CNB : 2021 1st 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 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

March 31, 2021

*Citizens National Bank Director

CONSOLIDATED BALANCE SHEET

(UNAUDITED) In thousands of dollars

	March 31,
ASSETS	2021	2020
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . .	$ 6,867	$ 12,002
Interest-bearing deposits with other financial
institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	47,631	4,867
	______	______
Total cash and cash equivalents. . . . . . . . . . . . . . . . . .	54,498	16,869
Time deposits with other financial institutions	12,632	16,113
Securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . .	173,476	108,988
Securities held to maturity . . . . . . . . . . . . . . . . . . . . . . . . . .	3,524	1,233
Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	957	957
	______	______
Total investment securities. . . . . . . . . . . . . . . . . . . . . . . .	177,957	111,178
Loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4,852	4,019
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	176,196	156,616
Less: allowance for loan losses. . . . . . . . . . . . .	(3,013)	(1,681)
	______	______
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	178,035	158,954
Premises and equipment, net. . . . . . . . . . . . . . . . . . . . .	7,551	5,739
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10,918	9,671
	______	______
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$441,591	$318,524
	_______	_______
LIABILITIES	_______	_______
Deposits:
Noninterest-bearingdemand . . . . . . . . . . . . . . . . . . .	$ 151,972	$ 81,198
Interest-bearing deposits	254,342	203,419

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

In thousands of dollars, except per share data

For the three months ended March 31,

INTEREST INCOME	2021	2020	2019
Interest and fees on loans . . . . . . . . . . . . . .	$ 2,251	$ 2,071	$ 1,991
Interest on securities:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	309	417	414
Tax exempt . . . . . . . . . . . . . . . . . . . . . . . . . .	81	74	69
Other interest income . . . . . . . . . . . . . . . . . . .	77	178	151
	______	______	______
Total interest income . . . . . . . . . . . . . . . . . . . .	2,718	2,740	2,625
INTEREST EXPENSE ON DEPOSITS	142	104	74
	______	______	______
NET INTEREST INCOME . . . . . . . . . . . .	2,576	2,636	2,551
Provision for loan losses . . . . . . . . . . . . . . . .	0	0	0
	______	______	______
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES . . . .	2,576	2,636	2,551
	______	______	______
NONINTEREST INCOME
Service charges and fees . . . . . . . . . . . . . . . . . .	256	247	241
Net gain from sale of loans . . . . . . . . . . . . . .	728	272	136
Gain on sale of assets . . . . . . . . . . . . . . . . . . . .	37	6	0
Loan servicing fees, net of amortization .	(61)	10	20
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	165	153	170
	______	______	______
Total noninterest income . . . . . . . . . . . . . . .	1,125	688	567

NONINTEREST EXPENSES

May 12, 2021

Dear Shareholder,

Re-opening is on everyone's mind, whether it is re-opening the state, re-opening the economy, or re-opening bank lobbies. Citizens National Bank's (the Bank) pandemic team has a strategy in place and as of the date of this statment, our lobbies are open. It has been over a year since lobby access was limited, and we are looking forward to assisting you face-to-face once more.

In the first quarter of 2021, the Bank's team members continued to perform at a high level for our customers and our community, despite ongoing pandemic restrictions. Staff performance and engagement levels resulted in the following first quarter financials for CNB Corporation (the Corporation) and its subsidiary, the Bank:

• The Bank's steady growth in the Petoskey market, coupled with Paycheck Protection Program (PPP) loans, resulted in net loan growth of $19.1 million year-over-year.
• Net premises and equipment assets increased year-over-year to $7.6 million with the purchase of the Petoskey News Review and Print Shop buildings in downtown Petoskey. A feasibility study of the property has commenced with plans to convert the site to the Bank's permanent Petoskey branch within the next year.
• As a result of the Bank's continued growth in the greater Petoskey market and funds from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, deposits grew exponentially by $121.7 million year-over-year. The influx in deposits generated investment security growth of $66.8 million for this same time period.
• In spite of the Bank's growth in both loans and investments, net interest income declined $60,000 as a result of the required 1% interest rate on PPP loans and reduced rates on new invest- ments.
• Offsetting the lower interest income, the residential lending team continued their strong performance in the first quarter, with net gain from sale of loans increasing $456,000 year-over- year.
• In total, net income increased year-over-year by $96,000, which resulted in earnings-per-share increasing from $0.45 to $0.53.

The Bank's participation in the second round of PPP loans is a continuance of its support for our customers through the even slower winter months brought on by the pandemic. More than ever, the Bank is committed to helping local businesses and communities

. . . . . . . . . . . . . . . . . . . . . . . .	______	______
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	406,314	284,617
Accrued and other liabilities. . . . . . . . . . . . . . . . . . . . . .	5,569	5,155
	______	______
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	411,883	289,772
SHAREHOLDERS' EQUITY
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3,027	3,027
Additional Paid-InCapital . . . . . . . . . . . . . . . . . . . . . . . . .	19,472	19,473
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6,376	4,556
Accumulated other
Comprehensive Income/(Loss), net . . . . . . . . .	833	1,696
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . .	29,708	28,572
Total liabilities and shareholders' equity . . . . . . .	$441,591	$318,524
	_______	_______
	_______	_______

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

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

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

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

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

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

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

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

BASIC NET INCOME PER SHARE . . . . . . . . .

	1,741		1,553		1,266
	314		310		289
	54		33		30
	813		767		800
______	______	______
	2,922		2,663		2,385
______	______	______
	779		661		733
	135		113		132
______	______	______
$	644	$	548	$	601
______	______	______
______	______	______
$	0.53	$	0.45	$	0.50
______	______	______
______	______	______

during this uncertain time; all the while, we are optimistic for a more traditional Northern Michigan summer.

Rebecca Tomaski has announced her retirement at year-end, with her replacement, Jessica Smith, transitioning into her new role throughout the year. Going forward, Jessica will become your main contact for relevant shareholder matters.

For those who can attend, I look forward to seeing you at the Annual Meeting of Shareholders on Thursday, May 20, 2021 at the Knights of Columbus Hall in Cheboygan. Current restrictions prevent us from hosting a dinner this year, but we hope for a return to tradition at our 2022 meeting.

Sincerely,

Matthew E. Keene

President & CEO