CNB : 2020 3rd Quarter Statement of Condition

DIRECTORS - CNB CORPORATION AND

CITIZENS NATIONAL BANK

RICK A. TROMBLE

Chairman, CNB Corporation

Chairman, Citizens National Bank

Owner, Tromble Bay Farms

*DANA F. ANDREWS

Owner, Sturgeon Bay Pottery & NorthGoods

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

VINCENT J. HILLESHEIM

Past Chairman, CNB Corporation

Past Chairman, Citizens National Bank

Retired President, Anchor In Marina

of Northern Michigan, Inc.

MATTHEW E. KEENE

President/Chief Executive Officer,

Citizens National Bank & CNB Corporation

*SCOTT D. LANDON

President, Landon Auto Parts

KATHLEEN A. LIEDER

Retired Partner, Bodman LLP

THOMAS J. REDMAN

President, Tube Fab

CHRISTOPHER B. SHEPLER

President, Shepler's Mackinac Island Ferry Service

R. JEFFERY SWADLING

Vice President, Ken's Village Market

DIRECTORS EMERITI

JOHN P. WARD

JAMES C. CONBOY, JR.

KATHLEEN M. DARROW

FRANCIS J. VANANTWERP, JR.

CNB CORPORATION OFFICERS

MATTHEW E. KEENE . . . . . . . . . . . . President & Chief Executive Officer

VICTORIA J. HAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Secretary

AMY E. ESSEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Treasurer

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 .	. . . . . . . . . . . . . . . . . . . . . . . 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	our 89 year tradition continues
www.CNBisMyBank.com	STATEMENT OF CONDITION
			September 30, 2020

*Citizens National Bank Director

CONSOLIDATED BALANCE SHEET

(UNAUDITED) In thousands of dollars

	September 30,
ASSETS	2020	2019
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . .	$ 9,733	$ 7,952
Interest-bearing deposits with other financial
institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	46,274	38,464
	______	______
Total cash and cash equivalents. . . . . . . . . . . . . . . . . .	56,007	46,416
Time deposits with other financial institutions	12,881	15,366
Securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . .	129,533	89,304
Securities held to maturity . . . . . . . . . . . . . . . . . . . . . . . . . .	3,577	2,488
Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	957	957
	______	______
Total investment securities. . . . . . . . . . . . . . . . . . . . . . . .	134,067	92,749
Loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4,232	1,622
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	178,367	158,455
Less: allowance for loan losses. . . . . . . . . . . . .	(2,047)	(1,765)
	______	______
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	180,552	158,312
Premises and equipment, net. . . . . . . . . . . . . . . . . . . . .	5,719	5,986
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10,006	10,151
	______	______
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$399,232	$328,980
	_______	_______
LIABILITIES	_______	_______
Deposits:
Noninterest-bearingdemand . . . . . . . . . . . . . . . . . . .	$ 121,529	$ 90,118

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

In thousands of dollars, except per share data

For the nine months ended September 30,

INTEREST INCOME	2020	2019	2018
Interest and fees on loans . . . . . . . . . . . . . .	$ 6,553	$ 6,132	$ 5,537
Interest on securities:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,237	1,207	1,223
Tax exempt . . . . . . . . . . . . . . . . . . . . . . . . . .	221	230	197
Other interest income . . . . . . . . . . . . . . . . . . .	356	492	389
	______	______	______
Total interest income . . . . . . . . . . . . . . . . . . . .	8,367	8,061	7,346
INTEREST EXPENSE ON DEPOSITS	337	249	220
	______	______	______
NET INTEREST INCOME . . . . . . . . . . . .	8,030	7,812	7,126
Provision for loan losses . . . . . . . . . . . . . . . .	350	0	0
	______	______	______
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES . . . .	7,680	7,812	7,126
	______	______	______
NONINTEREST INCOME
Service charges and fees . . . . . . . . . . . . . . . . . .	756	794	787
Net gain from sale of loans . . . . . . . . . . . . . .	2,273	558	281
Gain on sale of assets . . . . . . . . . . . . . . . . . . . .	12	(2)	0
Loan servicing fees, net of amortization .	(134)	40	95
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	402	478	393
	______	______	______
Total noninterest income . . . . . . . . . . . . . . .	3,309	1,868	1,556

NONINTEREST EXPENSES

October 28, 2020

Dear Shareholder,

Financial performance for the Corporation and its subsidiary, Citizens National Bank (the Bank), continued to reflect positive trends through the third quarter 2020. Highlights of financial performance reflected on the accompanying financial statement include:

• Continued growth in new bank relationships reflected in the following year-over-year activity:
• • 14% loan growth (partially influenced by SBA's Payroll Protection Program loans)
  • 22% deposit growth
  • 44% growth in investment securities;
• Loan and Investment Securities growth, which resulted in an increase in interest income of $218,000;
• Net Gain on Sales of Loans for new residential mortgages up $1,715,000 over this same time period in 2019;
• Funding of the Bank's Provision for Loan Losses by $350,000 due to strong loan growth and the economic uncertainty for 2021, which will likely continue through the balance of 2020; and,
• Net Income Per Share growth to $2.09.

Financial performance is anticipated to be positive through year end; however, concerns remain about the longer-term impact of the COVID- 19 pandemic on area businesses which rely heavily on the tourist industry. As mentioned in the last message, lenders are maintaining contact with customers to monitor activity in order to identify and assist those who might experience adversity.

At the September 22, 2020 annual meeting of shareholders, Thomas J. Redman, R. Jeffery Swadling and Rick A. Tromble were reelected as directors of the Corporation. Additionally, Rick A. Tromble was elected Chairman of the Board, and Thomas J. Ellenberger was reelected as Chairman of the Audit Committee. Mr. Tromble is stepping into the board chair position replacing Vincent J. Hillesheim, who has served as board chair for more than 14 years. Recognizing Mr. Hillesheim's eligibility to serve as a director will end at the expiration of his term in 2021 due to an established age limit policy, the board took action to assure a transition period prior to his retirement from the board. Mr. Tromble joined the board of directors in June 2012, and his breadth of experience and entrepreneurial background will serve the board well. I would like to extend my appreciation to Mr. Hillesheim; he has been an invaluable member of the board, and I am thankful for his leadership and guidance during my inaugural years as president & CEO. I would also like to acknowledge both Mr. Hillesheim and Mr. Tromble for their willingness to work cooperatively to help ensure a seamless transition moving forward.

Interest-bearingdeposits . . . . . . . . . . . . . . . . . . . . . . . .	242,040	206,661
	______	______
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	363,569	296,779
Accrued and other liabilities. . . . . . . . . . . . . . . . . . . . . .	5,132	5,659
	______	______
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	368,701	302,438
SHAREHOLDERS' EQUITY
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3,027	3,027
Additional Paid-InCapital . . . . . . . . . . . . . . . . . . . . . . . . .	19,472	19,472
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6,057	3,907
Accumulated other
Comprehensive Income/(Loss), net . . . . . . . . .	1,975	136
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . .	30,531	26,542

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

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

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

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

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

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

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

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

4,475	3,897	3,874
928	929	797
99	87	66
2,379	2,396	2,325
______	______	______
7,881	7,309	7,062
______	______	______
3,107	2,371	1,619
575	253	270
______	______	______
$ 2,532	$ 1,330	$ 1,349
______	______	______
______	______	______

I am pleased to announce the Bank's board of directors appointed Dana F. Andrews and Scott D. Landon as new directors effective September 10, 2020. Both Mr. Landon and Mr. Andrews call northern Michigan home and is where they operate their businesses. Mr. Andrews owns Sturgeon River Pottery and NorthGoods, both in Petoskey, and Mr. Landon is President of Landon Auto Parts, with locations in Cheboygan, Indian River, Boyne City, Charlevoix, and Onaway.

The circumstances created as a result of COVID-19 continue to present challenges for us all. Our staff has and will continue to work cooperatively to meet the needs of our customers and our communities.

I am always available if you have any questions or concerns regarding the Corporation or Bank.

Sincerely,

Total liabilities and shareholders' equity . . . . . . . $399,232	$328,980
_______	_______
_______	_______

BASIC NET INCOME PER SHARE . . . . . . . . .	$ 2.09	$ 1.10	$ 1.11
	______	______	______
	______	______	______

Matthew E. Keene President & CEO