CNB : 2020 4th 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

President, Sturgeon River Pottery, Inc.

STEVEN J. BAKER, D.V.M.

Retired, Indian River Veterinary Clinic

THOMAS J. ELLENBERGER

Past 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

Audit Committee Chairman, CNB Corporation 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

JOSEPH P. GARBER. . . . . . . . Senior Vice President & Chief Credit Officer DAVID A. WOODS . . . . . . . . . . Senior Vice President & Chief Loan Officer TRISHA M. DOBIAS . . . . . . . . . . . . . . . Vice President, Human Resources VALERIE A. JONES. . . . . . . . . . . . . . . . . Vice President, Cash Management NANCY K. LINDSAY . . . . . . . . . . . . . . . . . . . . . . Vice President, Marketing AMANDA J. NICHOLSON. . . . . . . . . . . . . . . . . . Universal Banking Officer

BUSINESS BANKING:

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

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

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

CYNTHIA D. LAMBERSON . . . . . . . . . . . . . . . . . . Assistant Vice President

STEPHEN J. DALY . . . . . . . . . . . . . . . . . . . . . . . . Business Banking Officer

RESIDENTIAL BANKING:

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

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

SHARON L. COPPERNOLL . . . . . . . . . . . . . . . . . . . . . . Residential Officer

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 CHANDLAR E. RUSH . . . . . . . . . . . . . . . . . . . . . . . . . . . Technology Officer SHERRY M. WICHLACZ . . . . . . . . . . . . . . . . . . . . . . . . Operations Officer

Citizens National Bank has offices in:

Cheboygan•Onaway•Mackinaw City

Pellston•Indian River•Alanson•Petoskey

You can also visit our website at

www.CNBisMyBank.com

our 89 year tradition continues

STATEMENT OF CONDITION

December 31, 2020

*Citizens National Bank Director

CONSOLIDATED BALANCE SHEET

(UNAUDITED) In thousands of dollars

		December 31,
ASSETS	2020	2019
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . .	$ 7,786	$ 6,437
Interest-bearing deposits with other financial
institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37,109	19,232
	______	______
Total cash and cash equivalents. . . . . . . . . . . . . . . . . .	44,895	25,669
Time deposits with other financial institutions	12,632	15,614
Securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . .	148,409	91,245
Securities held to maturity . . . . . . . . . . . . . . . . . . . . . . . . . .	3,524	1,240
Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	957	957
	______	______
Total investment securities. . . . . . . . . . . . . . . . . . . . . . . .	152,530	93,442
Loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5,484	3,106
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	170,316	159,316
Less: allowance for loan losses. . . . . . . . . . . . .	(3,004)	(1,671)
	______	______
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	172,796	160,751
Premises and equipment, net. . . . . . . . . . . . . . . . . . . . .	5,750	5,856
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10,271	9,930
	______	______
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$398,874	$311,262
	_______	_______
LIABILITIES	_______	_______
Deposits:
Noninterest-bearingdemand . . . . . . . . . . . . . . . . . . .	$ 123,493	$ 82,654
Interest-bearingdeposits . . . . . . . . . . . . . . . . . . . . . . . .	239,426	196,358
	______	______
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	362,919	279,012
Accrued and other liabilities. . . . . . . . . . . . . . . . . . . . . .	5,286	5,039
	______	______
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	368,205	284,051
SHAREHOLDERS' EQUITY
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3,027	3,027
Additional Paid-InCapital . . . . . . . . . . . . . . . . . . . . . . . . .	19,472	19,472
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6,337	4,493
Accumulated other
Comprehensive Income/(Loss), net . . . . . . . . .	1,833	219
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . .	30,669	27,211
Total liabilities and shareholders' equity . . . . . . .	$398,874	$311,262
	_______	_______
	_______	_______

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

In thousands of dollars, except per share data

For the twelve months ended December 31,

INTEREST INCOME		2020	2019	2018
Interest and fees on loans . . . . . . . . . . . . . .	$ 9,069	$ 8,321	$ 7,599
Interest on securities:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1,607	1,610	1,639
Tax exempt . . . . . . . . . . . . . . . . . . . . . . . . . .		310	307	268
Other interest income . . . . . . . . . . . . . . . . . . .		435	687	532
	______	______	______
Total interest income . . . . . . . . . . . . . . . . . . . .		11,421	10,925	10,038
INTEREST EXPENSE ON DEPOSITS		469	346	293
	______	______	______
NET INTEREST INCOME . . . . . . . . . . . .		10,952	10,579	9,745
Provision for loan losses . . . . . . . . . . . . . . . .		1,225	0	0
	______	______	______
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES . . . .		9,727	10,579	9,745
	______	______	______
NONINTEREST INCOME
Service charges and fees . . . . . . . . . . . . . . . . . .		1,032	1,067	1,060
Net gain from sale of loans . . . . . . . . . . . . . .		3,182	706	376
Gain on sale of assets . . . . . . . . . . . . . . . . . . . .		12	(2)	123
Loan servicing fees, net of amortization .		(127)	48	0
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		597	774	644
	______	______	______
Total noninterest income . . . . . . . . . . . . . . .		4,696	2,593	2,203
NONINTEREST EXPENSES
Salaries and benefits . . . . . . . . . . . . . . . . . . . . . . . . .		6,200	5,327	5,212
Occupancy and equipment . . . . . . . . . . . . .		1,286	1,367	1,074
FDIC insurance premiums . . . . . . . . . . . . . .		142	122	85
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .		3,367	3,262	3,179
	______	______	______
Total noninterest expenses . . . . . . . . . . . . .		10,995	10,078	9,550
	______	______	______
INCOME BEFORE INCOME TAXES . . . . . . . .		3,428	3,094	2,398
Income tax expense . . . . . . . . . . . . . . . . . . . . .		616	378	154
Pension Termination . . . . . . . . . . . . . . . . . . . .		0	788	3,023
	______	______	______
NET INCOME (LOSS) . . . . . . . . . . . . . . . . .	$	2,812	$ 1,928	$ (779)
	______	______	______
	______	______	______
BASIC NET INCOME PER SHARE . . . . . . . . .	$	2.32	$ 1.59	$ (0.64)
	______	______	______
	______	______	______

February 12, 2021

Dear Shareholder,

At its January 14, 2021 meeting, the CNB Corporation (Corporation) Board of Directors approved two dividends payable to shareholders of record as of January 23, 2021. The enclosed includes a regular dividend of $0.40 and a special dividend of $0.10, totaling a per-share dividend of $0.50.

Reflecting on 2020, I am, like most, glad it is behind us. Looking for- ward, I am optimistic a new normal will be identified and embraced as the vaccine rollout continues. I am thankful for the time and energy expended at all levels to move our nation and local communities through this crisis and stabilize the economy. I would also like to recognize the efforts of the staff of Citizens National Bank (Bank); they have risen to the new challenges throughout the year to help customers during the pandemic, exemplifying the definition of community banking.

In spite of the pandemic, financial performance for the Corporation and the Bank remained positive for the year ended December 31, 2020. Items of note on the accompanying financial statement include:

• Net income of $2.8 million - an increase of 45.9% from 2019 - accomplished after contributing more than $1.2 million to the provision for loan loss to safeguard against potential loan losses as the economic impact of the pandemic evolves.
• Loans grew 6.9% year-over-year to $170.3 million. Loan production contributed to income in part from the paycheck protection program (PPP) loans and the sale of loans to the secondary market, which itself increased more than 350% year-over-year.
• Salaries and benefits increased year-over-year 16.4%, or $873,000, due to staff additions to support the Bank's growth and incentive compensation from increased loan production, offset in-part by the resulting fees and interest income.
• Total deposits increased more than 30% year-over-year to $362.9 million, largely due to the efforts of the business banking team in establishing new depository relationships with borrowers, as well as the government's stimulus programs.

Staff changes during the quarter include the promotions of David A. Woods to Senior Vice President and Chief Loan Officer and Joseph P. Garber to Senior Vice President and Chief Credit Officer. Additionally, Valerie A. Jones is now leading the Bank's new Cash Management department which will expand and support the Bank's growing business banking relationships. Other promotions included Stephen J. Daly to Business Banking Officer, Amanda J. Nicholson to Universal Banking Officer and Chandlar E. Rush to Technology Officer. These promotions recognize their hard-work and dedication toward improvements and growth for the Bank. I am also pleased to announce the addition of Cynthia D. Lamberson to the Business Banking team as an Assistant Vice President working primarily in the Petoskey market.

Planning for the 2021 Annual Meeting of Shareholders is underway for mid-May. Information regarding the meeting will be sent out in early April, and I am hopeful circumstances allow everyone to attend.

Until I am able to resume my open-door policy, please feel free to call me if you have questions or concerns regarding the Corporation or the Bank.

Sincerely,

Matthew E. Keene

President & CEO