CNB : 2020 2nd 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

R. 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 . . . . . . . . . . . . . . . . . . . . . . . . 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 continue

FRANCIS J. VANANTWERP, JR.

STATEMENT OF CONDITION

June 30, 2020

CONSOLIDATED BALANCE SHEET

(UNAUDITED) In thousands of dollars

		June 30,
ASSETS	2020	2019
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . .	$ 32,182	$ 7,472
Interest-bearing deposits with other financial
institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11,139	7,202
	______	______
Total cash and cash equivalents. . . . . . . . . . . . . . . . . .	43,321	14,674
Time deposits with other financial institutions	15,615	15,369
Securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . .	102,570	88,549
Securities held to maturity . . . . . . . . . . . . . . . . . . . . . . . . . .	2,465	1,988
Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	957	957
	______	______
Total investment securities. . . . . . . . . . . . . . . . . . . . . . . .	105,992	91,494
Loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3,348	2,084
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	180,436	155,902
Less: allowance for loan losses. . . . . . . . . . . . .	(1,690)	(1,752)
	______	______
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	182,094	156,234
Premises and equipment, net. . . . . . . . . . . . . . . . . . . . .	5,620	6,083
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10,812	12,056
	______	______
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$363,454	$295,910
	_______	_______
LIABILITIES	_______	_______
Deposits:
Noninterest-bearingdemand . . . . . . . . . . . . . . . . . . .	$ 118,838	$ 78,788
Interest-bearingdeposits . . . . . . . . . . . . . . . . . . . . . . . .	208,772	184,912
	______	______

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

In thousands of dollars, except per share data

For the six months ended June 30,

INTEREST INCOME	2020	2019	2018
Interest and fees on loans . . . . . . . . . . . . . .	$ 4,315	$ 4,037	$ 3,614
Interest on securities:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	844	819	812
Tax exempt . . . . . . . . . . . . . . . . . . . . . . . . . .	145	150	127
Other interest income . . . . . . . . . . . . . . . . . . .	266	275	259
	______	______	______
Total interest income . . . . . . . . . . . . . . . . . . . .	5,570	5,281	4,812
INTEREST EXPENSE ON DEPOSITS	212	157	146
	______	______	______
NET INTEREST INCOME . . . . . . . . . . . .	5,358	5,124	4,666
Provision for loan losses . . . . . . . . . . . . . . . .	0	0	0
	______	______	______
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES . . . .	5,358	5,124	4,666
	______	______	______
NONINTEREST INCOME
Service charges and fees . . . . . . . . . . . . . . . . . .	474	503	513
Net gain from sale of loans . . . . . . . . . . . . . .	1,308	294	155
Gain on sale of assets . . . . . . . . . . . . . . . . . . . .	6	0	0
Gain (Loss) sale of securities . . . . . . . . . . .	0	(2)	0
Loan servicing fees, net of amortization .	0	27	61
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	211	300	266
	______	______	______
Total noninterest income . . . . . . . . . . . . . . .	1,999	1,122	995

NONINTEREST EXPENSES

August 7, 2020

Dear Shareholder,

CNB Corporation's financial performance for the second quarter was strong, resulting in the Board of Directors approving a cash dividend to the shareholders. The enclosed represents a $0.40 per share dividend payable to shareholders of record on July 24, 2020.

Highlights of financial performance as of and for the six months ended June 30, 2020 for the Corporation and its subsidiary, Citizens National Bank (CNB) include:

• CNB's depository growth exceeding expectations. Driving this is the Bank's reputation, developed over nearly 90 years, along with its positive recognition in its newer markets.
• Quality residential and commercial loan production resulted in loan growth of 16.6%, or $25.8 million, when compared to the same period last year.
• Residential mortgages sold to the secondary market were the leading contributor to non-interest income growth, which improved by over $1 million, or 344%, when compared to June 2019.
• Earnings, along with an increase in the market value of the bank's investment portfolio, increased shareholder equity by $3.1million, or 11.7%, year-over-year.
• Year-to-dateincome, coupled with managing expenses, resulted in basic net income of $1.36 per share, an increase of 35.6%.

CNB's focus on relationship banking, serving both the loan and deposit needs of customers, continued to strengthen earnings through the second quarter. While pleased with performance, management remains cognizant of the possible longer-term financial impact of the COVID-19 pandemic on its customers. Limitations placed on small businesses to help curb the virus will likely continue into the indefinite future, and in time may challenge their ability to sustain operations and meet financial obligations. Loan officers are proactively maintaining contact with customers and are monitoring activity in an effort to assist in adversity caused by the COVID- 19 pandemic.

I would like to remind our shareholders and communities the banking industry is considered an essential business, charged with responsibility for providing its clients access to depository services and loan products when needed. As such, the safety of our staff and customers remains paramount and at this time access to lobbies remains by appointment to minimize the potential of COVID-19 directly impacting our branches. CNB will continue to meet its customers' needs using drive-thrus, as well as

Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	327,610	263,700
Accrued and other liabilities. . . . . . . . . . . . . . . . . . . . . .	5,853	5,356
	______	______
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	333,463	269,056
SHAREHOLDERS' EQUITY
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3,027	3,027
Additional Paid-InCapital . . . . . . . . . . . . . . . . . . . . . . . . .	19,472	19,472
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5,655	4,267
Accumulated other
Comprehensive Income/(Loss), net . . . . . . . . .	1,837	88
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . .	29,991	26,854

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

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

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

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

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

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

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

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

3,111	2,511	2,643
618	617	532
64	58	45
1,542	1,600	1,502
______	______	______
5,335	4,786	4,722
______	______	______
2,022	1,460	939
374	254	154
______	______	______
$ 1,648	$ 1,206	$ 785
______	______	______
______	______	______

on-line and mobile platforms. Management regularly monitors the science and status of COVID-19 on a local, state, and national basis to help ensure appropriate safeguards are in place.

A date of September 22 has been set for the Corporation's 2020 Annual Meeting of Shareholders. Measures will be taken to accommodate social distancing. The mailing of proxy information is scheduled for next week and whether or not you plan to attend the Annual Meeting I would encourage you to complete and return the proxy ballot as soon as possible.

I am always available if you have questions and along with you am looking forward to improvements in the health and economy of our nation.

Sincerely,

Total liabilities and shareholders' equity . . . . . . . $363,454	$295,910
_______	_______
_______	_______

BASIC NET INCOME PER SHARE . . . . . . . . .	$ 1.36	$ 1.00	$ 0.65
	______	______	______
	______	______	______

Matthew E. Keene President & CEO