ANNUAL REPORT COMUNIBANC CORP. December 31, 2016 and 2015

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2 Comunibanc Corp. Page 1 ANNUAL REPORT COMUNIBANC CORP. December 31, 2016 and 2015 TABLE OF CONTENTS DEAR SHAREHOLDERS AND FRIENDS... 3 INDEPENDENT AUDITORS REPORT... 4 FINANCIAL STATEMENTS Consolidated Balance Sheets... 5 Consolidated Statements of Operations... 6 Consolidated Statements of Comprehensive Income (Loss)... 7 Consolidated Statements of Shareholders Equity... 8 Consolidated Statements of Cash Flows... 9 Notes to Consolidated Financial Statements FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA DIRECTORS AND MANAGEMENT TEAM... 36

3 Page 2 Comunibanc Corp. TRADITION OF

4 Comunibanc Corp. Page 3 Dear Shareholders & Friends: The financial results for 2016 were favorable although not at the performance level of several years ago due to the lack of growth and expansion within our local economy resulting in weak lending activity. On a positive note, our new branch in downtown Bowling Green is growing as we establish solid relationships with businesses and individuals in Bowling Green and Wood County communities. In 2016 we continued to evaluate our banking services and products to our customers and to further complement our array of internet banking products we introduced HCB Mobile Banking. We anticipate 2017 to bring various challenges to the Bank such as declining margins, flat yield curves, and the ever complex and burdensome regulations coupled with its cost to administrate for compliance. Additionally, it is important to assess our market area and beyond for new growth opportunities and to further develop, maintain, and build upon long-term customer relationships based on our personal service. We extend a sincere thank you to our shareholders and customers for your trust, confidence, and patronage. With your support and promotion, we strive to achieve the goal of success ultimately bringing enhancement to the investment you have made. Sincerely, COMUNIBANC CORP. William L. Wendt President/C.E.O.

5 Page 4 Comunibanc Corp. CliftonLarsonAllen LLP CLAconnect.com Shareholders and Board of Directors Comunibanc Corp. and Subsidiary Napoleon, Ohio INDEPENDENT AUDITORS REPORT Report on Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Comunibanc Corp. and its subsidiary, which comprise the consolidated balance sheets as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income (loss), changes in shareholders equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Comunibanc Corp. and its subsidiary as of December 31, 2016 and 2015, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. a CliftonLarsonAllen LLP Toledo, Ohio February 24, 2017

6 Comunibanc Corp. Page 5 CONSOLIDATED BALANCE SHEETS ASSETS CASH AND CASH EQUIVALENTS Cash and due from banks $ 1,451,031 $ 1,861,818 Interest-bearing deposits in other banks 6,992,007 9,915,190 Total cash and cash equivalents 8,443,038 11,777,008 Certificates of deposit in other banks 2,745,000 2,000,000 Securities, available-for-sale 140,999, ,348,543 Restricted stock, at cost 1,553,375 1,553,375 Loans, net of allowance for loan losses of $1,678,697 in 2016 and $2,039,779 in ,602, ,364,531 Premises and equipment, net 5,534,738 5,710,852 OTHER ASSETS Cash value of life insurance 5,841,207 5,724,289 Accrued interest receivable 793, ,873 Other real estate owned, net of valuation allowance of $6,700 in , ,646 Other 3,193,173 2,048,275 Total other assets 9,994,059 8,883,083 TOTAL ASSETS $ 280,872,287 $ 276,637,392 LIABILITIES AND SHAREHOLDERS EQUITY LIABILITIES Deposits: Demand accounts $ 80,057,575 $ 74,128,188 Savings accounts 50,284,738 51,481,462 Certificates of deposit and other time accounts 93,927, ,373,439 Total deposits 224,269, ,983,089 Federal Home Loan Bank borrowings 27,697,786 20,165,932 Other liabilities 3,208,432 3,180,753 Total liabilities 255,175, ,329,774 SHAREHOLDERS EQUITY Common stock, no par value. Authorized 2,000,000 shares; issued and outstanding 828,504 shares, at stated value 2,071,260 2,071,260 Surplus 1,288,478 1,288,478 Undivided profits 23,792,207 23,036,683 Accumulated other comprehensive income (loss) (1,455,214) 911,197 Total shareholders equity 25,696,731 27,307,618 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $ 280,872,287 $ 276,637,392 See accompanying Notes to Consolidated Financial Statements.

7 Page 6 Comunibanc Corp. CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED INTEREST INCOME Interest and fees on loans $ 5,603,242 $ 5,558,649 Securities: Obligations of U.S. Government Agencies and corporations 166, ,926 Obligations of states and political subdivisions 1,279,744 1,438,715 Mortgage-backed 1,896,858 1,760,389 Dividends on restricted stock 62,421 62,218 Other 118,244 59,994 Total interest income 9,127,427 9,284,891 INTEREST EXPENSE Deposits 843, ,361 Other borrowings 503, ,138 Total interest expense 1,347,285 1,246,499 Net interest income 7,780,142 8,038,392 PROVISION FOR LOAN LOSSES 450,000 1,020,000 Net interest income after provision for loan losses 7,330,142 7,018,392 NON-INTEREST INCOME Service charges on deposit accounts 250, ,156 Net securities gains 431, ,466 Net gains on sale of loans 136, ,510 Other operating income 538, ,456 Total non-interest income 1,357,683 1,453,588 NON-INTEREST EXPENSES Salaries and wages 3,239,800 2,949,742 Employee benefits 985, ,935 Occupancy expense 599, ,054 Data services 505, ,130 Professional fees, including collection and examinations 306, ,473 Committee and director fees 152, ,100 Advertising 204, ,367 FDIC premium assessments 219, ,435 Ohio financial institution tax 218, ,980 Other operating expenses 826, ,860 Total non-interest expenses 7,259,668 7,005,076 Earnings before federal income taxes 1,428,157 1,466,904 PROVISION (CREDIT) FOR FEDERAL INCOME TAXES 26,400 (15,200) NET EARNINGS $ 1,401,757 $ 1,482,104 NET EARNINGS PER SHARE, based on 828,504 shares $ 1.69 $ 1.79 See accompanying Notes to Consolidated Financial Statements.

8 Comunibanc Corp. Page 7 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) YEARS ENDED NET EARNINGS $ 1,401,757 $ 1,482,104 OTHER COMPREHENSIVE INCOME (LOSS) Change in unrealized gains (losses) on available-for-sale securities (3,154,062) (222,823) Reclassification adjustment for net securities gains included in earnings (431,409) (376,466) Net unrealized losses (3,585,471) (599,289) Income tax effect (1,219,060) (203,758) Other comprehensive loss (2,366,411) (395,531) TOTAL COMPREHENSIVE INCOME (LOSS) $ (964,654) $ 1,086,573 See accompanying Notes to Consolidated Financial Statements.

9 Page 8 Comunibanc Corp. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY YEARS ENDED Accumulated Other Total Common Undivided Comprehensive Shareholders Stock Surplus Profits Income (Loss) Equity BALANCE, DECEMBER 31, 2014 $ 2,071,260 $ 1,288,478 $ 22,200,812 $ 1,306,728 $ 26,867,278 Net earnings - - 1,482,104-1,482,104 Other comprehensive loss (395,531) (395,531) Cash dividends paid, $.78 per share - - (646,233) - (646,233) BALANCE, DECEMBER 31, ,071,260 1,288,478 23,036, ,197 27,307,618 Net earnings - - 1,401,757-1,401,757 Other comprehensive loss (2,366,411) (2,366,411) Cash dividends paid, $.78 per share - - (646,233) - (646,233) BALANCE, DECEMBER 31, 2016 $ 2,071,260 $ 1,288,478 $ 23,792,207 $ (1,455,214) $ 25,696,731 See accompanying Notes to Consolidated Financial Statements.

10 Comunibanc Corp. Page 9 CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 1,401,757 $ 1,482,104 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 428, ,823 Provision for loan losses 450,000 1,020,000 Deferred federal income taxes 2,360 (92,342) Net amortization of securities 1,411,284 1,002,235 Increase in cash value of life insurance (116,918) (123,536) Net securities gains (431,409) (376,466) Net gains on sale of loans (136,740) (151,510) Net loss from sale or write-down of other real estate owned 9,922 53,140 Gain on disposal of equipment (668) - Effects of changes in operating assets and liabilities: Accrued interest receivable (9,806) 15,151 Other assets 4,002 16,111 Other liabilities 27, ,874 Proceeds from sales of loans held-for-sale 4,830,239 6,602,467 Origination of loans held-for-sale (4,721,830) (6,499,050) Net cash provided by operating activities 3,148,517 3,522,001 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales and maturities of securities 42,226,672 47,842,399 Proceeds from sales of other real estate owned 542, ,456 Purchases of securities (55,442,838) (54,846,751) Net purchases of certificates of deposit in other banks (745,000) (2,000,000) Net decrease (increase) in loans 1,919,915 (2,329,327) Capital expenditures (159,074) (376,869) Proceeds from disposal of equipment 3,342 - Net cash used by investing activities (11,654,357) (11,589,092) CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease) in deposits (1,713,751) 11,933,913 Federal Home Loan Bank borrowings: Proceeds 27,700,000 43,800,000 Repayments (20,168,146) (44,016,488) Cash dividends paid (646,233) (646,233) Net cash provided by financing activities 5,171,870 11,071,192 NET CHANGE IN CASH AND CASH EQUIVALENTS (3,333,970) 3,004,101 CASH AND CASH EQUIVALENTS At beginning of Year 11,777,008 8,772,907 At end of Year $ 8,443,038 $ 11,777,008 See accompanying Notes to Consolidated Financial Statements.

11 Page 10 Comunibanc Corp. NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Comunibanc Corp. (the Company) was incorporated on August 27, 1996 in the state of Ohio. The Company is a bank holding company and has one wholly-owned subsidiary, The Henry County Bank (the Bank). The Bank, an Ohio chartered bank organized in 1936, operates in the commercial banking industry and has its main office and two branch offices in Napoleon, Ohio, as well as branches in Bowling Green, Holgate, Liberty Center, and Malinta, Ohio. The Bank s primary source of revenue is providing loans to customers located principally in the Henry and Wood County areas. Such customers are predominantly small and middle-market businesses, farmers and individuals. Significant accounting policies followed by the Company are presented below. Use of Estimates in Preparing Financial Statements In preparing consolidated financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates susceptible to change in the near term relate to the valuation of the allowance for loan losses and fair value of available-for-sale securities. Principles of Consolidation The consolidated financial statements include the accounts of the Company and the Bank. All significant intercompany balances and transactions have been eliminated in consolidation. Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash on hand, due from banks, and federal funds sold which mature overnight or within four days. Certificates of Deposit in Other Banks Interest-bearing time deposits in other banks are carried at cost. Securities Securities are classified as available-for-sale and recorded at fair value, with unrealized gains and losses excluded from earnings and reported as accumulated other comprehensive income or loss. The cost of available-for-sale debt securities is adjusted for amortization of premiums and accretion of discounts. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Declines in fair value of securities below their cost that are deemed to be other than temporary are reflected in income as realized losses. In estimating other-than-temporary impairment losses, management considers (1) the intent to sell the securities and the more likely than not requirement for the Company will be required to sell the securities prior to recovery, (2) the length of time and the extent to which the fair value has been less than cost, and (3) the financial condition and near-term proposals of the issuer. Gains and losses on the sale of securities are recorded on the trade date, using the specific identification method, and are included in non-interest income.

12 Comunibanc Corp. Page 11 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Restricted Stock Restricted stock is carried at cost and evaluated for impairment. Restricted stock at December 31, 2016 and 2015 principally consists of Federal Home Loan Bank of Cincinnati (FHLB) stock of $1,547,700. Loans Held for Sale Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to earnings. The Bank had no loans held for sale at December 31, 2016 and Loans The Bank makes real estate, commercial and consumer loans to customers. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Interest is accrued on the unpaid principal balance. Loan origination fees and direct origination costs are capitalized and recognized as an adjustment of the yield of the related loan using the interest method. The accrual of interest on mortgage and commercial loans is generally discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Consumer loans are typically charged-off no later than when they become 150 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual or chargedoff at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or charged-off is reversed against interest income. Interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. Allowance for Loan Losses The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a regular basis by management and is based upon management s periodic review of the collectibility of loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Due to potential changes in conditions, it is at least reasonably possible that changes in estimates will occur in the near term and that such changes could be material to the amounts reported in the Company s consolidated financial statements.

13 Page 12 Comunibanc Corp. NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Allowance for Loan Losses, Continued The allowance consists of specific, general and unallocated components. The specific component relates to impaired loans when the discounted cash flows, collateral value, or observable market price of the impaired loan is lower than the carrying value. The general component covers classified loans (substandard or special mention) without specific reserves, as well as nonclassified loans, and is based on historical loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan s effective interest rate, the loan s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Under certain circumstances, the Bank may provide borrowers relief through loan restructurings. A restructuring of debt constitutes a troubled debt restructuring (TDR) if the Bank, for economic or legal reasons related to the borrower s financial difficulties, grants a concession to the borrower that it would not otherwise consider. Concessions may include reduction of interest rates, extension of maturity dates, forgiveness of principal or interest due, or acceptance of other assets in full or partial satisfaction of the debt. TDR loans typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms. Loans that are reported as TDRs are considered impaired and measured for impairment, as previously described. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual consumer loans for impairment disclosures. Other Real Estate Owned Assets acquired through or in lieu of foreclosure are initially recorded at fair value, less estimated costs to sell, and any loan balance in excess of such value is charged to the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed and any further writedowns are included in other operating expenses, as are gains or losses upon sale and expenses related to maintenance of the properties. Premises and Equipment Premises and equipment are stated at cost, less accumulated depreciation. Depreciation is determined based on the estimated useful lives of the individual assets, which generally range from 15 to 40 years for buildings and improvements and 5 to 10 years for other depreciable assets, and is computed primarily using the straight-line method.

14 Comunibanc Corp. Page 13 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Premises and Equipment, Continued Premises and equipment are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value. Cash Value of Life Insurance The Bank has purchased life insurance policies on certain directors and officers. Bank owned life insurance is recorded at the amount that can be realized at the balance sheet date under the insurance contracts, which is the cash surrender value adjusted for any charges or other amounts at settlement. Servicing Mortgage loans sold are generally sold with the mortgage servicing rights retained by the Bank. The carrying value of mortgage loans sold is reduced by the cost allocated to the associated mortgage servicing rights. Gains or losses on sales of mortgage loans are recognized based on the difference between the selling price and the carrying value of the related mortgages sold. Mortgage servicing rights are recognized as an asset when acquired through sale of loans, reported in other assets, and amortized to expense in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Mortgage servicing rights are evaluated for impairment based upon the estimated fair value of the rights as compared to amortized cost. Fair value is determined based upon estimated discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance to the extent that fair value is less than the capitalized amount. Servicing fee income is recorded for fees earned for servicing loans and is included in other operating income, net of amortization of mortgage servicing rights. Supplemental Retirement Benefits Annual provisions are made for the estimated liability for accumulated supplemental retirement benefits under agreements with certain officers and directors. These provisions are determined based on the terms of the agreements, as well as certain assumptions including estimated service periods and discount rates. Rate Lock Commitments Loan commitments related to the origination or acquisition of mortgage loans that will be held for sale are accounted for as derivative instruments. The Bank enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (rate lock commitments). Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Accordingly, such commitments, along with any related fees received from potential borrowers, are to be recorded at fair value as derivative assets or liabilities, with changes in fair value recorded in the net gain or loss on sale of mortgage loans. Fair value is based on fees currently charged to enter into similar agreements, and for fixed-rate commitments also considers the difference between current levels of interest rates and the committed rates. At December 31, 2016 and 2015, derivative assets and liabilities relating to rate lock commitments were not material to the consolidated financial statements.

15 Page 14 Comunibanc Corp. NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Comprehensive Income (Loss) Recognized revenue, expenses, gains and losses are included in net earnings. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the consolidated balance sheet, such items, along with net earnings, are components of comprehensive income (loss). Off-Balance Sheet Credit Related Financial Instruments In the ordinary course of business, the Bank enters into commitments to extend credit, including commitments under loan arrangements, commercial letters of credit, and standby letters of credit. The face amount for these items represents the exposure to loss, before considering customer collateral on ability to repay. Such financial instruments are recorded when they are funded. Transfers of Financial Assets Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Bank, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. The transfer of a participating interest in a financial asset must have all of the following characteristics: (1) from the date of transfer, it must represent a proportionate ownership interest in the financial asset, (2) from the date of transfer, all cash flows received, except cash flows allocated as compensation for servicing or other services performed, must be divided proportionately among participating interest holders in the amount equal to their share ownership, (3) the rights of each participating interest holder must have the same priority, and (4) no party has the right to pledge or change the entire financial asset unless all participating interest holders agree to do so. Income Taxes The Company and Bank are currently subject to federal income taxes, but no state or local income taxes. Deferred income taxes are provided on temporary differences between financial statement and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their tax bases. Deferred tax assets are recognized for temporary differences that will be deductible in future years tax returns and for operating loss and tax credit carryforwards. Deferred tax assets are recognized only if it is more-likely-than-not that a tax position will be realized or sustained upon examination by the relevant taxing authority. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. Deferred tax assets are reduced by a valuation allowance if it is deemed more-likely-than-not that some or all of the deferred tax assets will not be realized. Deferred tax liabilities are recognized for temporary differences that will be taxable in future years. Management does not believe it has any significant uncertain tax positions at December 31, Tax years that remain open and subject to examination at December 31, 2016 are years

16 Comunibanc Corp. Page 15 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Advertising Expenditures for advertising and promotions are expensed as incurred. Per Share Data Net earnings per share is computed based on the weighted average number of shares of common stock outstanding during each year, after restatement for any stock dividends. Dividends per share are based on the number of shares outstanding on the declaration date. Reclassifications Certain reclassifications of 2015 amounts have been made to conform with the 2016 presentation. Subsequent Events Management evaluated subsequent events through February 24, 2017, the date the consolidated financial statements were available to be issued. NOTE 2 - NEW ACCOUNTING PRONOUNCEMENTS In January 2016, the FASB issued ASU , Financial Instruments - Overall to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Among other provisions not applicable to the Company, the amendments eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities (PBEs), eliminate the requirement for PBEs to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments for disclosure purposes, and require PBEs to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The amendments in ASU are effective for fiscal years beginning after December 15, 2016 with early adoption permitted for certain provisions of the amendment. The Company has determined that it does not meet the definition of a PBE under ASU and as a result has elected to not disclose the fair value of financial instruments measured at amortized cost. There has been no other impact on the Company s accompanying consolidated financial statements as a result of the adoption of ASU In June 2016, the FASB issued ASU , Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For non-public companies, this update will be effective for annual periods beginning after December 15, The Company has not yet determined the impact the adoption of ASU will have on the consolidated financial statements.

17 Page 16 Comunibanc Corp. NOTE 3 - SECURITIES The amortized cost and fair value of securities as of December 31, 2016 and 2015 are as follows: Amortized Fair Amortized Fair cost value cost value Obligations of U.S. Government agencies and corporations $ 7,720,886 $ 7,359,942 $ 6,447,638 $ 6,468,782 Obligations of states and political subdivisions 42,031,142 41,945,448 40,510,905 41,981,099 Mortgage-backed securities 93,452,204 91,693,973 84,009,398 83,898,662 Total securities $ 143,204,232 $ 140,999,363 $ 130,967,941 $ 132,348,543 A summary of gross unrealized gains and losses on securities at December 31, 2016 and 2015 follows: Gross Gross Gross Gross unrealized unrealized unrealized unrealized gains losses gains losses Obligations of U.S. Government agencies and corporations $ - $ 360,945 $ 40,412 $ 19,268 Obligations of states and political subdivisions 564, ,395 1,538,453 68,259 Mortgage-backed securities 126,067 1,884, , ,456 Total $ 690,768 $ 2,895,637 $ 1,974,585 $ 593,983 The amortized cost and fair value of securities at December 31, 2016, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Cost Fair Value Due in one year or less $ 3,109,234 $ 3,158,197 Due after one year through five years 71,752,749 70,867,385 Due after five years through ten years 43,456,470 42,508,667 Due after ten years 24,885,779 24,465,114 Total $ 143,204,232 $ 140,999,363 Sales and maturities (including calls) of available-for-sale securities resulted in gross realized gains of $431,409 in 2016 and $412,284 in 2015, with applicable income taxes amounting to $146,679 in 2016 and $140,177 in 2015, and gross realized losses of $35,818 in 2015 (none in 2016), with applicable income taxes amounting to $12,178.

18 Comunibanc Corp. Page 17 NOTE 3 - SECURITIES (CONTINUED) The following table presents gross unrealized losses and fair value of securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2016 and 2015: Securities in a Continuous Unrealized Loss Position Less than 12 Months 12 Months or more Total Unrealized Fair Unrealized Fair Unrealized Fair losses value losses value losses value 2016 Obligations of U.S. Government agencies and corporations $ 360,945 $ 7,359,942 $ - $ - $ 360,945 $ 7,359,942 Obligations of states and political subdivisions 607,849 18,884,577 42, , ,395 19,019,306 Mortgage-backed securities 1,872,184 77,461,566 12, ,027 1,884,297 78,035,593 Total $ 2,840,978 $ 103,706,085 $ 54,659 $ 708,756 $ 2,895,637 $ 104,414,841 Securities in a Continuous Unrealized Loss Position Less than 12 Months 12 Months or more Total Unrealized Fair Unrealized Fair Unrealized Fair losses value losses value losses value 2015 Obligations of U.S. Government agencies and corporations $ 9,014 $ 2,483,206 $ 10,254 $ 1,984,900 $ 19,268 $ 4,468,106 Obligations of states and political subdivisions 63,741 1,997,073 4, ,446 68,259 2,931,519 Mortgage-backed securities 403,213 52,410, ,243 6,059, ,456 58,469,636 Total $ 475,968 $ 56,890,699 $ 118,015 $ 8,978,562 $ 593,983 $ 65,869,261 At December 31, 2016, there were 139 securities in an unrealized loss position, two of which were in a continuous unrealized loss position for 12 months or more. At December 31, 2015, there were 61 securities in an unrealized loss position, 14 of which were in a continuous loss position for 12 months or more. Management has considered industry analyst reports, whether downgrades by bond rating agencies have occurred, sector credit reports, issuer s financial condition, and volatility in the bond market in concluding that the unrealized losses as of December 31, 2016 and 2015 were primarily the result of customary and expected fluctuations in the bond market related to changes in interest rates. As a result, all security impairments as of December 31, 2016 and 2015 are considered temporary. Securities with carrying values of $105,796,000 and $90,750,000 at December 31, 2016 and 2015, respectively, were pledged to secure public deposits, and for other purposes as required or permitted by law.

19 Page 18 Comunibanc Corp. NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES Net loans at December 31, 2016 and 2015 consist of the following: Real estate $ 92,281,131 $ 95,517,805 Consumer 8,080,629 8,428,333 Commercial 12,973,047 12,518, ,334, ,464,246 Less: Allowance for loan losses (1,678,697) (2,039,779) Deferred loan fees (53,396) (59,936) Loans, net $ 111,602,714 $ 114,364,531 Fixed rate loans approximated $32,008,000 and $29,918,000 at December 31, 2016 and 2015, respectively. A substantial portion of the loan portfolio is represented by mortgage and commercial loans throughout the Bank s primary lending area, which consists of Henry and Wood Counties and the surrounding areas. The ability of the Bank s customers to honor their contracts is dependent upon the real estate and general economic conditions in this area. In evaluating the allowance for loan losses, loans are generally analyzed based on how loans are categorized for financial reporting purposes. Construction loans are underwritten utilizing independent appraisals, sensitivity analysis of absorption, vacancy and lease rates and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, general economic conditions and the availability of long-term financing. The Bank may require guarantees on these loans. The Bank s construction loans are secured primarily by properties located in its primary market area and are included in the real estate loan portfolio. The Bank originates 1-4 family real estate and consumer loans utilizing credit reports to supplement the underwriting process. The Bank s manual underwriting standards for 1-4 family loans are generally in accordance with FHLMC manual underwriting guidelines. Properties securing 1-4 four family real estate loans are appraised by either staff appraisers or fee appraisers, both of which are independent of the loan origination function and have been approved by the Board of Directors. The loan-to-value ratios normally do not exceed 80% without credit enhancements such as mortgage insurance. The Bank will lend up to 100% of the lesser of the appraised value or purchase price for conventional 1-4 family real estate loans, provided private mortgage insurance is obtained.

20 Comunibanc Corp. Page 19 NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) The underwriting standards for consumer loans include a determination of the applicant s payment history on other debts and an assessment of their ability to meet existing obligations and payments on the proposed loan. To monitor and manage loan risk, policies and procedures are developed and modified, as needed by management. This activity, coupled with smaller loan amounts that are spread across many individual borrowers, minimizes risk. Additionally, market conditions are reviewed by management on a regular basis. The Bank s 1-4 family real estate loans are secured primarily by properties located in its primary market area. Commercial and agricultural real estate loans are subject to underwriting standards and processes similar to commercial and agricultural operating loans, in addition to those unique to real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial and agricultural real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Loan to value is generally 75% of the cost or value of the assets. Appraisals on properties securing these loans are generally performed by fee appraisers approved by the Board of Directors. Because payments on commercial and agricultural real estate loans are often dependent on the successful operation or management of the properties, repayment of such loans may be subject to adverse conditions in the real estate market or the economy. Management monitors and evaluates commercial and agricultural real estate loans based on collateral and risk rating criteria. The Bank may require guarantees on these loans. The Bank s commercial and agricultural real estate loans are secured primarily by properties located in its primary market area. Commercial and agricultural operating loans are underwritten based on the Bank s examination of current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. This underwriting includes the evaluation of cash flows of the borrower, underlying collateral, if applicable, and the borrower s ability to manage its business activities. The cash flows of borrowers and the collateral securing these loans may fluctuate in value after the initial evaluation. A first priority lien on the general assets of the business normally secures these types of loans. Loan to value limits vary and are dependent upon the nature and type of the underlying collateral and the financial strength of the borrower. Crop and hail insurance is required for most agricultural borrowers. Loans are generally guaranteed by the individual borrowers. The Bank s commercial and agricultural operating lending is principally in its primary market area. The Bank has an internal credit analyst who reviews and validates credit risk on a periodic basis, as well as an external loan review performed annually or semi-annually. Results of the credit analyst and external loan reviews are presented to management and the Audit Committee. The credit analyst and loan review processes complement and reinforce the risk identification and assessment decisions made by lenders and credit personnel, as well as the Bank s policies and procedures.

21 Page 20 Comunibanc Corp. NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) The following is a summary of activity in the allowance for loan losses, as well as the Bank s recorded investment in loans, by portfolio segment and based on impairment method, as of and for the years ended December 31, 2016 and 2015: 2016 Commercial Real estate mortgage Commercial real estate 1st Lien Junior Lien Consumer Total Allowance for Loan Losses: Balance at January 1 $ 568,900 $ 1,014,280 $ 412,572 $ 21,307 $ 22,720 $ 2,039,779 Provision (credit) for loan losses (41,813) 479,733 (9,443) 6,472 15, ,000 Loans charged-off (106,671) (683,927) (153,419) - (38,064) (982,081) Recoveries 138,786 2,418 3,064-26, ,999 Balance at December , , ,774 27,779 26,438 1,678,697 Ending balance individually evaluated for impairment 80, , , ,854 Ending balance collectively evaluated for impairment $ 479,202 $ 689,650 $ 149,774 $ 27,779 $ 26,438 $ 1,372,843 Loans: Total loans: Ending balance $ 12,973,047 $ 42,047,747 $ 41,742,763 $ 8,490,621 $ 8,080,629 $ 113,334,807 Ending balance individually evaluated for impairment 368,131 5,904,457 2,975, ,248,272 Ending balance collectively evaluated for impairment $ 12,604,916 $ 36,143,290 $ 38,767,079 $ 8,490,621 $ 8,080,629 $ 104,086, Commercial Real estate mortgage Commercial real estate 1st Lien Junior Lien Consumer Total Allowance for Loan Losses: Balance at January 1 $ 586,155 $ 1,086,023 $ 247,878 $ 32,610 $ 31,679 $ 1,984,345 Provision (credit) for loan losses 554, , ,248 (11,303) 11,553 1,020,000 Loans charged-off (579,116) (284,000) (90,438) - (39,902) (993,456) Recoveries 7,616-1,884-19,390 28,890 Balance at December ,900 1,014, ,572 21,307 22,720 2,039,779 Ending balance individually evaluated for impairment 212, , ,643 9, ,790 Ending balance collectively evaluated for impairment $ 356,100 $ 648,009 $ 105,929 $ 12,231 $ 22,720 $ 1,144,989 Loans: Total loans: Ending Balance $ 12,518,108 $ 45,497,815 $ 42,085,038 $ 7,934,952 $ 8,428,333 $ 116,464,246 Ending balance individually evaluated for impairment 504,948 6,473,104 3,112,433 30,536-10,121,021 Ending balance collectively evaluated for impairment $ 12,013,160 $ 39,024,711 $ 38,972,605 $ 7,904,416 $ 8,428,333 $ 106,343,225

22 Comunibanc Corp. Page 21 NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) The following represents the recorded investment and number of troubled debt restructurings by class of loan as of December 31, 2016 and 2015: Specific Specific Number Amount reserve Number Amount reserve Commercial 7 $ 172,216 $ 33,800 5 $ 328,118 $ 67,654 Real estate: Commercial 7 5,647,774 54, ,896, ,755 Mortgage - first lien 14 2,556, , ,191, ,356 Total 28 $ 8,376,497 $ 190, $ 7,416,628 $ 575,765 During the year ended December 31, 2016, 15 loans were modified in troubled debt restructurings, consisting of five commercial, three commercial real estate, and seven first lien real estate loans. The aggregate outstanding balance of these loans amounted to $2,729,145 with specific reserves at December 31, 2016 aggregating $81,000. The modification of the terms of the loans that resulted in a TDR included either the extension of additional borrowings or the extension of the maturity date. The post-modification balances approximated the pre-modification balances. The Bank intends to lend no additional amounts to these customers. During the year ended December 31, 2015, 13 loans were modified in troubled debt restructurings, consisting of five commercial, five commercial real estate, and three first lien real estate loans. The aggregate outstanding balance of these loans amounted to $5,444,739 with specific reserves at December 31, 2015 aggregating $260,730. The modification of the terms of the loans that resulted in a TDR included either the extension of additional borrowings or the extension of the maturity date and the post-modification balances approximated the pre-modification balances. During 2012, the Bank entered into forbearance agreements with a loan customer experiencing financial difficulties which, among other things, extended the maturity of various loans to the customer. During 2014, the Bank lent approximately $141,000 and subsequently charged off $2,941,990 of loans to the customer, including the remaining outstanding balance of its commercial loans, as well as a significant portion of the commercial real estate loan. During 2015, the Bank extended additional borrowings approximating $349,000 and charged off $327,000 of loans to the customer. During 2016, the Bank extended additional borrowings approximating $65,000 and charged off $406,000 of loans to the customer.

23 Page 22 Comunibanc Corp. NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2016 and 2015: Unpaid Allowance Unpaid Allowance principal for loan losses principal for loan losses balance allocated balance allocated With no related allowance recorded: Commercial $ 116,467 $ - $ 48,340 $ - Commercial real estate 3,958,720-3,944,714 - Real estate (first lien) 2,437,763-2,505,522 - Real estate (junior lien) ,440 - With an allowance recorded: Commercial 251,664 80, , ,800 Commercial real estate 1,945, ,854 2,528, ,271 Real estate (first lien) 537, , , ,643 Real estate (junior lien) ,096 9,076 Total $ 9,248,272 $ 305,854 $ 10,121,021 $ 894,790 No additional funds are committed to be advanced in connection with impaired loans at December 31, 2016 and The average balance of impaired loans for the years ended December 31, 2016 and 2015 was approximately $9,684,000 and $6,049,000, respectively. Interest income recognized on impaired loans for the years ended December 31, 2016 and 2015 approximated $205,000 and $107,000, respectively, on a cash basis, and $196,000 and $133,000, respectively, on an accrual basis. The following tables present the aging of the recorded investment in past due and nonaccrual loans as of December 31, 2016 and 2015 by class of loans: Loans Past Due Accruing Interest Loans not past Over Loans on due or on days days 90 Total non-accrual non-accrual Total 2016 Commercial $ 234,686 $ 49,745 $ 67,607 $ 352,038 $ 150,102 $ 12,470,907 $ 12,973,047 Commercial real estate - 24,274 74,354 98,628 1,163,313 40,785,806 42,047,747 Real estate: First lien 382, , ,935 1,406,540 1,934,038 38,402,185 41,742,763 Junior lien 80,211-53, ,310-8,357,311 8,490,621 Consumer 19,202 2,940 8,349 30,491-8,050,138 8,080,629 Total $ 716,618 $ 180,045 $ 1,124,344 $ 2,021,007 $ 3,247,453 $ 108,066,347 $ 113,334,807

24 Comunibanc Corp. Page 23 NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) Loans Past Due Accruing Interest Loans not past Over Loans on due or on days days 90 Total non-accrual non-accrual Total 2015 Commercial $ 55,261 $ 134,086 $ - $ 189,347 $ 201,378 $ 12,127,383 $ 12,518,108 Commercial real estate 758,542 44,985 14, ,312 4,971,498 39,708,005 45,497,815 Real estate: First lien 1,686, ,660-1,943,168 2,949,187 37,192,683 42,085,038 Junior lien 93,871 12, ,988 11,440 7,817,524 7,934,952 Consumer 71,530 12,114-83,644-8,344,689 8,428,333 Total $ 2,665,712 $ 459,962 $ 14,785 $ 3,140,459 $ 8,133,503 $ 105,190,284 $ 116,464,246 Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes all loans from the commercial loan department. This analysis is performed at least annually. The Company uses the following definitions for risk ratings: Pass: Loans classified as pass have no existing or known potential weakness deserving of management s close attention. Special Mention: Loans classified as special mention have a potential weakness that deserves management s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company s credit position at some future date. Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.