CNB COMMUNITY BANCORP, INC. REPORTS RECORD SECOND QUARTER 2020 RESULTS

CNB Community Bancorp, Inc. (OTC: CNBB), the parent company of County National Bank, today announced earnings for the three and six months ended June 30, 2020. Earnings during the second quarter of 2020 totaled $2.8 million, an increase of $438,000 or 16.7% compared to the $2.4 million earned during the three months ended June 30, 2019. Basic earnings per share for CNB Community Bancorp, Inc. (the “Company”) increased to $1.33 during the three months ended June 30, 2020, up $0.19 from $1.14 during the second quarter of 2019. For the six months ended June 30, 2020, the Company reported net income of $5.2 million, an increase of $523,000, or 11.3%, from the $4.6 million earned during the six months ended June 30, 2019. Basic earnings per share increased to $2.44 during the six months ended June 30, 2020, up $0.23 from $2.21 during the first six months of 2019.

The annualized return on average assets (ROA) decreased to 1.36% for the three months ended June 30, 2020, slightly down from 1.37% for the three months ended June 30, 2019. The annualized return on average equity (ROE) increased to 16.9% for the current quarter, up from 16.2% for the second quarter of 2019. ROA decreased to 1.30% during the six months ended June 30, 2020, down six basis points from the 1.36% during the first six months of 2019. ROE was 15.9% during the first half of 2020, down from 16.1% during the sixmonth period ended June 30, 2019. Book value per share increased to $32.19 at June 30, 2020, up $3.47 from $28.72 at June 30, 2019.

John R. Waldron, President and Chief Executive Officer of CNB Community Bancorp, Inc. and County National Bank, stated, “The last three months have tested all of us, yet I consistently see individuals, businesses, towns and communities prove their resilience. At County National Bank, our staff continues to maintain a safe work environment and displays a strong work ethic. The combined efforts of our customers and employees will continue to move us all forward. Although we have challenges ahead, I am pleased that we have all stayed the course and that CNB is reporting record earnings for the second quarter of 2020.”

Financial Highlights

• Total assets increased $261.1 million, or 38.0%, to $947.9 million from June 30, 2019 and $210.5 million, or 28.5% from December 31, 2019.
• Net loans increased $186.4 million, or 32.2%, to $765.9 million at June 30, 2020 compared to $579.5 million at June 30, 2019 and increased $143.3 million, or 23.0%, from December 31, 2019.
• Total deposits increased $242.8 million, or 40.1%, to $847.7 million at June 30, 2020 from $604.9 million at June 30, 2019 and increased $195.7 million, or 30.0% from December 31, 2019.
• Book value per share increased $3.47, or 12.1%, to $32.19 at June 30, 2020, up from $28.72 at June 30, 2019 and up $2.08 from $30.11 at December 31, 2019.
• Total equity increased $7.9 million to $68.1 million from June 30, 2019.
• Net income increased $438,000, 18.4%, to $2.8 million in the second quarter of 2020 and basic EPS increased $0.19, or 16.7%, to $1.33 from $1.14 in the second quarter of 2019.
• Net interest income for the second quarter of 2020 increased $697,000 to $7.8 million.
• Pre-tax, pre-provision income increased $1.1 million to $4.2 million in the second quarter of 2020, compared to $3.1 million in the second quarter of 2019.

Balance Sheet Review

The Company’s assets totaled $947.9 million at June 30, 2020 compared to $737.4 million at December 31, 2019, and $686.8 million at June 30, 2019. The increase in assets was predominately related to the Payroll Protection Program (the “PPP”), a fully government supported loan program for small businesses. This Small Business Association backed government program is resultant from the economic devastation of COVID-19, which includes business shutdowns, significant unemployment and a reduction in spending. The Bank has processed over 950 loans that total over $130 million in relief loans to the communities served.

The loan portfolio at June 30, 2020 included: $332.2 million in commercial real estate loans, $155.9 million in commercial loans, $131.1 in PPP loans, $121.4 in residential real estate loans and $37.5 million in consumer loans.

Nonperforming assets (which are predominately comprised of nonperforming loans and other real estate owned (“OREO”)) at June 30, 2020 were $3.3 million compared to $3.2 million at December 31, 2019 and $2.3 million at June 30, 2019. Nonperforming assets as a percentage of total assets decreased to 0.40% at June 30, 2020 from 0.44% at December 31, 2019 and increased from 0.33% at June 30, 2019.

Nonperforming loans at June 30, 2020 were $3.2 million, an increase of $200,000, or 6.7%, from the $3.0 million balance at December 31, 2019 and an increase of $1.0 million, or 45.4%, from the $2.2 million balance at June 30, 2019. Nonperforming loans as a percentage of total loans remained flat at 0.48% at June 30, 2020, as compared to 0.47% at December 31, 2019 and increased from 0.38% at June 30, 2019.

During the second quarter of 2020, there was recorded a provision for loan losses of $700,000, which is an increase of $372,000 from a provision of $328,000 recorded during the fourth quarter of 2019 and $600,000 from a provision of $100,000 recorded during the second quarter of 2019. Net recoveries totaled $10,000 during the second quarter of 2020 compared to net charge-offs of $37,000 in the fourth quarter of 2019 and net charge- offs of $2,000 in the second quarter of 2019.

Net charge-offs as a percentage of average loans was (0.01)% for second quarter of 2020, which was a decrease from the 0.04% from the fourth quarter of 2019 and the 0.03% from the second quarter of 2019. The allowance for loan losses totaled $8.4 million at June 30, 2020 compared to $7.5 million at December 31, 2019 and $7.1 million at June 30, 2019. The allowance for loan losses as a percentage of total loans increased from 1.18% at December 31, 2019 and from 1.21% at June 30, 2019 to 1.28% at June 30, 2020. The fluctuation in the required allowance for loan losses is directly attributable to the potential impact of deteriorating economic conditions in the region, due to COVID-19, inherent in the portfolio. Continued economic disruption from the COVID- 19 virus has the potential to impact the portfolio for the immediate future. The allowance will continue to be adjusted based upon these current and potential ramifications to the portfolio.

Total investment securities that exclude Federal Home Loan Bank of Indianapolis, United Bankers Bank and Federal Reserve Bank stock aggregated to $33.6 million at June 30, 2020, an increase of 1.0% from $33.3 million at December 31, 2019 and 28.2% from $26.2 million at June 30, 2019. This increase was largely a result of budgeted purchases made late in 2019 and early 2020 that were partially offset by maturities of municipals and certificate of deposits combined with a material increase in amortization of purchase premiums and paydowns. The Bank continues to focus on growing the portfolio through prudent investment in securities that align with the Bank’s investment criteria regardless of the rate environment.

Noninterest bearing deposits have increased by $91.9 million (56.7%) from $162.1 million at December 31, 2019 and $115.1 million (82.9%) from $138.9 million one year ago. Interest bearing deposits have increased from $489.9 million at December 31, 2019 and $466.1 million at June 30, 2019 to $593.7 million at June 30, 2020. The growth in deposits is still a result of ongoing efforts by our employees with significant credit given to our Treasury Management team; however, a predominate portion of the PPP loans funded by the Bank have been maintained at the Bank. The Bank will continue to monitor the deposit accounts for fluctuations based upon usage of the PPP loans.

Total shareholders’ equity increased by $4.4 million (6.9%) from $63.7 million at December 31, 2019 and $7.9 million (13.1%) from $60.2 million one year ago. The $4.4 million increase was mainly related to earnings during 2020 of $5.2 million and a change in other comprehensive income of $359,000, which were partially offset by two $0.26 per share cash dividends totaling $1.1 million.

2019 to 2020. The resultant interest expense was less impactful as seen in a cost of funds for the second quarter of 2020 that was 0.49% compared to 0.58% in 2019 and a cost of funds in the first half of 2020 that was 0.49% compared to 0.56% in the first half of 2019.

Net interest margin is net interest income expressed as a percentage of average interest-earning assets. For the quarter ended June 30, 2020, the net interest margin on a fully taxable equivalent basis fell to 3.86% from 4.41% and for the six months ended June 30, 2020 decreased to 3.93% from 4.41% for the six months ended June 30, 2019. Much of the decrease in margin is a product of the 150-basis point drop in rates at the end of the first quarter of 2020. Furthermore, PPP loan yields are also reducing yields on earning assets.

Noninterest Income/Expense

During the three months ended June 30, 2020, noninterest income totaled $2.7 million, an increase of $907,000 from the three months ended June 30, 2019 and was $4.8 million, an increase of $1.3 million (38.5%), for the six months ended June 30, 2020 from $3.5 million in the first six months of 2019. For both periods, the increase in noninterest income was predominately related to an increase in gain on sale of mortgage loans from $428,000 in the second quarter of 2019 to $1.5 million in 2020 and from $885,000 in the first half of 2019 to $2.3 million in 2020.

Noninterest expense totaled $6.3 million during the three months ended June 30, 2020 an increase of $462,000 from the second quarter of 2019 and increased $946,000 (8.3%) from $11.4 million for the six months ended June 30, 2019 to $12.4 million for the same period in 2020. The largest component of the increase is due to an increase in salary and employee benefit expense of $289,000 (8.2%) from the second quarter of 2019 to 2020 and $451,000 from the first half of 2019 to the first half of 2020 primarily due to credit related incentives.

About CNB Community Bancorp, Inc.

CNB Community Bancorp, Inc. (OTC:CNBB) is a one-bank holding company formed in 2005. Its subsidiary bank, County National Bank, is a nationally chartered full-service bank, which has served its local communities since its founding in 1934. CNB Community Bancorp, Inc. is headquartered in Hillsdale, Michigan and through its subsidiary bank offers banking products along with investment management and trust services to communities located throughout South Central Michigan.

Investor Contact: Erik A. Lawson, CFO, erik.lawson@cnbb.bank 517-439-6115

Media Contacts: Craig S. Connor, Chairman of the Board, and John R. Waldron, President & CEO

Safe Harbor Statement

This news release and other releases and reports issued by the Company may contain "forward-looking statements." The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company is including this statement for purposes of taking advantage of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.