WOODS . . . . . . . . . Senior Vice President & Senior Loan Officer TRISHA M. DOBIAS . . . . . . . . . . . . . . . Vice President, Human Resources JOSEPH P. GARBER . . . . . . . . . . . . . . . . . . Vice President, Credit Manager VALERIE A. JONES . . . . . . . . . . . . . . . . . . . Vice President, Retail Banking NANCY K. LINDSAY . . . . . . . . . . . . . . . . . . . . . . Vice President, Marketing

BUSINESS BANKING:

JOSEPH M. DALY . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President

NICOLE M. DRAKE . . . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President

TIMOTHY J. TIMMER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President

SHARON L. COPPERNOLL . . . . . . . . . . . . . . . . . Business Banking Officer

RESIDENTIAL BANKING:

STEPHEN J. CRUSOE . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President

DARREN M. SELDEN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President

MICHELLE M. MILLER . . . . . . . . . . . . . . . . . . . . . . . . Residential Officer

DENNIS S. MYERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Residential Officer

REGINA H. PATTON . . . . . . . . . . . . . . . . . . . . . . . . . . . Residential Officer

WEALTH & RETIREMENT STRATEGIES:

MATTHEW H DEWILDT . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President

OPERATIONS:

REBECCA L. TOMASKI . . Assistant Vice President, Shareholder Relations QUINN C. BONNETT . . . . . . . . . . . . Facilities Manager & Security Officer MYLISE M. HEXT-PYLE . . . . . . . . . . . . . . . . . Loan Operations Officer SHERRY M. WICHLACZ . . . . . . . . . . . . . . . . Assistant Operations Officer

Citizens National Bank has offices in:

Cheboygan • Onaway • Mackinaw City • Pellston Indian River • Alanson • Rogers City• Petoskey

You can also visit our website at

KATHLEEN M. DARROW

www.CNBisMyBank.com

our 89 year tradition continues

FRANCIS J. VANANTWERP, JR.

STATEMENT OF CONDITION

March 31, 2020

CONSOLIDATED BALANCE SHEET

(UNAUDITED) In thousands of dollars

	March 31,
ASSETS	2020	2019
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . .	$ 12,002	$ 5,898
Interest-bearing deposits with other financial
institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4,867	7,464
	______	______
Total cash and cash equivalents. . . . . . . . . . . . . . . . . .	16,869	13,362
Time deposits with other financial institutions	16,113	15,369
Securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . .	108,988	91,240
Securities held to maturity . . . . . . . . . . . . . . . . . . . . . . . . . .	1,233	3,497
Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	957	957
	______	______
Total investment securities. . . . . . . . . . . . . . . . . . . . . . . .	111,178	95,694
Loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4,019	1,777
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	156,616	155,228
Less: allowance for loan losses. . . . . . . . . . . . .	(1,681)	(1,719)
	______	______
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	158,954	155,286
Premises and equipment, net. . . . . . . . . . . . . . . . . . . . .	5,739	6,122
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9,671	10,438
	______	______
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$318,524	$296,271
	_______	_______
LIABILITIES	_______	_______
Deposits:
Noninterest-bearingdemand . . . . . . . . . . . . . . . . . . .	$ 81,198	$ 71,154
Interest-bearing deposits	203,419	194,664

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

In thousands of dollars, except per share data

For the three months ended March 31,

INTEREST INCOME	2020	2019	2018
Interest and fees on loans . . . . . . . . . . . . . .	$ 2,071	$ 1,991	$ 1,733
Interest on securities:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	417	414	387
Tax exempt . . . . . . . . . . . . . . . . . . . . . . . . . .	74	69	62
Other interest income . . . . . . . . . . . . . . . . . . .	178	151	158
	______	______	______
Total interest income . . . . . . . . . . . . . . . . . . . .	2,740	2,625	2,340
INTEREST EXPENSE ON DEPOSITS	104	74	72
	______	______	______
NET INTEREST INCOME . . . . . . . . . . . .	2,636	2,551	2,268
Provision for loan losses . . . . . . . . . . . . . . . .	0	0	0
	______	______	______
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES . . . .	2,636	2,551	2,268
	______	______	______
NONINTEREST INCOME
Service charges and fees . . . . . . . . . . . . . . . . . .	247	241	243
Net gain from sale of loans . . . . . . . . . . . . . .	272	136	66
Gain on sale of assets . . . . . . . . . . . . . . . . . . . .	6	0	0
Loan servicing fees, net of amortization .	10	20	29
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	153	170	158
	______	______	______
Total noninterest income . . . . . . . . . . . . . . .	688	567	496

NONINTEREST EXPENSES

May 11, 2020

Dear Shareholder,

The first quarter of 2020 has been memorable, to say the least.

My April 16, 2020 letter outlined the work of CNB Corporation and its sub- sidiary, Citizens National Bank (CNB), to help our customers during these difficult economic times due to the COVID-19 pandemic. I am happy to report that our staff's performance has been exemplary. In both the loan and deposit functions everyone continues to find ways to meet the needs of our customers while maintaining safety and security.

The consolidated financial statements of the Corporation for the three months ended March 31, 2020 are included. These are the highlights:

• Our deposits increased nearly $1.9 million in the past 12 months, showing that our communities continue to trust CNB with their savings and finances. We use these deposits to fund loan growth while the surplus is held in safe invest- ments.
• Portfolio loans increased $1.3 million over the past 12 months. As always, CNB analyzes loan requests carefully and we always require quality. These efforts have resulted in having no foreclosed properties ("Other Real Estate") and in having our loan delinquencies at near all-time lows.
• CNB continues to set the standard for service in residential lending in our communities. Residential loans increased $2.2 million over this same time period one year ago. Residential lending will likely be a key driver for earnings in the second quarter.
• Shareholder equity increased $3.4 million year-over-year, because of first quarter earnings and market adjustments on the investment portfolio.
• Interest income and income from the sale of residential loans continue to be the key drivers of earnings growth and together contributed $251,000 year-over-year.
• Current economic conditions resulted in a slower start than last year, with earnings per share of $0.45, but we remain cautiously optimistic about the balance of the year.

We are committed to aiding local businesses in the economic recovery ahead. A key part is reflected in CNB's dedication to helping our customers with the U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP). Navigating the PPP process was challenging at times, but I am grateful the program was available to support small businesses and help protect their employees during these uncertain times. As of the date of this statement, CNB has helped 244 local businesses secure their PPP requests. An impressive team effort in a very quick four weeks, the true definition of "community banking". The results of this effort will be reflected on the second quarter balance sheet and, if all goes according to the SBA's plan, will come off the balance sheet by year-end 2020.

As my April 16 letter explained, the 2020 Annual Shareholder Meeting has been postponed and a new date will be set as soon as possible. Three of

. . . . . . . . . . . . . . . . . . . . . . . .	______	______
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	284,617	265,818
Accrued and other liabilities. . . . . . . . . . . . . . . . . . . . . .	5,155	5.091
	______	______
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	289,772	270,909
SHAREHOLDERS' EQUITY
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3,027	3,027
Additional Paid-InCapital . . . . . . . . . . . . . . . . . . . . . . . . .	19,473	19,472
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4,556	3,662
Accumulated other
Comprehensive Income/(Loss), net . . . . . . . . .	1,696	(799)
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . .	28,752	25,362

Salaries and benefits . . . . . . . . . . . . . . . . . . . . . . . . .

Occupancy and equipment . . . . . . . . . . . . .

FDIC insurance premiums . . . . . . . . . . . . . .

Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total noninterest expenses . . . . . . . . . . . . .

INCOME BEFORE INCOME TAXES . . . . . . . .

Income tax expense . . . . . . . . . . . . . . . . . . . . .

NET INCOME (LOSS) . . . . . . . . . . . . . . . . .

1,553	1,266	1,482
310	289	270
33	30	23
767	800	733
______	______	______
2,663	2,385	2,508
______	______	______
661	733	256
113	132	32
______	______	______
$ 548	$ 601	$ 224
______	______	______
______	______	______

our directors have been nominated for re-election at this Meeting and they continue to serve until the election is held, as provided by our bylaws. This is a good time to mention how thankful I am for the guidance and support of our directors as we navigate these challenges. Their knowledge and insight have been invaluable.

The 2019 CNB Corporation annual report is available for download at https://www.cnbismybank.com/about-us/shareholder-relations.html. If you would prefer a paper copy, please mail a written request to Shareholder Relations, CNB Corporation, P.O. Box 10, Cheboygan, MI 49721 or please send your request by email to [e-mail].

In closing, I look forward to seeing you at the 2020 Annual Shareholder Meeting and to improvements in the health and economy of our nation.

Sincerely,

Total liabilities and shareholders' equity . . . . . . . $318,524	$296,271
_______	_______
_______	_______

BASIC NET INCOME PER SHARE . . . . . . . . .	$ 0.45	$ 0.50	$ 0.18
	______	______	______
	______	______	______

Matthew E. Keene President & CEO