CNB : 2021 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

President, Sturgeon River Pottery, Inc.

STEVEN J. BAKER, D.V.M.

Retired, Indian River Veterinary Clinic

STEPHANIE V. BALDWIN

President, Edgewater Design Group

MELISSA K. BRIDGES

Attorney, Bodman LLP

SUSAN A. ENO

Retired President/Chief Executive Officer,

Citizens National Bank & CNB Corporation

BRIAN B. EWBANK

President & COO, Stafford's Hospitality

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

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

THOMAS J. ELLENBERGER

VINCENT J. HILLESHEIM

THOMAS J. REDMAN

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 MARILY J. GALLOWAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Risk Manager 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 90 year tradition continues

STATEMENT OF CONDITION

Restated

September 30, 2021

CONSOLIDATED BALANCE SHEET

(UNAUDITED) In thousands of dollars

		September 30,
ASSETS	2021		2020
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . .	$ 9,037		$ 9,733
Interest-bearing deposits with other financial
institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22,757		46,274
	______		______
Total cash and cash equivalents. . . . . . . . . . . . . . . . . .	31,794		56,007
Time deposits with other financial institutions	11,639		12,881
Securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . .	257,224		129,533
Securities held to maturity . . . . . . . . . . . . . . . . . . . . . . . . . .	4,720		3,577
Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,426		957
	______		______
Total investment securities. . . . . . . . . . . . . . . . . . . . . . . .	263,370		134,067
PPP Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3,370		23,245
Loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,837		4,232
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	159,855		155,122
Less: allowance for loan losses. . . . . . . . . . . . .	(3,020)	(2,047)
	______		______
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	162,042		180,552
Premises and equipment, net. . . . . . . . . . . . . . . . . . . . .	7,449		5,719
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11,340		10,006
	______		______
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$487,634		$399,232
	_______		_______
LIABILITIES	_______		_______
Deposits:
Noninterest-bearingdemand . . . . . . . . . . . . . . . . . . .	$ 167,108		$ 121,529
Interest-bearingdeposits . . . . . . . . . . . . . . . . . . . . . . . .	284,235		242,040
	______		______
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	451,343		363,569
Accrued and other liabilities. . . . . . . . . . . . . . . . . . . . . .	6,338		5,132
	______		______
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	457,681		368,701
SHAREHOLDERS' EQUITY
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3,027		3,027
Additional Paid-InCapital . . . . . . . . . . . . . . . . . . . . . . . . .	19,472		19,472
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7,378		6,057
Accumulated other
Comprehensive Income/(Loss), net . . . . . . . . .	76			1,975
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . .	29,953		30,531
Total liabilities and shareholders' equity . . . . . . .	$487,634		$399,232
	_______		_______
	_______		_______

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

In thousands of dollars, except per share data

For the nine months ended September 30,

INTEREST INCOME		2021	2020		2019
Interest and fees on loans . . . . . . . . . . . . . .	$ 7,031	$ 6,553	$ 6,132
Interest on securities:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1,151	1,237		1,207
Tax exempt . . . . . . . . . . . . . . . . . . . . . . . . . .		239	221		230
Other interest income . . . . . . . . . . . . . . . . . . .		233	356		492
	______	______	______
Total interest income . . . . . . . . . . . . . . . . . . . .		8,654	8,367		8,061
INTEREST EXPENSE ON DEPOSITS		452	337		249
	______	______	______
NET INTEREST INCOME . . . . . . . . . . . .		8,202	8,030		7,812
Provision for loan losses . . . . . . . . . . . . . . . .		0	350		0
	______	______	______
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES . . . .		8,202	7,680		7,812
	______	______	______
NONINTEREST INCOME
Service charges and fees . . . . . . . . . . . . . . . . . .		913	756		794
Net gain from sale of loans . . . . . . . . . . . . . .		1,972	2,273		558
Gain on sale of assets . . . . . . . . . . . . . . . . . . . .		0	12		(2)
Gain (Loss) of sale of securities . . . . . . . .		46	0		0
Loan servicing fees, net of amortization		(57)	(134)		40
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		483	402		478
	______	______	______
Total noninterest income . . . . . . . . . . . . . . .		3,357	3,309		1,868
NONINTEREST EXPENSES
Salaries and benefits . . . . . . . . . . . . . . . . . . . . . . . . .		5,189	4,475		3,897
Occupancy and equipment . . . . . . . . . . . . .		1,014	928		929
FDIC insurance premiums . . . . . . . . . . . . . .		180	99		87
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .		2,570	2,380		2,396
	______	______	______
Total noninterest expenses . . . . . . . . . . . . .		8,953	7,882		7,309
	______	______	______
INCOME BEFORE INCOME TAXES . . . . . . . .		2,606	3,107		2,371
2019 Pension adjustment . . . . . . . . . . . . . . .		0	0		788
Income tax expense . . . . . . . . . . . . . . . . . . . . .		476	575		253
	______	______	______
NET INCOME (LOSS) . . . . . . . . . . . . . . . . .	$	2,130	$ 2,532	$	1,330
	______	______	______
	______	______	______
BASIC NET INCOME PER SHARE . . . . . . . . .	$	1.76	$ 2.09	$	1.10
	______	______	______
	______	______	______

November 12, 2021

Dear Shareholder,

Financial performance for the Corporation and its subsidiary, Citizens National Bank (the Bank), remained consistent through the third quarter 2021. The following are the Bank's financial highlights reflected in the accompanying financial statement:

• Interest and fees on loans grew 7.3% year-over-year as a result of new loan production and Paycheck Protection Program (PPP) fee income realized. The Bank's business bankers continue to work closely with customers to navigate loan forgiveness in an effort to have all outstanding PPP loans forgiven by year-end.
• The Bank's growth in the Petoskey market coupled with remaining government stimulus funds and a strong summer tourist season contributed to total deposits increasing 24.1% year-over-year. This deposit growth was subsequently moved into the Bank's investment portfolio.
• The low-rate environment of the second quarter continued to hinder the Bank's earnings on investment securities in the third quarter and will continue to do so until rates begin to rise.
• Service charges and fees increased 20.8% from the same period 2020 due in part to heightened debit card usage, contributing to the Bank's noninterest income in the third quarter.

While the long-term impacts of the COVID-19 pandemic are still to be determined, positive financial performance is anticipated as year-end approaches. To better serve those experiencing adversity during these unprecedented times, the Bank's teammates continue to communicate with customers to identify how best to assist them.

Our growth as a community bank led us to hire Marily Galloway as the Bank's new Risk Officer. She brings with her a wealth of knowledge in cybersecurity and financial regulatory compliance. Director Thomas Redman announced his retirement from the Bank board of directors and served at his final meeting on October 14, 2021. The directors and I will miss him and his insight at the board table, but we wish him the best in his retirement. I am pleased to announce the Citizens National Bank Board of Directors appointed Stephanie Baldwin, Melissa Bridges, and Brian Ewbank as new directors effective October 14, 2021. All three directors call northern Michigan home and bring diverse talents to the Bank's board. Ms. Baldwin owns and operates Edgewater Design Group in Petoskey; Ms. Bridges is an attorney with Bodman LLP, specializing in bank regulatory compliance; and Mr. Ewbank is President and Chief Operating Officer of Stafford's Hospitality, with hotel and restaurant locations in Alanson, Charlevoix, Harbor Springs, and Petoskey.

As always, my door is open, and I am available if you have questions or concerns regarding the Corporation or the Bank.

Sincerely,

Matthew E. Keene

President & CEO