**EXHIBIT
      13**


**ANNUAL
      REPORT TO STOCKHOLDERS**


**LETTER
      TO STOCKHOLDERS**





We
      are
      now in our tenth year of operation and are pleased to report record earnings
      of
      $1,084,307 for 2005, an increase of 86.2% over 2004. These strong earnings
      were
      primarily the result of increased loan volume and improved yields, and a high
      quality loan portfolio with minimal past dues. Low loan delinquency is an
      important efficiency of our loan operation and contributes substantially to
      our
      bottom line. Increased non-interest income and cost containment were also
      important elements that contributed to our profits. Our growth pattern continued
      with assets increasing by 7.8% and deposits by 5.8%. The company is very well
      capitalized, and capital rose from $15.7 million to $19.1 million, an increase
      of 22%. This includes $2.7 million from the sale of stock in connection with
      the
      exercise of warrants. Asset growth and strong capital bode well for our future.
      In 2006, we will focus on expanding our products and increasing our emphasis
      on
      customer satisfaction to achieve our objectives.





Recent
      economic data is uneven but the economy performed at a reasonable level during
      2005. Consumer spending throughout the country, a key element of economic
      stability, continues at a favorable rate. The Federal Reserve, in its effort
      to
      control inflation, had five rate increases in 2004 and eight more in 2005.
      These
      rate increases favorably impacted the company’s profit.





Technology
      and security are high priorities for County National Bank. During 2006, we
      plan
      to implement an improved Internet banking platform that will provide customers
      with additional access to account information while preserving security of
      that
      information. We are also planning to upgrade our data processing internal
      reporting system to provide better management information and marketing
      statistics.





We
      focused on cost efficiency at the beginning of 2005 and are looking to continue
      streamlining our internal procedures in 2006. We will further develop our
      marketing strategy to build our customer base and to bring greater visibility
      to
      the bank.





All
      of
      our four branches are profitable and we are ready to expand our market network
      with a new branch in Linthicum, MD. We are particularly excited about this
      location because of its proximity to the Baltimore Washington International
      Thurgood Marshall Airport. The new branch will provide a base of operation
      to
      service the many small businesses surrounding the airport. We plan to begin
      construction of the branch in late summer of 2006 and be up and running in
      the
      last quarter of 2006. Initial startup costs for the new branch will affect
      our
      profitability in the short term; however, based on past experience, we expect
      this branch to be profitable within eighteen to twenty-four months.





One
      of
      our ongoing goals is to increase value and liquidity of our stock. Numerous
      brokers make a market in our stock and trading activity is increasing. The
      market price of the stock fluctuated during 2005, with a high of $16.50 and
      a
      low of $13.50. Book value of the stock increased from $11.34 at year end 2004
      to
      $11.47 on December 31, 2005. The Board of Directors approved an increase in
      our
      quarterly cash dividend to $0.05 per share during 2005, and paid an additional
      bonus dividend of $0.05 per share on January 13, 2006 to stockholders of record
      on December 31, 2005. On an annual basis, the total dividend declared was $0.25
      per share. Our intent is to provide a return to our stockholders based on the
      company’s profits, and we have been able to increase our dividend each year.





It
      is
      with great sadness that we acknowledge the passing of Henry L. Hein. Henry
      was
      one of the founding organizers of CN Bancorp, Inc. and the first Chairman of
      the
      Board of County National Bank. He contributed very much to the formation and
      success of the company and the bank. His gentle, caring and sincere manner
      was
      reflective of his character. Henry was well known in Glen Burnie, Anne Arundel
      County and the State of Maryland for his outstanding community service. He
      will
      be missed by all of us, but not forgotten.





Your
      continued support of CN Bancorp and County National Bank is the core strength
      of
      our operation and we are confident that it will carry us forward. We thank
      you
      for your support. Please mark your calendars and join us for our Annual Meeting
      of Stockholders on Monday, May 15, 2006.











Jan
      W.
      Clark


Chairman/President/CEO





1








**BUSINESS
      OF CN BANCORP, INC. AND COUNTY NATIONAL BANK**





CN
      Bancorp, Inc. is the bank holding company for County National Bank. CN Bancorp,
      Inc.’s principal asset is its investment in all of the issued and outstanding
      capital stock of County National Bank, and its principal business is commercial
      banking.





County
      National Bank serves individuals and small to medium sized businesses in Anne
      Arundel County, Maryland, with a specific focus in central and northern Anne
      Arundel County. County National Bank offers a wide range of deposit accounts
      and
      commercial and consumer loans, tax deferred accounts, safe deposit boxes, and
      other services to its customers. Telephone and online banking is available
      24
      hours a day.





County
      National Bank’s mission statement is to:


·
            Provide
                the highest quality products and personalized services to meet the
                financial needs of our community and customers;
                and


·
            Provide
                sound management to maximize our leadership position, never losing
                sight
                of the well being of our neighbors, friends, employees and
                stockholders.





County
      National Bank serves its customers from branches in Glen Burnie, Pasadena,
      Odenton and Millersville, Maryland. County National Bank has leased land in
      Linthicum, Maryland on which it plans to build a branch in 2006.





**COMMON
      STOCK AND DIVIDENDS**





CN
      Bancorp, Inc. common stock is not currently traded on an organized exchange
      or
      on the Nasdaq National Market or the Nasdaq Capital Market. In August 2002,
      CN
      Bancorp, Inc.’s common stock was first quoted for trading on the Over the
      Counter Bulletin Board (“OTCBB”) under the symbol “CNBE.” Prior to August 2002,
      the common stock was traded only in private transactions and only on very
      limited and sporadic basis. Since August 2002, the common stock has traded
      only
      sporadically and no assurance can be given that an active or established market
      will develop in the foreseeable future. The following table sets forth the
      high
      and low bid prices for the stock during each calendar quarter in 2005 and 2004.
      These quotations reflect interdealer price quotations, without retail mark-up,
      mark-down or commission, and may not represent actual transactions. Also, these
      quotations may not be representative of all transactions due to the infrequency
      of trades and the limited market for our common stock.





2005
            
            
            
            2004High
            
            Low
            
            High
            
            LowFirst
                Quarter
            $14.25
            
            $13.70
            
            $14.70
            
            $13.50Second
                Quarter
            16.50
            
            13.70
            
            14.75
            
            13.60Third
                Quarter
            15.50
            
            14.05
            
            14.75
            
            13.70Fourth
                Quarter
            15.00
            
            13.50
            
            16.00
            
            14.75





CN
      Bancorp, Inc. had 399 stockholders of record at February 28, 2006. Common stock
      outstanding at that date was 1,696,353 shares. In addition, on February 28,
      2006, CN Bancorp, Inc. had outstanding warrants to purchase 22,931 shares of
      common stock exercisable at $10.00 per share and a total of 97,500 shares
      issuable under option plans, including 51,000 options to purchase common shares
      at $14.50 per share and 46,500 options to purchase common shares at $14.20
      per
      share.





CN
      Bancorp, Inc. declared four regular dividends (March, June, September and
      December) of $.05 per share ($.20 per share for the year) and one bonus dividend
      (December) of $.05 per share in 2005. CN Bancorp, Inc. declared four quarterly
      dividends of $.04 per share ($.16 per share for the year) and one special
      dividend (February) of $.05 per share in 2004. CN Bancorp, Inc.’s continued
      ability to pay dividends will depend on its compliance with certain dividend
      regulations imposed upon it as a bank holding company by the Federal Reserve
      Board. In addition, CN Bancorp, Inc.’s ability to pay dividends may depend on
      the ability of County National Bank to pay dividends to CN Bancorp, Inc. County
      National Bank may not be able to pay dividends to CN Bancorp, Inc. unless it
      complies with certain regulatory requirements. In addition, CN Bancorp, Inc.
      will consider a number of other factors, including its earning prospects,
      financial condition and cash needs before deciding to pay additional dividends
      in the future.





*Recent
      Sales of Unregistered Securities*





In
      June
      1997, CN Bancorp, Inc. issued warrants to purchase a total of 343,431 shares
      of
      common stock at $10.00 per share to organizers of County National Bank. During
      2005, 272,600 shares of common stock were issued upon the exercise of these
      warrants. In 2004, 20,000 shares of common stock were issued upon exercise
      of
      the warrants. The $2,726,000 proceeds from the exercise of the warrants in
      2005
      and $200,000 proceeds from the exercise of warrants in 2004 were used for
      general corporate purposes. Warrants to purchase 50,831 shares of common stock
      are outstanding at December 31, 2005 and 22,931 shares at February 28, 2006
      respectively. The warrants became exercisable in March 1998 and will expire
      in
      March 2006.








2





There
      were and will be no underwriting discounts or commissions paid with respect
      to
      the issuance of the common stock upon exercise of the warrants. CN Bancorp,
      Inc.
      believes that the issuance of the shares of common stock upon exercise of the
      warrants is exempt from the registration requirements of the Securities Act
      of
      1933 by virtue of Section 4(2) of the Securities Act of 1933. The transaction
      was not conducted by any form of general solicitation or general advertising
      and, in connection with the transaction, CN Bancorp, Inc. is taking reasonable
      care to assure that the purchasers of the common stock upon exercise of the
      warrants are not underwriters within the meaning of Section 2(11) of the
      Securities Act by, among other things, placing appropriate restrictive legends
      on the share certificates .





**SUMMARY
      HISTORICAL CONSOLIDATED FINANCIAL DATA**





The
      following table summarizes the selected consolidated financial information
      and
      other financial data. The selected balance sheet and statement of income data
      are derived from the audited consolidated financial statements for the years
      ended December 31, 2005 and 2004. This information should be read together
      with
“Management’s Discussion and Analysis of Financial Condition and Results of
      Operations” and our consolidated financial statements and the related notes
      included elsewhere in this annual report. Results for past periods are not
      necessarily indicative of results that may be expected for any future
      period.





**At
                and for****the**
              **Year
                Ended**
              **December
                31,**
            
            **At
                and for the**
              **Year
                Ended**
              **December
                31,***(In
                thousands except per share data)*
            **2005**
            
            **2004**




**Statement
                of Operations Data:**Interest
                income
            $7,091
            
            $5,714Interest
                expense
            1,950
            
            1,243Net
                interest income
            5,141
            
            4,471Provision
                for loan losses
            184
            
            151Net
                interest income after provision for loan losses
            4,957
            
            4,320Other
                income
            1,178
            
            950Other
                expense
            4,484
            
            4,391Income
                before taxes
            1,651
            
            879Income
                taxes
            567
            
            297Net
                income
            $1,084
            
            $582**Per
                Share Data:**Earnings
                per share, basic
            $0.76
            
            $0.43Earnings
                per share, diluted
            0.71
            
            0.40Cash
                dividends (five dividends in 2005 and 2004)
            0.25
            
            0.21Book
                value per share
            11.47
            
            11.34Tangible
                book value per share
            11.47
            
            11.34Weighted
                average shares outstanding, basic
            1,435,278
            
            1,358,954Weighted
                average shares outstanding, diluted
            1,521,542
            
            1,462,875Shares
                outstanding at end of period
            1,664,342
            
            1,384,565**Balance
                Sheet Data:**Total
                Assets
            $147,596
            
            $136,871Securities
                available for sale, at fair value
            23,881
            
            26,214Securities
                held to maturity, at cost
            8,162
            
            10,359






3






**At
                  and for the**
                **Year
                  Ended**
                **December
                  31,**
              
              **At
                  and for the**
                **Year
                  Ended**
                **December
                  31,***(In
                  thousands except per share data)*
              **2005**
              
              **2004**


Loans
                receivable, net of unearned income
            89,426
            
            79,695Allowance
                for loan losses
            864
            
            800Premises
                and equipment, net
            3,914
            
            4,179Non-interest
                bearing deposits
            36,867
            
            30,078Interest
                bearing deposits
            89,418
            
            89,232Total
                deposits
            126,285
            
            119,310Securities
                sold under agreements to repurchase
            $548
            
            $523Stockholders'
                equity including unrealized gainsand
                losses
            19,097
            
            15,695**Selected
                Performance and Other Ratios:**Return
                on average stockholders' equity
            6.54%
            
            3.82%Return
                on average assets
            0.74%
            
            0.44%Net
                interest margin
            3.80%
            
            3.69%Other
                income to average assets
            0.81%
            
            0.73%Other
                expenses to average assets
            3.07%
            
            3.35%Dividend
                payout ratio
            35.09%
            
            49.14%Number
                of branches
            4
            
            4Allowance
                for loan losses to total loans
            0.97%
            
            1.00%Non-performing
                loans to total loans
            0.07%
            
            0.06%Allowance
                for loan losses to non-performing loans
            1,386.13%
            
            1,567.79%**Applicable
                Company Capital Ratios:**Tier
                1 risk-based capital
            19.9%
            
            18.1%Total
                risk-based capital
            20.8%
            
            19.0%Leverage
                capital
            12.9%
            
            11.2%Stockholders'
                equity to total assets
            12.9%
            
            11.5%





**FORWARD-LOOKING
      STATEMENTS**





The
      Company makes forward-looking statements in filings with the Securities and
      Exchange Commission (including this Annual Report on Form 10-KSB and exhibits
      thereto) that are subject to risks and uncertainties. These forward-looking
      statements include: the Letter from the Chairman, President and Chief Executive
      Officer, Management’s Discussion and Analysis of Financial Condition and Results
      of Operations, statements of CN Bancorp's goals, intentions, and expectations;
      estimates of risks and of future costs and benefits; assessments of loan
      quality, probable loan losses, liquidity, market risk, off-balance sheet
      arrangements, interest rate risks, and statements of its ability to achieve
      financial and other goals. Forward-looking statements often use words such
      as
“believe,” “expect,” “plan,” “may,” “will,” “should,” “project,” “contemplate,”
“ anticipate,” “forecast,” “intend” or other words of similar meaning. You can
      also identify them by the fact that they do not relate strictly to historical
      or
      current facts. These forward-looking statements are subject to significant
      uncertainties because they are based upon or are affected by: the amount and
      timing of future changes in interest rates and other economic conditions,
      management's estimates and projections of future interest rates and other
      economic conditions; future laws and regulations, including accounting
      principles; and a variety of other matters which, by their nature, are subject
      to significant uncertainties. You should not put undue reliance on any
      forward-looking statements.





Because
      of these uncertainties, the Company’s actual future results may differ
      materially from the results indicated by these forward-looking statements.
      In
      addition, the Company's past results of operations do not necessarily indicate
      its future results. Forward-looking statements speak only as of the date they
      are made, and we undertake no obligation to update publicly any of these
      statements in light of new information or future events.






4





**MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**




This
      document contains certain "forward-looking statements" which may be identified
      by the use of words such as "believe," "expect," "anticipate," "should,"
      "planned," "estimated" and "potential." Examples of forward-looking statements
      include, but are not limited to, estimates with respect to our financial
      condition, results of operations and business that are subject to various
      factors which could cause actual results to differ materially from these
      estimates and most other statements that are not historical in nature.




The
      following discussion and analysis of the financial condition and results of
      operations of CN Bancorp, Inc. should be read in conjunction with CN Bancorp,
      Inc.’s audited consolidated financial statements, including the related
      footnotes, included elsewhere in this annual report.





**GENERAL**


Overview





The
      Company continued a pattern of growth during the year ended December 31, 2005.
      This growth has resulted in improved operating results as compared to prior
      periods. Key measurements and events for the year ended December 31, 2005
      include the following:





·
            Total
                assets as of December 31, 2005 increased by 7.8% to $148 million
                as
                compared to $137 million as of December 31, 2004.





·
            Net
                loans outstanding increased by 12.3% to $89 million as of December
                31,
                2005 from $79 million as of December 31,
                2004.





·
            Deposits
                as of December 31, 2005 were $126 million, an increase of $7 million
                or
                5.8% from December 31, 2004.





·
            The
                Company’s net income increased to $1,084,307, or 86.2%, for the year ended
                December 31, 2005 as compared to net income of $582,268 for the year
                ended
                December 31, 2004.





·
            Net
                interest income, the Company’s main source of income, was $5.1 million
                during the year ended December 31, 2005 compared to $4.5 million
                for the
                same period in 2004. This represents an increase of 15.0% for the
                year
                December 31, 2005 as compared to 2004.





·
            Non-interest
                income increased by $228,644 or 24.1%, for the year ended December
                31,
                2005, as compared to the year ended December 31, 2004.





·
            Non-interest
                expenses increased by $92,852 or 2.1%, for the year ended December
                31,
                2005, as compared to 2004.





A
      detailed discussion of the factors leading to these changes can be found in
      the
      discussion below.





CN
      Bancorp, Inc. has continued to experience growth since it started operations
      in
      December 1996. Assets increased $10,724,877 (7.8%) to $147,595,842 at December
      31, 2005 from $136,870,965 at December 31, 2004. Increases in loans comprised
      the majority of the increase in assets. The increase in assets was funded by
      increases in deposits and proceeds from stock sales. Net income increased by
      86.2% primarily resulting from the increase in earning assets and market
      interest rate levels.





Critical
      Accounting Policies





CN
      Bancorp, Inc.’s consolidated financial statements are prepared in accordance
      with accounting principles generally accepted in the United States and follow
      general practices within the industries in which it operates. Application of
      these principles requires management to make estimates, assumptions and
      judgments that affect the amounts reported in the financial statements and
      accompanying notes. These estimates, assumptions and judgments are based on
      information available as of the date of the financial statements; accordingly,
      as this information changes, the financial statements could reflect different
      estimates, assumptions and judgments. Certain policies inherently have a greater
      reliance on the use of estimates, assumptions and judgments and as such have
      a
      greater possibility of producing results that could be materially different
      than
      originally reported. Estimates, assumptions and judgments are necessary when
      assets and liabilities are required to be recorded at fair value, when a decline
      in the value of an asset not carried on the financial statements at fair value
      warrants an impairment write-down or valuation reserve to be established, or
      when an asset or liability needs to be recorded contingent upon a future event.
      Carrying assets and liabilities at fair value inherently results in more
      financial statement volatility. The fair values and the information used to
      record valuation adjustments for certain assets and liabilities are based either
      on quoted market prices or are provided by other third-party sources, when
      available.






5





The
      most
      significant accounting policies followed by CN Bancorp, Inc. are presented
      in
      Note 1 to the consolidated financial statements. These policies, along with
      the
      disclosures presented in the other financial statement notes and in this
      discussion, provide information on how significant assets and liabilities are
      valued in the financial statements and how those values are determined. Based
      on
      the valuation techniques used and the sensitivity of financial statement amounts
      to the methods, assumptions and estimates underlying those amounts, management
      has identified the determination of the allowance for loan losses as the
      accounting area that requires the most subjective or complex judgments, and
      as
      such could be most subject to revision as new information becomes available.





CN
      Bancorp, Inc. believes it has developed appropriate policies and procedures
      for
      assessing the adequacy of the allowance for loan losses, recognizing that this
      process requires a number of assumptions and estimates with respect to its
      loan
      portfolio. CN Bancorp, Inc.’s assessments may be impacted in future periods by
      changes in economic conditions, the impact of regulatory examinations and the
      discovery of information with respect to borrowers which is not known to
      management at the time of the issuance of the consolidated financial statements.
      For additional discussion concerning CN Bancorp, Inc.’s allowance for loan
      losses and related matters, see “ *Provision
      for Loan Losses* ”
      below.





CN
      Bancorp, Inc. has adopted the disclosure-only provisions of Statement of
      Financial Accounting Standards (SFAS) No.123 “Accounting for Stock-Based
      Compensation” and SFAS No. 148 “Accounting for Stock-Based Compensation -
      Transition and Disclosure”, but applies Accounting Principal Board Opinion (APB)
      No. 25, “Accounting for Stock Issued to Employees” and related interpretations
      in accounting for its stock option and stock purchase plans. In December 2004,
      the Financial Accounting Standards Board issued SFAS No.123 (revised 2004)
      which
      will require the Company to measure and record the cost of employee services
      received in exchange for an award of equity instruments based upon the
      grant-date fair value of the award (with certain limitations). SFAS 123 (revised
      2004) is effective for the Company on January 1, 2006.





**FINANCIAL
      CONDITION**




The
      loan
      portfolio comprises the majority of CN Bancorp, Inc.’s earning assets. Loans
      receivable (net of the allowance for loan losses, unearned fees and origination
      costs) increased by $9,666,822 (12.3%) from $78,894,775 at December 31, 2004
      to
      $88,561,597 at December 31, 2005. Loans receivable, net, comprise 60.0% of
      assets ($147,595,842) as of December 31, 2005 and 57.6% of assets ($136,870,965)
      at December 31, 2004.





Residential
      real estate loans, excluding construction loans, increased $7,660,401 (35.4%)
      from $21,646,113 at December 31, 2004 to $29,306,514 at December 31, 2005.
      Commercial loans increased by $3,443,539(18.2%) from $18,923,232 at December
      31,
      2004 to $22,366,771 at December 31, 2005. Commercial real estate loans,
      excluding construction loans, increased $433,793 (1.5%) from $28,987,012 at
      December 31, 2004 to $29,420,805 at December 31, 2005. Real estate construction
      loans decreased by $1,668,021 (27.8%) from $5,997,848 at December 31, 2004
      to
      $4,329,827 at December 31, 2005. CN Bancorp, Inc. continued to concentrate
      on
      real estate secured lending for predominately owner-occupied properties as
      well
      as commercial loans. Installment and other loans decreased by $152,145 (3.7%)
      from $4,100,899 at December 31, 2004 to $3,948,754 at December 31,
      2005.





The
      allowance for loan losses was $864,000 (0.97% of loans) at December 31, 2005.
      The allowance was $800,000 (1.00% of loans) at December 31, 2004. At December
      31, 2005, non-accrual loans totaled $62,332 as compared to $51,027 at December
      31, 2004. Loans charged off in 2005 totaled $140,728 as compared to $90,051
      during 2004. Recoveries on charged off loans were $20,418 during 2005 as
      compared to $19,213 in 2004.





During
      2003, the Bank sold loan participations to family members of a director of
      the
      Bank and the Company on a non-recourse basis. Under these transactions, the
      family members acquired undivided percentage interests in specific loans held
      by
      the Bank. The participations were sold under the same terms and conditions
      as
      loan participations sold to non-related entities. The total amount of the loan
      participations sold was $2,058,741. The total loan participation amount
      outstanding at December 31, 2005 was $673,026 and $744,434 at December 31,
      2004.






6





The
      securities portfolio at December 31, 2005 amounted to $32,817,378, a decrease
      of
      $4,493,756, or 12.0% from the amount at December 31, 2004. Funds obtained
      through deposit increases, stock sales and security repayments were invested
      in
      loans and other assets. Available for sale investment securities decreased
      to
      $23,881,126 at December 31, 2005 from $26,214,112 at December 31, 2004. Held
      to
      maturity securities decreased  to
      $8,162,452 at December 31, 2005 from $10,359,122 at December 31, 2004. The
      carrying value of available for sale securities includes net unrealized losses
      of $455,320 at December 31, 2005 (reflected as unrealized losses of $279,521
      in
      stockholders’ equity after deferred taxes) as compared to net unrealized losses
      of $221,424 ($146,139 net of taxes) as of December 31, 2004. Unrealized losses
      (and unrealized gains) are the result of interest rate levels differing from
      those existing at the time of securities’ acquisition and, as to mortgage backed
      securities, actual and estimated prepayment speeds. These unrealized losses
      are
      considered temporary as they reflect fair values on December 31, 2005 and 2004
      and are subject to change daily as interest rates fluctuate. CN Bancorp has
      the
      intent and the ability to hold the securities to the maturity of the securities
      or the time required for the value of the securities to equal or exceed their
      cost.





Deposits
      are the major source of funds for lending and investment activities. Deposits
      increased $6,974,990 (5.8%) to $126,285,474 at December 31, 2005 from
      $119,310,484 at December 31, 2004. Non-interest bearing deposits increased
      22.6%, savings deposits increased 3.0%, interest bearing demand deposits
      increased 15.1% and certificates of deposit decreased 8.2% during the year
      ended
      December 31, 2005. Included in the December 31, 2005 and 2004 savings deposits
      are two savings accounts of related customers with total balances of
      approximately $8 million at December 31, 2005 and 2004.





Total
      stockholders’ equity was $19,096,579 at December 31, 2005 representing an
      increase of $3,401,724 from December 31, 2004. The increase from December 31,
      2004 was attributable to the proceeds from the sale of stock under the Dividend
      Reinvestment and Stock Purchase Plan of $105,314, proceeds of $2,726,000 from
      sales of stock in connection with warrants being exercised, earnings of
      $1,084,307 less an increase in unrealized losses on available for sale
      investment securities of $133,382 and dividends of $380,515 ($0.25 per
      share).





At
      December 31, 2005, we continued to exceed all regulatory capital requirements
      to
      be considered a “well capitalized” financial institution under federal
      regulations.





**RESULTS
      OF OPERATIONS**





*Net
      income*





Net
      income for the year ended December 31, 2005 was $1,084,307, an increase of
      $502,039, or 86.2%, from $582,268 during 2004. Net income increased in 2005
      as
      compared to 2004 because of increases in net interest income and non-interest
      income exceeded increases in operating expenses. Net interest income increased
      by 15.0% and non-interest income increased 24.1% during 2005 versus 2004 while
      operating expenses increased by 2.1% during the same period. Net income was
      adversely affected during 2004 as County National Bank opened a new branch
      office early in 2004.





CN
      Bancorp, Inc.’s return on average equity was 3.82% in 2004 and 6.54% in 2005 as
      net income increased as market interest rates increased in 2005, the Company
      is
      operating more efficiently and utilizing the capital raised in late 2004. The
      return on average assets was 0.44% in 2004 and 0.74% in 2005.




*Net
      Interest Income and Net Interest Margin*





Net
      interest income is the amount by which interest earned on assets exceeds the
      interest paid on interest-bearing liabilities. CN Bancorp, Inc.’s principal
      interest earning assets are loans to businesses and individuals.
      Interest-bearing liabilities consist primarily of savings accounts, money market
      accounts and certificates of deposit. Generally, changes in net interest income
      are measured by net interest rate spread and net interest margin. Net interest
      rate spread is equal to the difference between the average rate earned on
      interest earning assets and the average rate incurred on interest-bearing
      liabilities. Net interest margin represents the difference between interest
      income (including net loan fees earned) and interest expense calculated as
      a
      percentage of earning assets.





Total
      interest income increased by $1,376,613 or 24.1% to $7,090,916 for the year
      ended December 31, 2005 as compared to 2004. This increase was primarily
      attributable to the increase in market interest rates and the increase in
      interest bearing assets during 2005. Average interest earning assets increased
      by $13,952,000 to $135,231,000 in 2005 and the yield on the interest earning
      assets increased to 5.24% in 2005 from 4.71% in 2004.






7





Interest
      expense increased by $707,121 or 56.9% to $1,950,122 for the year ended December
      31, 2005 as compared to 2004. This increase was primarily attributable to the
      raising market interest rates during 2005 and the increase in interest bearing
      liabilities during 2005. Average interest bearing liabilities increased by
      $8,158,000 to $91,639,000 in 2005 and the cost of the interest bearing funds
      increased to 2.13% in 2005 from 1.49% in 2004.





Net
      interest income increased by $669,492, or 15%, during 2005 as compared to 2004.
      Net interest income increased because the average balance of interest earning
      assets increased more than the interest bearing liabilities. The net interest
      spread was 3.11% in 2005 as compared to 3.22% in 2004 due to interest rates
      on
      liabilities increasing at a faster rate than rates on interest bearing assets.
      The net interest margin was 3.80 percent in 2005 and 3.69% in 2004.





The
      tables below present a summary of CN Bancorp, Inc.’s average daily balances,
      rates, interest income and expense, the interest rate spread and net interest
      margins for the years ended December 31, 2005 and 2004.





**AVERAGE
                BALANCES, RATES AND INTEREST INCOME AND
                EXPENSE****Years
                Ended December 31,***(in
                thousands)*
            
            
            **2005**
            
            
            
            **2004****Average**
            
            **Yield/**
            
            **Average**
            
            **Yield/****Balance**
            **Interest**
            **Rate**
            
            **Balance**
            **Interest**
            **Rate****Assets:****Interest-Earning
                Assets:**Federal
                funds sold
            
            $12,285
            405
            3.30%
            
            $12,171
            168
            1.38%Interest
                bearing deposits
            3,282
            94
            2.86%
            
            3,831
            70
            1.83%Investment
                securities
            36,086
            1,162
            3.22%
            
            30,875
            958
            3.10%Loans
                receivable
            
            84,411
            5,430
            6.43%
            
            75,167
            4,518
            6.01%Allowance
                for loan losses
            
            (833)
            -
            -
            
            (765)
            -
            -83,578
            5,430
            6.50%
            
            74,402
            4,518
            6.07%**Total
                Interest Earning Assets**
            135,231
            7,091
            5.24%
            
            121,279
            5,714
            4.71%Non-interest
                Earning Assets
            
            10,964
            
            
            
            9,709**Total
                Assets**
            
            $146,195
            
            
            
            $130,988**Liabilities
                and Stockholders' Equity:****Interest
                -Bearing Liabilities:**Interest
                bearing demand deposits
            $14,584
            93
            0.64%
            
            $13,325
            61
            0.46%Savings
                accounts
            
            40,310
            816
            2.02%
            
            33,290
            332
            1.00%Time
                deposits
            
            35,247
            1,029
            2.92%
            
            34,705
            834
            2.40%Securities
                sold under agreementsTo
                repurchase
            
            1,498
            12
            0.80%
            
            2,161
            16
            0.75%**Total
                Interest Bearing Liabilities**
            91,639
            1,950
            2.13%
            
            83,481
            1,243
            1.49%**Non-interest
                Bearing Liabilities:**Demand
                deposits
            
            36,399
            
            
            
            31,833Other
            
            1,582
            
            
            
            446**Total
                Liabilities**
            
            129,620
            
            
            
            115,760Stockholders'
                Equity
            
            16,575
            
            
            
            15,228**Total
                Liabilities and Equity**
            
            $146,195
            
            
            
            $130,988Net
                Interest Income
            
            
            $
                5,141
            
            
            
            4,471Net
                Interest Spread
            
            
            
            3.11%
            
            
            
            3.22%Net
                Interest Margin
            
            
            
            3.80%
            
            
            
            3.69%Ratio
                of Interest-Earning Assetsto
                Interest-Bearing Liabilities
            147.57%
            
            
            
            145.28%




*Yields
      on securities are calculated based on amortized cost.*


*Nonaccruing
      loans are included in the average loan balances outstanding.*






8





The
      tables below present the relative contribution of changes in volumes and changes
      in rates to the changes in net interest income for 2005 and 2004. The change
      in
      the interest income and interest expense attributable to the combined impact
      of
      both volume and rate has been allocated proportionately to the change due to
      volume and the change due to rate.





**RATE/VOLUME
                ANALYSIS****2005
                vs. 2004**
            
            **2004
                vs. 2003****Increase
                (Decrease)**
            
            **Increase
                (Decrease)****Volume**
            **Rate**
            **Total**
            
            **Volume**
            **Rate**
            **Total****Interest-Earning
                Assets:**Federal
                funds and interest bearingdeposits
                with banks
            
            $(8,432)
            $270,072
            $261,640
            
            $25,628
            $57,551
            $83,179Securities
            
            156,622
            47,028
            203,650
            
            395,746
            (136,405)
            259,341Loans
                receivable
            
            555,677
            355,646
            911,323
            
            616,290
            (207,866)
            408,424**Net
                Change in Interest Income**
            
            703,867
            672,746
            1,376,613
            
            1,037,664
            (286,720)
            750,944**Interest
                Bearing Liabilities:**Interest
                bearing deposits
            
            133,086
            578,330
            711,416
            
            255,371
            (259,483)
            (4,112)Note
                payable
            
            -
            -
            -
            
            (2,562)
            -
            (2,562)Securities
                sold under agreementsto
                repurchase
            
            (4,975)
            680
            (4,295)
            
            (4,007)
            -
            (4,007)**Net
                Change in Interest Expense**
            
            128,111
            579,010
            707,121
            
            248,802
            (259,483)
            (10,681)**Change
                in Net Interest Income**
            
            $575,756
            $93,736
            $669,492
            
            $788,862
            $(27,237)
            $761,625




*Provision
      for Loan Losses*




The
      provision for loan losses represents the amount charged against earnings to
      increase the allowance for loan losses to the level deemed appropriate by
      management. The provision for loan losses and the allowance for loan losses
      are
      based on management’s ongoing assessment of CN Bancorp, Inc.’s credit exposure
      and consideration of certain other relevant factors.





The
      adequacy of the allowance for loan losses is evaluated based upon loan
      categories except for loans rated substandard, doubtful or loss, which are
      evaluated separately and assigned loss amounts based upon the evaluation. Loss
      ratios are applied to each category of loan to determine estimated loss amounts.
      Categories of loans are identified as consumer (secured and unsecured),
      commercial (secured and unsecured) and mortgage loans (residential and
      commercial real estate). Loss ratios are determined based upon losses incurred
      adjusted for the effect of current economic conditions (currently
      strengthening), any industry concentration or identified weakness in an industry
      (none currently), credit management and underwriting policies changes and
      secured versus unsecured nature of loan category.





At
      December 31, 2005, the range of the loss ratios used to determine estimated
      losses by loan category were: consumer loans - .20% to 1.75%; commercial loans
      -
      0.86% to 1.66%; and, mortgage loans - 0.25% to .70%. Additional losses are
      estimated resulting from additional identified risks factors, such as loans
      with
      underwriting exceptions, the level and direction of payment delinquencies and
      the level of unsecured credit. These additional loss estimates are not allocated
      to the separate loan categories.





The
      adequacy of the allowance for loan losses is reviewed at least quarterly. Loans
      are assigned a risk rating based upon rating criteria consistent with regulatory
      definitions. The risk rating is adjusted, as necessary, if loans become
      delinquent, if significant adverse information is discovered regarding the
      underlying credit and, in the case of commercial loans and commercial real
      estate loans, the normal periodic review of the underlying credit indicate
      that
      a change in risk rating is appropriate. An estimated “low” and “high” loss
      percentage is applied to loans in each risk rating. These loss percentages
      increase as the loan risk rating increases. Loans rated as substandard, doubtful
      or loss are evaluated separately and assigned loss amounts based upon the
      separate evaluation. Risks factors identified beyond individual loan risks,
      such
      as economic conditions, underwriting exceptions and loan concentrations are
      quantified based upon management’s estimations of loss exposure. Loss
      percentages used are generally based upon management’s best estimates
      considering losses incurred. Estimated “low” and “high” allowance for loan loss
      amounts are derived by accumulating the estimated losses using the “low” and
“high” loss percentages for each risk rating and adding losses based upon
      separate loan evaluations and identified other risks. The actual allowance
      for
      loan losses is compared to this range to ascertain that it is reasonably
      situated within the range. During 2005, there were no significant changes in
      estimation methods or assumptions that affected the methodology for assessing
      the appropriateness of the allowance. In addition, on at least a quarterly
      basis, the recorded allowance for loan losses (as a percent of loans) is
      compared to peer group levels to ascertain the reasonableness of the
      estimate.






9





At
      December 31, 2005, the “low” and “high” allowance determination resulted in a
“low” allowance of .85% of loans and a “high” allowance of 1.19% of loans. The
      actual allowance for loan losses was 0.97% of loans.





The
      provision for loan losses was $184,310 during the year ended December 31, 2005
      as compared to $150,838 for the year ended December 31, 2004, a 22.2% increase.
      The increase in provision for loan losses reflects the increase in loan losses
      that occurred in 2005 as well as the 12.3% increase in loans outstanding during
      2005.





The
      allowance for loan losses represents 0.97% and 1.00% of loans receivable at
      December 31, 2005 and December 31, 2004, respectively. CN Bancorp, Inc. has
      no
      exposure to foreign countries or foreign borrowers. Management believes that
      the
      allowance for loan losses is adequate for each period presented.





The
      table
      below sets forth the period end loans receivable balances and summarizes CN
      Bancorp, Inc.’s loan loss experience for the periods presented as well as
      certain ratios related to net charge-offs and the allowance for loan losses
      as a
      percent of the total loan portfolio.





**SUMMARY
                OF LOAN LOSS EXPERIENCE****Year
                Ended December
                31,****2005**
            
            **2004****Allowance
                for loan losses:**Beginning
                balance
            $800,000
            
            $720,000Charge-offs:Mortgage
                loans
            (50,027)
            
            -Commercial
                loans
            -
            
            (49,146)Consumer
                loans
            (90,701)
            
            (40,905)(140,728)
            
            (90,051)Recoveries:Commercial
                loans
            10,938
            
            6,491Consumer
                loans
            9,480
            
            12,72220,418
            
            19,213Net
                charge-offs
            (120,310)
            
            (70,838)Provision
                for loan losses
            184,310
            
            150,838Ending
                balance
            $864,000
            
            $800,000**Ratios:**Net
                charge-offs to average loans
            0.14%
            
            0.09%Net
                charge-offs to provision for loan losses
            65.28%
            
            46.96%Allowance
                for loan losses to loans receivable
            0.97%
            
            1.00%





The
      table
      below presents information regarding non-performing loans at December 31, 2005
      and 2004.





**NON-PERFORMING
                LOANS****December
                31,**
            
            **December
                31,****2005**
            
            **2004**Non-accruing
                loans
            
            $62,332
            
            $51,027Accruing
                loans past due 90 days or longer
            
            -
            
            -Total
                non-performing loans
            
            $62,332
            
            $51,027






10






**NON-PERFORMING
                LOANS****December
                31,**
            
            **December
                31,***Continued*
            
            **2005**
            
            **2004**Non-accruing
                loans:Interest
                income not recorded on non-accruing
                loans
            
            $3,646
            
            $4,987Interest
                income included in net incomefor
                period on non-accruing loans collections
            
            -
            
            -Ratios:Non-performing
                loans to total loans
            
            0.07%
            
            0.06%Non-performing
                loans to total assets
            
            0.04%
            
            0.04%Allowance
                for loan losses to non-performing
                loans
            
            1,386.13%
            
            1,567.79%Commitments
                to lend additional funds tonon-performing
                loan customers
            
            -
            
            -Restructured
                loans:
            
            None
            
            None





The
      table
      below illustrates the estimated breakdown of the allowance for loan losses
      as
      allocated to various segments of the loan portfolio.


**ALLOWANCE
                      FOR LOAN LOSSES BY CATEGORY****December
                      31, 2005**
                  
                  **December
                      31, 2004****Allocated**
                    **Allowance**
                    **Amount**
                  **%
                      of Loans in**
                    **each
                      Category**
                    **to
                      Total Loans**
                    **Receivable**
                  
                  **Allocated**
                    **Allowance**
                    **Amount**
                  **%
                      of Loans in**
                    **each
                      Category**
                    **to
                      Total Loans**
                    **Receivable***(In
                      thousands)*Consumer
                      loans
                  
                  $95
                  6.4%
                  
                  $48
                  5.1%Home
                      Equity loans
                  
                  26
                  8.3%
                  
                  24
                  10.2%Real
                      estate loans
                  
                  284
                  62.3%
                  
                  289
                  60.9%Commercial
                      loans
                  
                  348
                  23.0%
                  
                  401
                  23.8%Unallocated
                      to loan type
                  
                  111
                  
                  
                  38$864
                  100.0%
                  
                  $800
                  100.0%
  *Non-interest
        Income*





Non-interest
      income consisted primarily of fees and charges from depository accounts,
      increases in cash surrender value of life insurance policies, gains on sale
      of
      assets and other income. Non-interest income increased $228,644 or 24.1%, to
      $1,178,821 for the year ended December 31 2005 as compared to $950,177 during
      2004. This increase was primarily attributable to the increase in fees earned
      under an overdraft privilege program, overdraft fees, continued increases in
      the
      number of customer accounts, usage of debit cards by customers and the use
      of
      owned ATM machines by non-customers. Also contributing to the increase in income
      in 2005 was additional income of $43,510 (98.3% increase from 2004) from bank
      owned life insurance (BOLI) policies because of the additional investment in
      BOLI and increases in earnings rates of the policies. The net gain on sales
      of
      loans was $35,437 in 2005 compared to no gains or losses on sales of loans
      in
      2004.





*Non-interest
      Expense*





Non-interest
      expense was $4,484,028 during the year ended December 31, 2005 representing
      an
      increase of $92,852 or 2.1%, as compared to $4,391,176 during 2004. The expense
      category comprising the largest changes in 2005 as compared to 2004 were:
      increase in compensation and related benefits of $106,032 (4.6%); decrease
      in
      marketing and advertising expenses of $39,727 (34.8%); the decrease in
      depreciation and amortization expenses of $61,055 (15.1%); the increase in
      directors’ fees of $23,950 (33.2%); and, the increase in electronic transfer
      fees of $13,453 (17.1%). The increase in compensation and benefits resulted
      from
      normal salary increases and increased benefit costs offset by a small reduction
      of personnel. Marketing expenses were reduced because, during 2004, a new bank
      branch was opened accompanied by expanded advertising and marketing efforts.
      Depreciation and amortization expense declined as more assets were fully
      amortized during late 2004 and 2005. Directors’ fees were increased at the
      beginning of 2005 to better match fees paid to directors of similar-sized banks.
      Electronic transfer fees increased as the volume of electronic activity,
      primarily debit card usage, increased.








11





*Income
      Taxes*





Income
      tax expense was $566,970 (34.3% of pre-tax income) for the year ended December
      31, 2004 as compared to $297,197 (33.8% of pre-tax income) for 2004. The
      increase in the effective tax rate in 2005 versus 2004 reflects higher state
      income taxes because the amount of state tax-exempt interest income became
      a
      smaller portion of income before income taxes in 2005 as compared to
      2004.





**ASSET/LIABILITY
      MANAGEMENT**





A
      principal objective of CN Bancorp, Inc.’s asset/liability management policy is
      to minimize exposure to changes in interest rates by an ongoing review of the
      maturity and re-pricing of interest-earning assets and interest-bearing
      liabilities. The asset/liability committee and the executive committee of the
      board of directors of County National Bank oversee this review.





The
      executive committee establishes policies to control interest rate sensitivity.
      Interest rate sensitivity is the volatility of a bank’s earnings resulting from
      movements in the market interest rates. Management monitors rate sensitivity
      in
      order to reduce vulnerability to interest rate fluctuations while maintaining
      adequate capital levels and acceptable levels of liquidity. Monthly financial
      reports provide management with information to evaluate and manage rate
      sensitivity and adherence to policy. CN Bancorp, Inc.’s asset/liability policy’s
      goal is to manage assets and liabilities in a manner that stabilizes net
      interest income and net economic value within a broad range of interest rate
      environments. Adjustments to the mix of assets and liabilities are made
      periodically in an effort to achieve dependable, steady growth in net interest
      income regardless of the behavior of interest rates in general.





As
      part
      of the interest rate risk sensitivity analysis, the asset/liability committee
      examines the extent to which CN Bancorp, Inc.’s assets and liabilities are
      interest rate sensitive and monitors the interest rate sensitivity gap. An
      interest rate sensitive asset or liability is one that, within a defined time
      period, either matures or experiences an interest rate change in line with
      general market rates. The interest rate sensitivity gap is the difference
      between interest-earning assets and interest-bearing liabilities scheduled
      to
      mature or re-price within such time period. A gap is considered positive when
      the amount of interest rate sensitive assets exceeds the amount of interest
      rate
      sensitive liabilities. A gap is considered negative when the amount of interest
      rate sensitive liabilities exceeds the interest rate sensitive assets. During
      a
      period of rising interest rates, a negative gap would tend to adversely affect
      net interest income, while a positive gap would tend to result in an increase
      in
      net interest income. During a period of declining interest rates, a negative
      gap
      would tend to result in an increase in net interest income, while a positive
      gap
      would tend to adversely affect net interest income. If re-pricing of assets
      and
      liabilities were equally flexible and moved concurrently, the impact of any
      increase or decrease in interest rates on net interest income would be
      minimal.





CN
      Bancorp, Inc. currently has a negative gap over the short term, which suggests
      that the net yield on interest bearing assets and liabilities may decrease
      during periods of rising interest rates. However, a simple interest rate “gap”
analysis by itself may not be an accurate indicator of how net interest income
      will be affected by changes in interest rates. Income associated with
      interest-earning assets and costs associated with interest-bearing liabilities
      may not be affected uniformly by changes in interest rates. In addition, the
      magnitude and duration of changes in interest rates may have a significant
      impact on net interest income. Although certain assets and liabilities may
      have
      similar maturities or periods of re-pricing, they may react in different degrees
      to changes in market interest rates. Interest rates on certain types of assets
      and liabilities fluctuate in advance of changes in general market interest
      rates, while interest rates on other types may lag behind changes in general
      market rates. In the event of a change in interest rate, prepayment and early
      withdrawal levels also could deviate significantly from those assumed in
      calculating the interest-rate gap. The ability of many borrowers to service
      their debts also may decrease in the event of an interest rate
      increase.






12





The
      table
      below presents CN Bancorp, Inc.’s interest rate sensitivity at December 31,
      2005. The table is based upon the earlier of the assets and liabilities
      re-pricing date or their maturity date.


**RATE
                SENSITIVITY ANALYSIS****December
                31, 2005****0-3**
            
            **4-6**
            
            **7-12**
            
            **>1&<5*****(in
                thousands)***
            **Months**
            
            **Months**
            
            **Months**
            **Years**
            
            **5
                YRS +**
            
            **Total****Assets**Loans
            $28,047
            
            $4,290
            
            $8,633
            
            $41,820
            
            $6,636
            
            $89,426Securities,
                at cost
            2,998
            
            1,000
            
            8,351
            
            19,090
            
            1,059
            
            32,498Federal
                funds sold
            11,262
            
            -
            
            -
            
            -
            
            -
            
            11,262Interest
                bearing deposits
            1,905
            
            980
            
            -
            
            -
            
            -
            
            2,885Bank-owned
                life insurance
            -
            
            2,601
            
            
            
            
            
            
            
            2,601Total
            44,212
            
            8,871
            
            16,984
            
            60,910
            
            7,695
            
            138,672**Liabilities**Savings/MoneyMarket/NOW
            $55,902
            
            -
            
            -
            
            -
            
            -
            
            55,902Certificates
                of deposit
            3,185
            
            3,364
            
            5,380
            
            21,588
            
            -
            
            33,517Repurchase
                agreements
            548
            
            -
            
            -
            
            -
            
            -
            
            548Total
            59,635
            
            3,364
            
            5,380
            
            21,588
            
            -
            
            89,967**GAP:**Period
            $(15,423)
            
            5,507
            
            11,604
            
            39,322
            
            7,695
            
            $48,705Cumulative
            
            
            $(9,916)
            
            $1,688
            
            $41,010
            
            $48,705


**LIQUIDITY**





Liquidity
      represents CN Bancorp, Inc.’s ability to efficiently manage cash flows to
      support the lending activities and the requirements of depositors. Liquidity
      is
      essential to fund fluctuations in the balance sheet and provide funds for
      growth. Liquidity needs may be met by converting assets into cash or obtaining
      sources of additional funding.





Liquidity,
      which generally is maintained in cash and amounts due from banks and federal
      funds sold, totaled $15,476,898 at December 31, 2005 compared to $9,868,815
      at
      December 31, 2004. Additional sources of asset liquidity include funds held
      in
      time deposits, cash flow from operations and the investment and loan portfolios.
      Liquidity needs may also be met by selling securities available for sale,
      selling loans, raising additional capital or borrowing funds. At December 31,
      2005, available for sale debt securities totaled $23,881,126 as compared to
      $26,214,112 at December 31, 2004.





Liability
      liquidity sources include attracting deposits at competitive rates. In addition,
      County National Bank has established lines of credit totaling four million
      dollars with a correspondent commercial bank as a reliable source for short-term
      funds. Borrowing under a two and one-half million dollar line would be
      collateralized by securities in the investment portfolio; the remaining one
      and
      one-half million dollar line of credit is unsecured. County National Bank has
      never borrowed funds under these facilities.





The
      Company has sufficient liquidity to meet its loan commitments as well as
      fluctuations in deposits. Maturing certificates of deposit are usually retained
      as we offer competitive rates on certificates of deposit. Management is not
      aware of any known trends, events or uncertainties that will have or are
      reasonably likely to have a material effect on our liquidity, capital or
      operations, nor are we aware of any current recommendation by regulatory
      authorities, which if implemented, would have a material effect on liquidity,
      capital or operations.





CN
      Bancorp, Inc. is a single bank holding company with no current business
      operations other than managing its investment in County National Bank, investing
      in loan participations from County National Bank and holding cash. CN Bancorp,
      Inc. pays its expenses from cash received from its loan participation portfolio,
      stock sales and from dividends, if any, from County National Bank. County
      National Bank may only pay dividends to CN Bancorp, Inc. if it complies with
      certain regulatory requirements.






13


**CAPITAL
      ADEQUACY**





The
      Company and the Bank are required to maintain capital ratios in accordance
      with
      guidelines adopted by the federal banking regulators. These guidelines are
      commonly known as Risk Based Capital Guidelines. Under these guidelines, banks
      are rated as “well capitalized,” “adequately capitalized,” “undercapitalized,”
“significantly undercapitalized” or “critically undercapitalized” based upon its
      capital levels. Banks that are classified as “undercapitalized,” “significantly
      undercapitalized” or “critically undercapitalized” are subject to increased
      regulatory oversight.





Risk-based
      capital standards require a bank to have Tier 1 capital of at least 4% and
      total
      capital (including Tier 1 capital) of at least 8% of risk-weighted assets to
      be
      considered “adequately capitalized.” The standards require a bank to have Tier 1
      capital of at least 6% and total capital (including Tier 1 capital) of at least
      10% of risk-weighted assets to be considered “well capitalized.” Tier 1 capital
      includes common stockholders’ equity, plus the net unrealized depreciation (or
      less the unrealized net appreciation) on securities available for sale, net
      of
      tax, less intangible assets.





The
      table
      below presents the Company’s and the Bank’s risk-based capital ratios and
      leverage ratio to the minimum regulatory requirements for the indicated
      periods.





**RISK-BASED
                CAPITAL RATIOS****Minimum
                Ratios****December
                31,**
              **2005**
            
            **December
                31,**
              **2004**
            
            **To
                be “Adequately**
              **Capitalized”**
            
            **To
                be “Well**
              **Capitalized”**Total
                capital:Company
            
            20.8%
            
            19.0%
            
            8.0%
            
            N/ABank
            
            13.6%
            
            13.9%
            
            8.0%
            
            10.0%Tier
                ICompany
            
            19.9%
            
            18.1%
            
            4.0%
            
            N/ABank
            
            12.7%
            
            12.9%
            
            4.0%
            
            6.0%Leverage
                TotalCompany
            
            12.9%
            
            11.2%
            
            4.0%
            
            N/ABank
            
            8.0%
            
            7.8%
            
            4.0%
            
            5.0%





At
      December 31, 2005 and 2004, CN Bancorp, Inc. exceeded the capital requirements
      necessary to be considered a “well capitalized” financial institution under
      federal regulations.





**EFFECTS
      OF INFLATION**





CN
      Bancorp, Inc.’s asset and liability structure is primarily monetary in nature.
      As such, asset and liability values tend to move in concert with inflation.
      Changes in interest rates may have a more significant impact on financial
      performance than the effects of the general levels of inflation. Interest rates
      do not necessarily move in the same direction or at the same magnitude as prices
      of other goods and services, and may frequently reflect government policy
      initiatives or economic factors not measured by price index. CN Bancorp, Inc.
      strives to manage its interest sensitive assets and liabilities in order to
      offset the effects of rate changes and inflation.





**OFF-BALANCE
      SHEET ARRANGEMENTS**





Standby
      letters of credit are conditional commitments issued by County National Bank
      to
      guarantee the performance of a customer to a third party. The credit risk
      involved in issuing letters of credit is essentially the same as that involved
      in extending loan facilities to customers. County National Bank holds collateral
      supporting those commitments for which collateral is deemed necessary. County
      National Bank has not been required to perform on any financial guarantees
      and
      has not incurred any losses on its commitments. The issuance of letters of
      credit is not a significant activity of County National Bank. Outstanding
      letters of credit at December 31, 2005 total $1,960,855 ($1,985,033 at December
      31, 2004).






14







Commitments
      to extend credit are agreements to lend funds to customers as long as there
      are
      no violations of any condition established in the loan contracts. Commitments
      generally have fixed expiration dates or other termination clauses and may
      require payment of a fee. Since many of the commitments are expected to expire
      without being drawn upon, the total commitment amounts do not necessarily
      represent future cash requirements. The Bank evaluates each customer’s credit
      worthiness on a case-by-case basis. The amount of collateral obtained, if it
      is
      deemed necessary by County National Bank upon extension of credit, is based
      on
      management’s credit evaluation of the customer. Collateral held varies but may
      include real estate (commercial and consumer property), accounts receivable,
      inventory, plant and equipment as well as income producing properties.
      Commitments to extend credit total $14,822,411 at December 31, 2005 ($10,523,924
      at December 31, 2004). We believe that we have adequate resources to fund all
      loan commitments.





County
      National Bank has entered into leases for its branches and office space, most
      of
      which contain renewal options. The minimum net noncancelable future rental
      commitments at December 31, 2005 were as follows:





**Year
                Ending****December
                31,**2006
            $226,5602007
            212,8622008
            173,9982009
            147,5282010
            147,5282011
            61,470





With
      the
      exception of the foregoing, the Company has no off-balance sheet arrangements,
      as defined, that have or are reasonably likely to have, a current or future
      effect on its financial condition, changes in financial condition, revenues
      or
      expenses, results of operations, liquidity, capital expenditures or capital
      resources that are material to investors.





**FINANCIAL
      STATEMENTS**





The
      audited financial statements for CN Bancorp, Inc. for the years ended December
      31, 2005 and 2004 follow.











15





*Letterhead*




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**








To
      the
      Stockholders and Board of Directors


CN
      Bancorp, Inc.


Glen
      Burnie, Maryland





We
      have
      audited the accompanying consolidated statements of financial condition of
      CN
      Bancorp, Inc. and Subsidiary, as of December 31, 2005 and 2004, and the related
      consolidated statements of operations, comprehensive income, stockholders’
equity and cash flows for the years then ended. These consolidated financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these consolidated financial
      statements based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). 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. The Company
      is not required to have, nor were we engaged to perform, an audit of its
      internal control over financial reporting. Accordingly, we express no such
      opinion. An audit also includes examining, on a test basis, evidence supporting
      the amounts and disclosures in the consolidated financial statements, assessing
      the accounting principles used and significant estimates made by management,
      as
      well as evaluating the overall consolidated financial statement presentation.
      We
      believe that our audits provide a reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of CN Bancorp, Inc. and
      Subsidiary, as of December 31, 2005 and 2004 and the consolidated 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.





/s/
      Beard
      Miller Company LLP





Baltimore,
      Maryland


January
      20, 2006







16




**CN
        BANCORP, INC. AND SUBSIDIARY**
 **CONSOLIDATED
        STATEMENTS OF FINANCIAL CONDITION**
 **December
        31, 2005 and 2004**
 
 **2005**
              
              **2004****ASSETS**Cash
                  and due from banks
              $4,214,570
              
              $2,759,279Federal
                  funds sold
              11,262,328
              
              7,109,536Cash and cash equivalents
              15,476,898
              
              9,868,815Interest
                  bearing deposits
              2,884,893
              
              4,387,283Investment
                  securities - available for sale (Note 2)
              23,881,126
              
              26,214,112Investment
                  securities - held to maturity (Note 2)
              8,162,452
              
              10,359,122Other
                  securities (Note 2)
              773,800
              
              737,900Loans
                  receivable, net of allowance for loan losses of $864,000 in
                  2005and $800,000 in 2004 (Note 3)
              88,561,597
              
              78,894,775Property,
                  equipment and leasehold improvements, net (Note 4)
              3,914,253
              
              4,179,185Cash
                  surrender value of life insurance policies
              2,600,679
              
              1,337,917Other
                  assets
              1,340,144
              
              891,856Total Assets
              $147,595,842
              
              $136,870,965**LIABILITIES**Non-interest
                  bearing deposits
              $36,867,060
              
              $30,078,225Interest
                  bearing deposits (Note 5)
              89,418,414
              
              89,232,259Total deposits
              126,285,474
              
              119,310,484Securities
                  sold under agreements to repurchase (Note 6)
              548,367
              
              522,540Official
                  checks
              798,962
              
              890,654Other
                  liabilities
              866,460
              
              452,432Total Liabilities
              128,499,263
              
              121,176,110Commitments
                  (Note 9)**STOCKHOLDERS’
                  EQUITY (Notes 7, 8 and 10)**Preferred
                  stock - $.01 par value; authorized 5,000,000 shares.Issued and outstanding: none at December 31, 2005 and 2004
              -
              
              -Common
                  stock - $10 par value; authorized 5,000,000 shares.Issued and outstanding: 1,664,342 shares at December 31,2005 and 1,384,565 at December 31, 2004
              16,643,415
              
              13,845,652Additional
                  paid in capital
              950,891
              
              917,340Retained
                  earnings
              1,781,794
              
              1,078,002Accumulated
                  other comprehensive loss:Unrealized losses on securities available for sale
              (279,521)
              
              (146,139)Total Stockholders’ Equity
              19,096,579
              
              15,694,855Total
                  Liabilities and Stockholders’ Equity
              $147,595,842
              
              $136,870,965
 
 The
          Notes
          to Consolidated Financial Statements are an integral part of these
          statements.
   17
  **CN
          BANCORP, INC. AND SUBSIDIARY**
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS**
 **For
          the years ended December 31, 2005 and 2004**
 
 **2005**
                
                **2004**Interest
                    income:Interest and fees on loans
                
                $
                5,430,011
                
                $
                4,518,687Federal funds sold
                
                
                405,290
                
                
                167,907Interest bearing deposits
                
                
                94,019
                
                
                69,764Securities
                
                
                1,161,596
                
                
                957,945Total interest income
                
                
                7,090,916
                
                
                5,714,303Interest
                    expense:Certificates of deposit of $100,000 or more
                
                
                342,270
                
                
                297,713Other deposits
                
                
                1,595,931
                
                
                929,073Repurchase agreements
                
                
                11,921
                
                
                16,215Total interest expense
                
                
                1,950,122
                
                
                1,243,001Net interest income
                
                
                5,140,794
                
                
                4,471,302Provision
                    for loan losses (Note 3)
                
                
                184,310
                
                
                150,838Net interest income after provision for loan losses
                
                
                4,956,484
                
                
                4,320,464Other
                    income:Fees and service charges from depository accounts
                
                
                938,330
                
                
                793,650Other income
                
                
                117,292
                
                
                112,581Increase in cash surrender value of life insurance
                    policies
                
                
                87,762
                
                
                44,252Gain on sale of loans
                
                
                35,437
                
                
                -Loss on sale of securities
                
                
                -
                
                
                (306
                )Total other income
                
                
                1,178,821
                
                
                950,177Operating
                    expenses:Compensation and related expenses
                
                
                2,392,655
                
                
                2,286,623Occupancy expense
                
                
                433,653
                
                
                411,008Depreciation and amortization
                
                
                343,671
                
                
                404,726Consulting expense
                
                
                89,213
                
                
                83,031Data processes expense
                
                
                192,529
                
                
                190,317Director fees
                
                
                96,100
                
                
                72,150Advertising and marketing expense
                
                
                74,504
                
                
                114,231Equipment maintenance costs
                
                
                120,119
                
                
                114,954Electronic funds transfer fees
                
                
                92,126
                
                
                78,673Stationery and office supplies
                
                
                86,246
                
                
                89,550Other operating expenses
                
                
                563,212
                
                
                545,913Total operating expenses
                
                
                4,484,028
                
                
                4,391,176Income before income taxes
                
                
                1,651,277
                
                
                879,465Income
                    tax expense (Note 11)
                
                
                566,970
                
                
                297,197NET INCOME
                
                $
                1,084,307
                
                $
                582,268Basic
                    earnings per share
                
                $
                .76
                
                $
                .43Diluted
                    earnings per share
                
                $
                .71
                
                $
                .40Dividends
                    declared
                
                $
                .25
                
                $
                .21
 
 The
            Notes
            to Consolidated Financial Statements are an integral part of these
            statements.
   18
  **CN
          BANCORP, INC.**
 **CONSOLIDATED
          STATEMENTS OF COMPREHENSIVE INCOME**
 **For
          the years ended December 31, 2005 and 2004**
  
 **2005**
                
                **2004**Net
                    income
                
                $
                1,084,307
                
                $
                582,268Change
                    in unrealized gains and(losses) on securities available for sale
                
                
                (233,897
                )
                
                (223,776
                )Tax effect
                
                
                100,515
                
                
                76,084Net
                
                
                (133,382
                )
                
                (147,692
                )Reclassification
                    adjustment for (gains)losses included in net income
                
                
                -
                
                
                306Tax effect
                
                
                -
                
                
                (104
                )Net
                
                
                -
                
                
                202Other comprehensive loss
                
                
                (133,382
                )
                
                (147,490
                )Total
                    comprehensive income
                
                $
                950,925
                
                $
                434,778
   The
        Notes to Consolidated Financial Statements are an
        integral part of these statements.
  19
  **CN
          BANCORP, INC. AND SUBSIDIARY**
 **CONSOLIDATED
          STATEMENTS OF STOCKHOLDERS’ EQUITY**
 **For
          the years ended December 31, 2005 and 2004**
 
 Common
                  Stock
                
                Additional
                  Paid
                    in
                  Capital
                
                Retained
                  Earnings
                
                Accumulated
                  Other
                  Comprehensive
                  Income
                    (Loss)
                
                TotalBalance
                    December 31, 2003
                $12,647,450
                
                $705,730
                
                $781,891
                
                $1,351
                
                $14,136,422Net income in 2004
                
                
                
                
                582,268
                
                
                
                582,268Change
                    in unrealized gains and(losses) on securities available for sale
                
                
                
                
                
                
                (147,490)
                
                (147,490)Proceeds
                    from warrant exercises
                1,118,000
                
                183,600
                
                
                
                
                
                1,301,600Sale
                    of common stock under theDividend Reinvestment and StockPurchase Plan
                53,352
                
                22,667
                
                
                
                
                
                76,019Sale
                    of common stock under theEmployee Stock Purchase Plan
                26,850
                
                5,343
                
                
                
                
                
                32,193Dividends ($.21 per share)
                
                
                
                
                (286,157)
                
                
                
                (286,157)Balance
                    December 31, 2004
                $13,845,652
                
                $917,340
                
                $1,078,002
                
                $(146,139)
                
                $15,694,855Net
                    income in 2005
                
                
                
                
                1,084,307
                
                
                
                1,084,307Change
                    in unrealized gains and(losses) on securities available for sale
                
                
                
                
                
                
                (133,382)
                
                (133,382)Sale
                    of common stock under theDividend Reinvestment and StockPurchase Plan
                71,763
                
                33,551
                
                
                
                
                
                105,314Proceeds
                    from warrant exercises
                2,726,000
                
                -
                
                
                
                
                
                2,726,000Dividends ($.25 per share)
                
                
                
                
                (380,515)
                
                
                
                (380,515)Balance
                    December 31, 2005
                $16,643,415
                
                $950,891
                
                $
                    1,781,794
                
                $(279,521)
                
                $19,096,579
 The
          Notes to Consolidated Financial Statements are
          an integral part of these statements.
   20
  **CN
          BANCORP, INC. AND SUBSIDIARY**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 **For
          the years ended December 31, 2005 and 2004**
 **2005**
                
                **2004**CASH
                    FLOWS FROM OPERATING ACTIVITIESNet
                    income
                
                $
                1,084,307
                
                $
                582,268Adjustments
                    to reconcile net income to net cashprovided by operations:Depreciation and amortization
                
                
                343,671
                
                
                404,726Loss on sale of securities
                
                
                -
                
                
                306Gain on sale of loans
                
                
                (35,437
                )
                
                -Deferred income taxes
                
                
                (107,533
                )
                
                (16,446
                )Provision for loan losses
                
                
                184,310
                
                
                150,838Increase in cash surrender value of life insurance
                    policies
                
                
                (87,762
                )
                
                (44,252
                )Increase in other assets
                
                
                (204,803
                )
                
                (30,548
                )Increase in other liabilities
                
                
                302,977
                
                
                106,738Decrease in official checks
                
                
                (91,692
                )
                
                (320,208
                )Amortization of premiums and discounts
                
                
                8,515
                
                
                30,816Net
                    cash provided by operating activities
                
                
                1,396,553
                
                
                864,238CASH
                    FLOWS FROM INVESTING ACTIVITIESNet
                    increase in loans
                
                
                (11,651,132
                )
                
                (8,886,760
                )Decrease
                    (increase) in interest bearing deposits
                
                
                1,502,390
                
                
                (1,524,292
                )Investment
                    in securities - available for sale
                
                
                (3,966,092
                )
                
                (18,853,461
                )Investment
                    in securities - held to maturity
                
                
                -
                
                
                (5,353,479
                )Investment
                    in other securities
                
                
                (35,900
                )
                
                (125,600
                )Principal
                    payments and redemption of securities
                
                
                8,253,334
                
                
                7,131,890Proceeds
                    from sales of securities - available for sale
                
                
                -
                
                
                5,990,625Proceeds
                    from sale of loans
                
                
                1,800,000
                
                
                -Investment
                    in life insurance policies
                
                
                (1,175,000
                )
                
                -Purchase
                    of property, equipment and leasehold improvements
                
                
                (78,737
                )
                
                (531,377
                )Net
                    cash used by investing activities
                
                
                (5,351,137
                )
                
                (22,152,454
                )CASH
                    FLOWS FROM FINANCING ACTIVITIESNet
                    increase in deposits including interest credited
                
                
                6,974,990
                
                
                20,000,688Net
                    increase (decrease) in securities sold under agreementsto repurchase
                
                
                25,827
                
                
                (930,432
                )Proceeds
                    from warrant exercises
                
                
                2,726,000
                
                
                1,301,600Sales
                    of common stock under Dividend Reinvestment Plan
                
                
                105,314
                
                
                76,019Sales
                    of common stock under Employee Stock Purchase Plan
                
                
                -
                
                
                32,193Dividends
                    paid
                
                
                (269,464
                )
                
                (268,716
                )Net
                    cash provided by financing activities
                
                
                9,562,667
                
                
                20,211,352NET
                    INCREASE (DECREASE) IN CASH
                
                
                5,608,083
                
                
                (1,076,864
                )Cash
                    at beginning of period
                
                
                9,868,815
                
                
                10,945,679Cash
                    at end of period
                
                $
                15,476,898
                
                $
                9,868,815SUPPLEMENTAL
                    CASH FLOW INFORMATIONInterest
                    paid
                
                $
                1,943,101
                
                $
                1,236,563Income
                    taxes paid
                
                $
                495,154
                
                $
                316,300
  The
          Notes
          to Consolidated Financial Statements are an integral part of these
          statements.
  21




**CN
        BANCORP, INC. AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **Note
        1. The Company and its Significant Accounting Policies**
 
 CN
        Bancorp, Inc. (the Company) was incorporated in January, 1996 under the laws
        of
        the State of Maryland to serve as a bank holding company and formed County
        National Bank (the Bank) as a wholly owned subsidiary. The Company is registered
        as a bank holding company and the Bank is chartered as a national bank. The
        Bank
        opened on December 19, 1996. The Company (as a bank holding company) and
        the
        Bank (as a nationally chartered bank) are subject to government supervision,
        regulations and control.
 
 The
        Bank’s primary business activity is the solicitation and acceptance of deposits
        from within its market area and the use of such funds in loans and investments.
        The Bank is subject to competition from other financial institutions and
        financial service companies.
 
 Principles
        of Consolidation
 
 The
        consolidated financial statements include the accounts of the Company and
        its
        wholly owned subsidiary, County National Bank. All inter-company accounts
        and
        transactions have been eliminated in consolidation.
 
 Use
        of
        Estimates
 
 The
        financial statements have been prepared in conformity with accounting principles
        generally accepted in the United States of America. The preparation of the
        financial statements requires management to make estimates and assumptions
        that
        affect the reported amounts of assets and liabilities and disclosures of
        contingent assets and liabilities at the date of the financial statements
        and
        the reported amounts of revenue and expenses during the reporting period.
        Actual
        results could differ significantly from those estimates. Material estimates
        that
        are particularly susceptible to significant change in the near-term relate
        to
        the determination of the allowance for loan losses. See below for a discussion
        of the determination of that estimate.
 
 Investment
        Securities
 Available-for-sale
        securities consist of bonds and notes not classified as trading securities
        or as
        held-to-maturity securities. These securities are reported at their fair
        value
        with the unrealized holding gains and losses, net of tax, reported as a net
        amount in a separate component of stockholders’ equity until realized. Gains and
        losses on the sale of available-for-sale securities are determined using
        the
        specific identification method. Premiums and discounts are recognized in
        interest income using the interest method over the period to
        maturity.
 
 Securities
        for which the Company has the positive intent and ability to hold to maturity
        are reported at cost, adjusted for premiums and discounts that are recognized
        in
        interest income using the interest method over the period to maturity. A
        charge
        to operations would occur if the fair value of the securities declines below
        cost and the Company’s intention or ability to hold the securities to maturity
        changes.
 
 Declines
        in the fair value of individual held-to-maturity and available-for-sale
        securities below their cost that are other than temporary would result in
        write-downs of the individual securities to their fair value. In estimating
        other-then-temporary impairment losses, management considers (1) the length
        of
        time and the extent to which the fair value has been less than cost, (2)
        the
        financial condition and near-term prospects of the issuer, and (3) the intent
        and ability of the Company to retain its investment in the issuer for a period
        of time sufficient to allow for any anticipated recovery in the fair value.
        The
        related write-downs would be included in earnings as realized
        losses.
 
 Other
        Securities
 
 As
        a
        member of the Federal Reserve Bank of Richmond (Federal Reserve) and the
        Federal
        Home Loan Bank of Atlanta (FHLB), the Company is required to acquire and
        hold
        stock in these entities. Ownership of stock in these entities is restricted
        to
        members and can only be sold to and acquired from the respective entities
        at
        par. The
 
 
 22
  **CN
          BANCORP, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **Note
        1. The Company and its Significant Accounting Policies -
        Continued**
 
 Company
        also owns stock in Atlantic Central Bankers Bank (ACBB) and Maryland Financial
        Bank (MFB), banks that generally offers product and services only to other
        banks. Ownership of the ACBB shares is restricted to banks, and there is
        no
        active market for the ACBB or the MFB shares. As there is no readily
        determinable fair value for these securities, they are carried at
        cost.
 
 Loans
        and Allowance for Loan Losses
 
 Loans
        receivable that management has the intent and ability to hold for the
        foreseeable future or until maturity or pay-off are reported at their
        outstanding principal balance adjusted for any charge-offs, the allowance
        for
        loan losses and any unamortized deferred fees, costs, premiums and discounts.
        Loan origination fees and certain direct origination costs are capitalized
        and
        recognized as an adjustment of the yield of the related loan.
 
 The
        accrual of interest on loans is discontinued when, in management’s opinion, the
        full collection of principal or interest is in doubt, or a scheduled loan
        payment has become over ninety days past due, unless the obligation is well
        secured and in the process of collection. Interest received on non-accrual
        loans
        generally is either applied against principal or reported as interest income,
        according to management’s judgment as to the collectibility of
        principal.
 
 The
        Company determines and recognizes impairment of loans in accordance with
        the
        provisions of Statement of Financial Accounting Standards No. 114, Accounting
        by
        Creditors for Impairment of a Loan as amended by Statement 118, Accounting
        by
        Creditors for Impairment of a Loan - Income Recognition and Disclosures.
        A loan
        is determined to be impaired when, based on current information and events,
        it
        is probable that the Company will be unable to collect all amounts due according
        to the contractual terms of the loan agreement. A loan is not considered
        impaired during the period of delay in payment if the Company expects to
        collect
        all amounts due, including past-due interest. An impaired loan is measured
        at
        the present value of its expected future cash flows discounted at the loan’s
        effective interest rate or at the loan’s observable market price or the fair
        value of the collateral if the loan is collateral dependent. Statement No.
        114
        is generally applicable to all loans except large groups of smaller - balance
        homogeneous loans that are evaluated collectively for impairment unless such
        loans are subject to a restructuring agreement. Interest payments received
        are
        recognized as interest income or, if ultimate collectibility of principal
        is in
        doubt, are applied to principal.
 
 The
        allowance for loan losses is increased by charges to income and decreased
        by
        charge-offs (net of recoveries). Management’s periodic determination and
        evaluation of the adequacy of the allowance assesses various factors including
        inherent losses in all significant loans; known deterioration in concentrations
        of credit, certain classes of loans or collateral; historical loss experiences;
        results of independent reviews of loan quality and the allowance for loan
        losses; trends in portfolio quality, maturity and composition; volumes and
        trends in delinquencies and non-accrual loans, risk management policies and
        practices; lending policies and procedures; economic conditions and downturns
        in
        specific local industries; and the experience and quality of lending management
        and staff. Estimated losses in the portfolio are determined by applying loss
        ratios to loan categories, other than impaired loans and loans considered
        substandard or doubtful, which are evaluated separately, to determine loss
        estimates. Until the second quarter of 2004, the Company relied upon peer
        group
        loss ratios in its allowance calculations because of its relatively short
        operating history. The Company believed that its experience was sufficient
        for
        it to rely primarily upon its loss history and the other factors described
        above, rather than on peer losses, and amended its methodology accordingly
        at
        that time.
 
 The
        determination of the allowance for loan losses involves the use of various
        subjective estimates by management and may result in over or under estimations
        of the amount of inherent losses in the loan portfolio. To review the adequacy
        of the allowance, on a least a quarterly basis, management analyzes the loan
        portfolio through risk ratings. Each loan, other than impaired loans and
        loans
        considered substandard or doubtful, which are evaluated separately, is assigned
        a risk rating and estimated “low” and “high” loss percentages are applied to the
        loans in each rating. Management determines the loss percentages based upon
        its
        best estimates considering losses incurred. The allowance for loan losses
        is
        compared to this “low” and “high” range to ascertain that it is situated within
        the range.
  
 23
  **CN
          BANCORP, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **Note
        1. The Company and its Significant Accounting Policies -
        Continued**
 
 The
        allowance is also compared on at least a quarterly basis to peer group levels.
        Management believes that the recorded allowance for loan losses is appropriate.
 
 Property,
        Equipment and Leasehold Improvements
 
 Property,
        equipment and leasehold improvements are stated at cost less accumulated
        depreciation and amortization. Depreciation is charged to operations over
        the
        estimated useful lives of the assets using the straight-line method. Leasehold
        improvements are amortized to operations over the shorter of the lease term
        (including renewal options) or the life of the improvement.
 
 Bank
        Owned Life Insurance
 
 The
        Bank
        invests in bank owned life insurance (BOLI) as a source of funding for employee
        benefit expenses. BOLI involves the purchase of life insurance by the Bank
        on a
        select group of officers. The Bank is the owner and beneficiary of the policies.
        This life insurance is carried at the cash surrender value of the underlying
        policies. Income from the increase in the cash surrender value of the policies
        is included in other income.
 
 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 Company, (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 Company
        does not maintain effective control over the transferred assets through an
        agreement to repurchase them before their maturity.
 
 Securities
        Sold under Agreements to Repurchase
 
 Securities
        sold under agreements to repurchase are accounted for as borrowings and recorded
        as a liability at the amount of the repurchase obligation. These transactions
        mature the next business day. The Company’s repurchase obligations are secured
        by Company owned securities with market values exceeding the obligations.
        These
        securities are segregated from other, non-pledged securities.
 
 Deferred
        Income Taxes
 
 Deferred
        income taxes are recognized for temporary differences between the financial
        reporting basis and the income tax basis of assets and liabilities based
        on
        enacted tax rates expected to be in effect when such amounts are realized
        or
        settled. Deferred tax assets are recognized only to the extent that it is
        more
        likely than not that such amounts will be realized based on consideration
        of
        available evidence. The effect on deferred tax assets and liabilities of
        a
        change in tax rates is recognized in income in the period that includes the
        enactment date.
 
 Concentration
        of Credit Risk
 
 The
        Company grants loans to customers primarily in its market area in Maryland.
        The
        concentration of credit by type of loan is set forth in Note 3 below. The
        debtors’ ability to honor their contracts, including borrowing agreements, may
        be influenced by the economic conditions in the Company’s lending
        area.
 
 The
        Company sells federal funds, which are not insured by the Federal Deposit
        Insurance Corporation, to up three banking entities.
 
 
 24
 **CN
          BANCORP, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **Note
        1. The Company and its Significant Accounting Policies -
        Continued**
 
 Comprehensive
        Income or Loss
 
 Unrealized
        gains and losses on available for sale securities, net of tax, are reported
        as a
        separate component of the equity section in the consolidated statement of
        financial condition. Changes in the net unrealized gains and losses are
        components of comprehensive income or loss and are not included in reported
        net
        income or loss.
 
 Advertising
        Costs
 
 The
        Company expenses advertising costs as incurred.
 
 Earnings
        Per Share
 
 Basic
        EPS
        is computed based upon income available to common shareholders and the weighted
        average number of common shares outstanding for the period. Diluted EPS reflects
        the potential dilution that could occur if securities or other contracts
        to
        issue common stock were exercised or converted into common stock or resulted
        in
        the issuance of common stock that would share in the earnings of the Company.
        The determination of the amount of common stock equivalents arising from
        warrants and options issued by the Company requires the use of the average
        market price of the common shares during the year. The Company’s common shares
        are traded on the over-the -counter bulletin board (OTCBB) market. The volume
        of
        trading activity is light; therefore, management used the average price of
        all
        reported buy and sell transactions during the year ended December 31, 2005
        of
        $14.52 per share to determine dilutive shares during 2005. The average closing
        prices for days in which trades occurred during the year ended December 31,
        2004
        of $14.35 per share was used to determine dilutive shares during 2004.
 
 The
        weighted average number of common shares and dilutive securities (comprised
        of
        warrants and options) and resultant per share computations are as
        follows:
 
 2005
              
              2004Weighted
                  average shares outstanding
              1,435,278
              
              1,358,954Common
                  stock equivalents
              86,264
              
              103,921Average
                  common shares and equivalents
              1,521,542
              
              1,462,875Net
                  income
              $1,084,307
              
              $582,268Basic
                  earnings per share
              $.76
              
              $.43Diluted
                  earnings per share
              $.71
              
              $.40
 
 Stock
        Options
 
 The
        Company has adopted the disclosure-only provisions of SFAS No.123 “Accounting
        for Stock-Based Compensation” and SFAS No. 148 “Accounting for Stock-Based
        Compensation - Transition and Disclosure”, but applies Accounting Principal
        Board Opinion (APB) No. 25, “Accounting for Stock Issued to Employees” and
        related interpretations in accounting for its Plans. No compensation expense
        related to the Plans was recorded in 2005 or 2004. If the Company had elected
        to
        recognize compensation cost based on fair value at the grant dates for the
        option awards under the ESPP and SOP consistent with the method prescribed
        by
        SFAS No. 123, net income and earnings per share would have been reduced to
        the
        pro forma amounts as set forth below:
 
 
 25
 **CN
          BANCORP, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **Note
        1. The Company and its Significant Accounting Policies -
        Continued**
 
 Year
                  EndedDecember
                  31,2005
              
              2004Net
                  income, as reported
              $1,084,307
              
              $582,268Less
                  pro forma stock- based compensationexpenses
                  determined under fair valuemethod,
                  net of related taxes:ESPP
                  options
              -
              
              5,431SOP
                  options
              164,281
              
              101,614Pro
                  forma net income
              $920,026
              
              $475,223Net
                  income per share:Basic
                  - as reported
              $.76
              
              $.43Basic
                  - pro forma
              .64
              
              .35Diluted
                  - as reported
              .71
              
              .40Diluted
                  - pro forma
              .60
              
              .33
 
 The
        Financial Accounting Standards Board issued SFAS No.123 (revised 2004) in
        December 2004 which will require the Company to measure and record the cost
        of
        employee services received in exchange for an award of equity instruments
        based
        upon the grant-date fair value of the award (with certain limitations). SFAS
        123
        (revised 2004) is effective for the Company on January 1, 2006. Any impact
        in
        the future that the adoption of this statement will have on our financial
        position and results of operations will be determined by share-based payments
        granted in the future periods and the assumptions on which the value of those
        share-based payments is based. The Company is not required to make any rewards
        of equity instruments in the future.
 
 The
        weighted average fair value of the stock options granted in December 2005
        of
        $3.22 per option has been estimated using the Black-Scholes option-pricing
        model
        with the following assumptions: Dividend yield- 1.40%; risk free interest
        rate-
        4.42% to 4.51%; expected volatility- 12% and average life- 4 to10 years.
        The
        weighted average fair value of the stock options granted in December 2004
        of
        $2.21 per option was estimated using the same model with the following
        assumptions: Dividend yield- 1.48%; risk free interest rate- 3.50% to 4.10%;
        expected volatility- 5% and average life- 4 to10 years. The average fair
        value
        of the stock purchase options issued under the Employee Stock Purchase Plan
        in
        2004 were valued at the purchase discount amount (15%) because of the short
        duration of the options (three months).
 
 Statement
        of Cash Flows
 
 Cash
        and
        cash equivalents in the statement of cash flows include cash on hand,
        non-interest bearing amounts due from correspondent banks and the Federal
        Reserve and Federal funds sold.
  Reclassification
 
 Certain
        prior year’s amounts have been reclassified to conform to the current year’s
        method of presentation.
 
 
 
 26
 
 **CN
          BANCORP, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **Note
        2.**  **Investment
        Securities**
 
 Investment
        securities are summarized as follows:
 *AVAILABLE-FOR-
                    SALE SECURITIES*Gross
                
                Gross
                
                EstimatedAmortized
                
                Unrealized
                
                Unrealized
                
                FairCost
                
                Gains
                
                Losses
                
                ValueDecember
                    31, 2005Mortgage-backed
                    securities
                $3,670,094
                
                -
                
                $112,180
                
                $3,557,914U.S.
                    Government agencyNotes
                20,666,352
                
                -
                
                343,140
                
                20,323,212$24,336,446
                
                -
                
                $455,320
                
                $23,881,126December
                    31, 2004:Mortgage-backed
                    securities
                $4,759,959
                
                -
                
                $70,413
                
                $4,689,546U.S.
                    Government agencyNotes
                21,675,577
                
                2,655
                
                153,666
                
                21,524,566$26,435,536
                
                $2,655
                
                $224,079
                
                $26,214,112*HELD-TO-MATURITY
                    SECURITIES*December
                    31, 2005:Mortgage-backed
                    securities
                $4,159,164
                
                -
                
                $122,050
                
                $4,037,114U.S.
                    Government agencyNotes
                4,003,288
                
                -
                
                76,360
                
                3,926,928$8,162,452
                
                -
                
                $198,410
                
                $7,964,042December
                    31, 2004:Mortgage-backed
                    securities
                $5,343,065
                
                -
                
                $64,531
                
                $5,278,534U.S.
                    Government agencyNotes
                5,016,057
                
                5,266
                
                1,945
                
                5,019,378$10,359,122
                
                $5,266
                
                $66,476
                
                $10,297,912
  During
        2004 the Company sold available for sale securities with a cost of $5,990,931
        for $5,990,625 realizing a gross loss on the sales of $306. There were no
        sales
        of securities during 2005.
 
 Securities
        with a carrying amount of $555,311 (cost of $555,311 and fair value of $548,963)
        are pledged to customers under repurchase agreements at December 31, 2005.
        Securities with a carrying amount of $250,475 (cost of $250,475 and fair
        value
        of $246,025) are pledged to a local municipality as partial security for
        performance letters of credit issued for the benefit of the
        municipality.
 
 The
        stated maturity of securities available-for-sale and held-to-maturity are
        as
        follows at December 31, 2005:
 
 Available-for-Sale
                
                Held-to-MaturityAmortized
                
                Fair
                
                Amortized
                
                FairCost
                
                Value
                
                Cost
                
                ValueMatures
                    within 1 year
                $10,983,694
                
                $10,895,208
                
                $1,002,312
                
                $992,700Matures
                    after 1 through 5 years
                9,682,658
                
                9,428,004
                
                3,000,976
                
                2,934,22820,666,352
                
                20,323,212
                
                4,003,288
                
                3,626,928Mortgage-backed
                    securities
                3,670,094
                
                3,557,914
                
                4,159,164
                
                4,037,114$24,336,446
                
                $23,881,126
                
                $8,162,452
                
                $7,964,042
 
  27
 **CN
            BANCORP, INC. AND SUBSIDIARY**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **Note
        2.**  **Investment
        Securities - Continued**
 
 Below
        are
        schedules of securities with unrealized losses at December 31, 2005 and 2004.
        Unrealized losses (and unrealized gains) are the result of interest rate
        levels
        differing from those existing at the time of securities’ acquisition and, as to
        mortgage backed securities, actual and estimated prepayment speeds. These
        unrealized losses are considered temporary as they reflect fair values on
        December 31, 2005 and are subject to change daily as interest rates fluctuate.
        The Company has the intent and the ability to hold the securities to the
        maturity of the securities or the time required for the value of the securities
        to equal or exceed their cost.
 
 **December
                  31, 2005**
              
              Continuous
                  Unrealized Losses
                for
                  Less than 12 Months
              
              Continuous
                  Unrealized Losses
                for
                  12 Months or MoreUnrealized
              
              
              
              
              
              UnrealizedFair
                  Value
              
              #
              
              Losses
              
              Fair
                  Value
              
              #
              
              LossesMortgage-backed
                  securities:Available
                  for Sale
              
              $
              361,444
              
              
              1
              
              $
              1,614
              
              $
              3,196,470
              
              
              5
              
              $
              110,566Held
                  to Maturity
              
              
              -
              
              
              -
              
              
              -
              
              
              4,037,114
              
              
              6
              
              
              122,050361,444
              
              
              1
              
              
              1,614
              
              
              7,233,584
              
              
              11
              
              
              232,616U.S.
                  Government agency Notes:Available
                  for Sale
              
              
              -
              
              
              -
              
              
              -
              
              
              20,323,212
              
              
              17
              
              
              343,140Held
                  to Maturity
              
              
              -
              
              
              -
              
              
              -
              
              
              3,926,928
              
              
              3
              
              
              76,360-
              
              
              
              
              
              -
              
              
              -
              
              
              24,250,140
              
              
              20
              
              
              419,500Total
              
              $
              361,444
              
              
              1
              
              $
              1,614
              
              $
              31,483,724
              
              
              31
              
              $
              652,116
 
 
 **December
                  31, 2004**
              
              Continuous
                  Unrealized Losses
                for
                  Less than 12 Months
              
              Continuous
                  Unrealized Losses
                for
                  12 Months or MoreUnrealized
              
              
              
              
              
              UnrealizedFair
                  Value
              
              #
              
              Losses
              
              Fair
                  Value
              
              #
              
              LossesMortgage-backed
                  securities:Available
                  for Sale
              
              $
              4,689,546
              
              
              6
              
              $
              70,413
              
              $
              -
              
              
              -
              
              $
              -Held
                  to Maturity
              
              
              5,278,531
              
              
              6
              
              
              64,531
              
              
              -
              
              
              -
              
              
              -9,968,081
              
              
              12
              
              
              134,944
              
              $
              -
              
              
              -
              
              $
              -U.S.
                  Government agency Notes:Available
                  for Sale
              
              
              16,551,700
              
              
              16
              
              
              153,666
              
              
              -
              
              
              -
              
              
              -Held
                  to Maturity
              
              
              1,004,100
              
              
              1
              
              
              1,945
              
              
              -
              
              
              -
              
              
              -17,555,800
              
              
              17
              
              
              155,611
              
              
              -
              
              
              
              
              
              -Total
              
              $
              27,523,881
              
              
              29
              
              $
              290,555
              
              $
              -
              
              
              -
              
              $
              -
 
 Other
        Securities
 
 As
        a
        requirement for membership in the Federal Reserve and the FHLB, the Company
        is
        required to acquire and hold stock in these entities. The amount of stock
        that
        the Company is required to own is determined by separate formulas used by
        each
        entity. The Company also voluntarily acquired stock in ACBB and MFB. The
        Company
        records the Federal Reserve, FHLB, ACBB and MFB shares at cost. Investment
        in
        the shares of these entities is as follows:
 
 
 
 28
 
 **CN
            BANCORP, INC. AND SUBSIDIARY**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **Note
        2.**  **Investment
        Securities - Continued**
 
 December
                  31,2005
              
              2004Federal
                  Reserve Bank ofRichmond
                  stock
              
              $282,000
              
              $282,000Federal
                  Home Loan Bankof
                  Atlanta stock
              
              266,800
              
              230,900Atlantic
                  Central BankersBank
                  stock
              
              75,000
              
              75,000Maryland
                  Financial Bankstock
              
              150,000
              
              150,000$773,800
              
              $737,900
 
 
 **Note
        3. Loans and Allowance for Loan Losses**
 
 The
        Bank
        grants commercial and consumer loans to customers primarily in its market
        area
        of Anne Arundel County in Maryland. The principal categories of the loan
        portfolio are as follows:
  December
                  31,2005
              
              
              2004Commercial
                  loans
              
              $
              22,366,771
              
              $
              18,923,232Consumer
                  loans
              
              
              3,948,754
              
              
              4,100,899Real
                  Estate loans:Commercial
                  real estate
              
              
              29,420,805
              
              
              28,987,012Residential
                  real estate
              
              
              29,306,514
              
              
              21,646,113Construction
              
              
              4,329,827
              
              
              5,997,848Total
                  real estate loans
              
              
              63,057,146
              
              
              56,630,973Total
              
              
              89,372,671
              
              
              79,655,104Unearned
                  income and deferred costs, net
              
              
              52,926
              
              
              39,671Allowance
                  for loan losses
              
              
              (864,000
              )
              
              (800,000
              )$
              88,561,597
              
              $
              78,894,775
 The
        allowance for loan losses activity for the years ended December 31, 2005
        and
        2004 is as follows:
 2005
              
              2004Balance
                  at beginning of period
              
              $
              800,000
              
              $
              720,000Provision
                  for loan losses
              
              
              184,310
              
              
              150,838Less:
                  Commercial loans charged off
              
              
              -
              
              
              49,146Consumer
                  loans charged off
              
              
              140,728
              
              
              40,905140,728
              
              
              90,051Recoveries:
                  Commercial loans
              
              
              10,938
              
              
              6,491Consumer
                  loans
              
              
              9,480
              
              
              12,72220,418
              
              
              19,213Balance
                  at end of period
              
              $
              864,000
              
              $
              800,000
 
   29
  
 **Note
        3. Loans and Allowance for Loan Losses- Continued**
 
 At
        December 31, 2005 CN Bancorp has two loans on non-accrual status which are
        in
        process of collection with carrying amounts totaling $62,332: (1) an impaired
        secured commercial loan in the amount of $49,667; and (2) an unsecured
        commercial loan in the amount of $12,665. The amount of the specific allowance
        for loan losses for these loans is $15,795 at December 31, 2005. Unrecognized
        interest on the loans at December 31, 2005 is approximately $3,600. CN Bancorp
        is not committed to lend funds to debtors whose loans are on non-accrual
        status
        or are considered impaired.
 
 At
        December 31, 2004 CN Bancorp has two loans on non-accrual status which are
        in
        process of collection with carrying amounts totaling $51,027: (1) an impaired
        secured commercial loan in the amount of $1,000; and (2) a secured residential
        real estate loan in the amount of $50,027. The amount of the specific allowance
        for loan losses for these loans is $6,000 at December 31, 2004. Unrecognized
        interest on the loans at December 31, 2004 is approximately $5,000. CN Bancorp
        is not committed to lend funds to debtors whose loans are on non-accrual
        status
        or are considered impaired.
 
 At
        December 31, 2005 and 2004, the balance of commercial and real estate loans
        serviced by the Company for others under loan participation agreements was
        $3,608,047 and $1,936,034, respectively. The related mortgage servicing rights
        are not material and are included in other assets.
 
 Certain
        officers and directors (and companies in which they have a 10% or more
        beneficial ownership) have loans with the Bank. The activity of these loans
        during 2005 and 2004 is as follows:
 
 2005
              
              2004Total
                  loans at beginning of year
              $4,235,607
              
              $3,131,436New
                  loans and funding during the year
              2,889,347
              
              2,075,864Existing
                  loans to new officers and directors
              1,237,963
              
              -Repayments
                  during the year
              (1,720,816)
              
              (971,693)Total
                  loans at end of year
              $6,642,101
              
              $4,235,607
 
 
 **Note
        4. Property, Equipment and Leasehold Improvements**
 
 Property,
        equipment and leasehold improvements are as follows at December 31:
 
 UsefulLives
              
              2005
              
              2004Land
              Not
                  applicable
              
              $387,768
              
              $387,768Building
              40
                  years
              
              521,877
              
              521,877Leasehold
                  improvements
              15
                  to 40 years
              
              2,617,208
              
              2,617,208Furniture
                  and equipment
              3
                  to 15 years
              
              1,803,474
              
              2,292,542Construction
                  in process
              Not
                  applicable
              
              113,708
              
              73,5825,444,035
              
              5,892,977Accumulated
                  depreciationand
                  amortization
              
              
              1,529,782
              
              1,713,792Net
              
              
              $3,914,253
              
              $4,179,185
  Construction
        in process is comprised of costs of preparing building sites for new branch
        facilities.
 
 
 
 
 30
 **CN
            BANCORP, INC. AND SUBSIDIARY**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **Note
        5. Deposits**
 
 Deposit
        balances are summarized below as of December 31:
 
 2005
              
              2004Non-interest
                  bearing accounts
              $36,867,060
              
              $30,078,225NOW
                  accounts
              6,688,476
              
              6,295,471Money
                  market accounts
              8,712,590
              
              7,081,182Savings
                  accounts
              40,500,733
              
              39,334,411Time
                  deposit accounts:Less
                  than $100,000
              22,007,453
              
              22,110,809$100,000
                  or more
              11,509,162
              
              14,410,386$126,285,474
              
              $119,310,484
 
 The
        time
        deposit accounts mature and/or re-price as follows: within one year -
        $11,860,909; one to two years - $10,593,170; two to three years - $7,424,285;
        three to four years - $3,120,904; four to five years - $517,347.
  **Note
        6. Other Borrowed Funds**
 
 The
        Bank
        enters into sales of securities under agreements to repurchase the same
        securities, which mature the next business day. Securities pledged as collateral
        for securities sold under agreements to repurchase include various debt
        securities having an aggregate carrying amount of $555,311 and $528,989 at
        December 31, 2005 and 2004, respectively. The cost of and fair value of the
        securities were $555,311 and $548,963 at December 31, 2005 and $532,044 and
        $523,731 at December 31, 2004, respectively.
 
 Information
        concerning securities sold under agreements to repurchase at and during the
        year
        ended December 31, 2005 and 2004 is summarized as follows:
 
 2005
              2004Total
                  outstanding at year-end
              $548,367
              $522,540Average
                  balance during the year
              $1,498,356
              $2,161,416Average
                  interest rate during the year
              .80%
              .75%Maximum
                  balance during the year
              $3,345,763
              $3,159,632
  **Note
        7. Capital Stock**
 
 The
        Company sold warrants to purchase common stock to the Company’s organizers.
        Under the warrants, 343,431 shares of common stock may be issued at the price
        of
        $10.00 per share. The warrants may be exercised on or after March 20, 1998
        and
        they expire on March 20, 2006. Proceeds from the sale were $3,434. Warrants
        representing 272,600 shares were exercised in 2005 (20,000 shares were exercised
        in 2004). There are warrants representing 50,831 shares outstanding at December
        31, 2005.
 
 The
        Company provided each common shareholder of record on December 31, 1998 a
        dividend consisting of a warrant to acquire additional common stock in the
        Company. The warrants were issued on January 4, 1999. Each share of stock
        owned
        entitled the shareholder to a warrant to acquire an additional share of common
        stock for the amount of $12.00 per share. The warrants to purchase a total
        of
        860,000 shares of common stock became exercisable on January 5, 2000 and
        expired
        on January 5, 2004. No value was assigned to the warrants at their issuance
        since the value determined using the Black-Scholes option-pricing model was
        immaterial. During 2004, 91,800 warrants for common stock were exercised.
        There
        are no $12.00 warrants outstanding at December 31, 2004 or 2005.
  
 31
  **CN
          BANCORP, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **Note
        7. Capital Stock- Continued**
 
 In
        April
        2004, the Board of Directors approved the Company’s Dividend Reinvestment and
        Stock Purchase Plan (DRIP) which authorizes up to 200,000 shares of common
        stock
        for use under the DRIP. Under the DRIP, the shareholder may receive dividends
        paid on the common stock of the Company that they own in additional shares
        of
        common stock of the Company. Shareholders are also allowed to purchase
        additional shares of common stock on the dividend payment dates up to a maximum
        value of $5,000. The shares are sold under this plan at the fair market value
        of
        the stock on the dividend declaration date. During 2005, 7,176 shares of
        common
        stock were issued under the DRIP. During 2004, 5,335 shares of common stock
        were
        issued under the DRIP. There are remaining 187,489 shares of stock available
        for
        use under the DRIP at December 31, 2005.
 
 The
        Company is authorized to issue 5,000,000 shares of $.01 par value preferred
        stock. No preferred stock has been offered or issued.
 
 **Note
        8. Stock Options**
 
 In
        May
        2004, the shareholders approved the Company’s Employee Stock Purchase Plan
        (ESPP) authorizing up to 50,000 shares of common stock for use under the
        ESPP.
        Under the ESPP, the Company may award options to employees to purchase common
        stock at the purchase price for the shares at the lower of 85% of fair market
        value of
 the
        common stock on the date of the option grant or on the exercise date of the
        option. During 2004, 2,685 shares were purchased by employees under the ESPP.
        There are no outstanding options to purchase common shares at December 31,
        2005
        under the ESPP. No shares were granted or sold under the plan during
        2005 .
 
 In
        April
        2004, the Board of Directors approved the Company’s Directors Stock Purchase
        Plan (DSPP) authorizing up to 50,000 shares of common stock for use under
        the
        DSPP. Under the DSPP, the Company may award options to directors to purchase
        common stock at fair market value as of the date of the option grant. No
        shares
        were purchased during 2005 or 2004 under the DSPP and there are no outstanding
        options to purchase common shares at December 31, 2005.
 
 In
        May
        2004, the shareholders approved the Company’s Stock Option Plan (SOP)
        authorizing up to 200,000 shares of common stock for use under SOP. Under
        the
        SOP, the Company may award options to designated officers and employees to
        purchase common stock at the minimum purchase price of fair market value
        of the
        common stock on the date of the option grant. The options have a maximum
        term of
        ten years. The Board of Directors determines the vesting, term and purchase
        price for each option granted within the parameters of the SOP.
 
 On
        December 6, 2005, the Company granted immediately vested options to purchase
        51,000 shares of its common stock to certain officers and employees under
        the
        SOP at the fair value of the stock on the date of grant for a period of ten
        years. All of the options’ exercise price is $14.50 per share and the options
        expire on December 5, 2015. At December 31, 2005, all of these options (51,000
        shares) are outstanding. Also outstanding are options to purchase
 46,500
        shares of common stock at $14.20 per share remaining from the award of ten
        year
        fully vested options in December 2004. No options were exercised in 2005
        (4,500
        options were canceled upon employee terminations).
 
 **Note
        9. Commitments**
 
 Commitments
        to extend credit are agreements to lend funds to customers as long as there
        are
        no violations of any condition established in the loan contracts. Commitments
        generally have fixed expiration dates or other termination clauses and may
        require payment of a fee. Since many of the commitments are expected to expire
        without being drawn upon, the total commitment amounts do not necessarily
        represent future cash requirements. The Bank evaluates each customer’s credit
        worthiness on a case-by-case basis. The amount of collateral obtained, if
        it is
        deemed necessary by the Bank upon extension of credit, is based on management’s
        credit evaluation of the customer. Collateral held varies but may include
        accounts receivable, inventory, property, plant and equipment as well as
        income
        producing properties.
 
 
 32
  **CN
          BANCORP, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **Note
        9. Commitments- Continued**
 
 Standby
        letters of credit are conditional commitments issued by the Bank to guarantee
        the performance of a customer to a third party. The credit risk involved
        in
        issuing letters of credit is essentially the same as that involved in extending
        loan facilities to customers. The Bank holds collateral supporting those
        commitments for which collateral is deemed necessary. The Bank has not been
        required to perform on any financial guarantees and has not recorded or incurred
        any losses on its commitments.
 
 A
        summary
        of the Bank’s commitments at December 31, 2005 and 2004 follows:
 
 2005
              2004Commitments
                  to extend credit
              $14,822,411
              $10,523,924Standby
                  letters of credit
              $1,960,855
              $1,985,033
 
 The
        Bank
        has entered into leases for its branches and office space, most of which
        contain
        renewal options. The minimum net non-cancelable future rental commitments
        at
        December 31, 2005 are as follows:
 
 
 Year
                  EndingDecember
                  31,2006
              
              $226,5602007
              
              212,8622008
              
              173,9982009
              
              147,5282010
              
              147,5282011
              
              61,470
 
 The
        related net rent expense was $228,226 and $225,240 in 2005 and 2004,
        respectively.
 
 **Note
        10. Regulatory Matters**
 
 The
        Company and the Bank are subject to various regulatory capital requirements
        administered by the federal banking agencies. Failure to meet minimum capital
        requirements can initiate certain mandatory - and possibly additional
        discretionary - actions by regulators that, if undertaken, could have a direct
        material effect on the Company’s financial statements. Under capital adequacy
        guidelines and the regulatory framework for prompt corrective action, the
        Company and the Bank must meet specific capital guidelines that involve
        quantitative measures of assets, liabilities and certain off-balance-sheet
        items
        as calculated under regulatory accounting practices. The Company’s and the
        Bank’s capital amounts and classification are also subject to qualitative
        judgments by the regulators about components, risk weightings and other
        factors.
 
 The
        Company and the Bank must maintain minimum capital and other requirements
        of
        regulatory authorities when declaring and paying dividends. The Company and
        the
        Bank have complied with such capital requirements.
 
 Quantitative
        measures established by regulation to ensure capital adequacy require the
        Company and the Bank to maintain minimum amounts and ratios (set forth in
        the
        table below) of total and Tier I capital (as defined in the regulation) to
        risk-weighted assets (as defined), and of Tier I capital to average assets
        (as
        defined). Management believes, as of December 31, 2005, that the Company
        and the
        Bank meet capital adequacy requirements to which they are subject.
 
 As
        of
        December 31, 2005, the most recent notification from the regulators categorized
        the Bank as well capitalized under the regulatory framework for prompt
        corrective action. To be categorized as well capitalized the Bank must meet
        minimum total risk-based, Tier I risk-based and Tier I leverage ratios. There
        are no conditions or events since that notification that management believes
        have changed the Company’s and the Bank’s category.
   33
 **CN
            BANCORP, INC. AND SUBSIDIARY**
 **NOTES
            TO CONSOLIDATED FINANCIAL
            STATEMENTS**
 **Note
        10. Regulatory Matters- Continued**
 
 Actual
        capital amounts and ratios are presented in the table
        below:
 Actual
                  
                  To
                      be “Adequately
                    Capitalized”
                  
                  To
                      be
                    “Well
                    Capitalized”December
                      31, 2005
                  Amount
                  Ratio
                  
                  Amount
                  
                  Ratio
                  
                  Amount
                  
                  RatioTotal
                      Capital (to risk weighted assets):Company
                  $19,827,137
                  20.8%
                  
                  $7,619,946
                  >
                  8.0%
                  
                  N/ABank
                  12,390,126
                  13.6%
                  
                  7,282,221
                  >
                  8.0%
                  
                  $9,102,776
                  >
                  10.0%Tier
                      I Capital (to risk weighted assets):Company
                  18,963,137
                  19.9%
                  
                  3,809,973
                  >
                  4.0%
                  
                  N/ABank
                  11,526,126
                  12.7%
                  
                  3,641,111
                  >
                  4.0%
                  
                  5,461,666
                  >
                  6.0%Tier
                      I Capital (to average assets):Company
                  18,963,137
                  12.9%
                  
                  5,898,699
                  >
                  4.0%
                  
                  N/ABank
                  11,526,126
                  8.0%
                  
                  5,740,928
                  >
                  4.0%
                  
                  7,176,160
                  >
                  5.0%December
                      31, 2004Total
                      Capital (to risk weighted assets):Company
                  $16,436,080
                  19.0%
                  
                  $6,909,474
                  >
                  8.0%
                  
                  N/ABank
                  11,486,757
                  13.9%
                  
                  6,628,937
                  >
                  8.0%
                  
                  $8,286,171
                  >
                  10.0%Tier
                      I Capital (to risk weighted assets):Company
                  15,636,080
                  18.1%
                  
                  3,454,737
                  >
                  4.0%
                  
                  N/ABank
                  10,686,757
                  12.9%
                  
                  3,314,469
                  >
                  4.0%
                  
                  4,971,703
                  >
                  6.0%Tier
                      I Capital (to average assets):Company
                  15,636,080
                  11.2%
                  
                  5,579,100
                  >
                  4.0%
                  
                  N/ABank
                  10,686,757
                  7.8%
                  
                  5,453,293
                  >
                  4.0%
                  
                  6,816,616
                  >
                  5.0%
  **Note
        11. Income Taxes**
 
 The
        income tax expense consists of the following for the years ended December
        31,
        2005 and 2004:
  2005
              
              2004Current:Federal
              
              $600,955
              
              $270,730State
              
              73,548
              
              42,913$674,503
              
              $313,643Deferred:Federal
              
              $(93,608)
              
              $1,143State
              
              (13,925)
              
              (17,589)(107,533)
              
              (16,446)$566,970
              
              $297,197
 
 The
        reasons for the differences between the statutory federal income tax rates
        are
        summarized as follows:
  2005
              
              2004Amount
              
              Rate
              
              Amount
              
              RateTax
                  at statutory rates
              
              $561,434
              
              34.0%
              
              $299,018
              
              34.0%State
                  income taxes net offederal
                  tax benefit
              
              39,354
              
              2.4%
              
              16,714
              
              1.9%Increase
                  in cash surrendervalue
                  of life insurance
              
              (29,839)
              
              (1.8)%
              
              (15,046)
              
              (1.7)%Other
              
              (3,979)
              
              (.3)%
              
              (3,489)
              
              (.4)%$566,970
              
              34.3%
              
              $297,197
              
              33.8%
    34
 **CN
          BANCORP, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **Note
        11. Income Taxes - Continued**
 
 The
        deferred income tax account is comprised of the following at December 31,
        2005
        and 2004:
 
 2005
              
              2004Deferred
                  tax assets:Allowance
                  for loan losses
              
              $
              303,240
              
              $
              290,417Deferred
                  compensation plan
              
              
              107,858
              
              
              56,460Unrealized
                  losses on securities, net
              
              
              175,799
              
              
              75,284Other
              
              
              -
              
              
              4,060586,897
              
              
              426,221Deferred
                  tax liabilities:Accumulated
                  depreciation
              
              $
              173,608
              
              $
              221,306Other
              
              
              326
              
              
              -173,934
              
              
              221,306Net
                  deferred tax assets
              
              $
              412,963
              
              $
              204,915
 
 Federal
        and state income taxes payable of $177,278 ($166,536 Federal and $10,742
        state)
        in 2005 and $34,737 ($24,050 Federal and $10,687 state) in 2004 are included
        in
        other liabilities.
 
 **Note
        12. Related Party Transactions**
 
 The
        Bank
        leases two properties from entities controlled by a director and stockholder
        of
        the Company. One property is used for the Bank’s operations offices and a branch
        facility. The lease expires in May 2006 but is renewable at the option of
        the
        Bank for two additional five-year periods. The monthly payment under this
        lease
        at December 31, 2005 is $12,294. Lease payments made for these facilities
        totaled $145,163 in 2005 and $140,799 in 2004. The other leased property
        is used
        as a branch facility which opened in January 2004. The lease expires in May
        2008
        but is renewable at the option of the Bank for seven additional five-year
        periods. The monthly payment under this lease at December 31, 2005 is $5,294.
        Lease payments of $62,513 and $60,636 were made under this lease during 2005
        and
        2004, respectively.
 
 During
        2003, the Bank sold loan participations to family members of a director of
        the
        Bank and the Company on a non-recourse basis. Under these transactions, the
        family members acquired undivided percentage interests in specific loans
        held by
        the Bank. The participations were sold under the same terms and conditions
        as
        loan participations sold to non-related entities. The total loan participation
        amount outstanding at December 31, 2005 and December 31, 2004 was $673,026
        and
        $744,434, respectively.
 
 **Note
        13. Retirement Plans**
 
 The
        Company has entered into Supplemental Executive Retirement Plan and Consulting
        Agreements (SERPs) with several officers under which the Company has agreed
        to
        provide retirement benefits to the officers. The balance of each officer’s
        unfunded SERP liability account will determine the amount of the benefit
        to each
        officer at retirement as this balance will be paid to the officer over ten
        years
        after retirement. Until retirement, the SERP liability accounts are increased
        by
        the after Federal income tax effect of the increases in the cash surrender
        value
        of life insurance policies acquired by the Company. During 2005, new SERP
        agreements were established with additional officers and the existing SERPs
        were
        enhanced. The Company invested $1,175,000 in new life insurance policies
        in 2005
        to fund the new/enhanced benefits. During 2005 and 2004, $126,350 and $67,530,
        respectively were added to the SERP liability balances and charged to
        compensation expense. The balance of all SERP liability accounts was $261,585
        at
        December 31, 2005 and $135,235 at December 31, 2004.
 
 The
        Bank
        has a 401(k) profit sharing plan for those employees who meet the eligibility
        requirements set forth in the plan. The plan does not require the Bank to
        match
        the participants’ contributions; however, the Bank expensed $45,324 and $34,662
        for matching the contributions in 2005 and 2004, respectively.
    35
 **CN
          BANCORP, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **Note
        14. Fair Value of Financial Instruments**
  The
        estimated fair values of the Company’s financial instruments at December 31,
        2005 and 2004 are summarized below. The fair values of a significant portion
        of
        these financial instruments are estimates derived using present value techniques
        and may not be indicative of the net realizable or liquidation values. Also,
        the
        calculation of estimated fair values is based on market conditions at a specific
        point in time and may not reflect current or future fair values.
 
 December
                  31, 2005
              
              December
                  31, 2004Carrying
                Amount
              Fair
                Value
              
              Carrying
                Amount
              Fair
                ValueFinancial
                  assets:Cash
                  and due from banks
              $4,214,570
              4,214,570
              
              $2,759,279
              2,759,279Federal
                  funds sold
              11,262,328
              11,262,328
              
              7,109,536
              7,109,536Interest
                  bearing deposits
              2,884,893
              2,884,893
              
              4,387,283
              4,387,283Investment
                  securities (total)
              32,817,378
              32,618,968
              
              37,311,134
              37,249,924Loans,
                  net
              88,561,597
              88,691,945
              
              78,894,775
              78,447,975Accrued
                  interest receivable
              595,131
              595,131
              
              523,239
              523,239Mortgage
                  servicing rights
              26,321
              26,321
              
              -
              -Financial
                  liabilities:Non-interest
                  bearing deposits
              $36,867,060
              36,867,060
              
              $30,078,225
              30,078,225Interest
                  bearing deposits
              89,418,414
              89,519,351
              
              89,232,259
              89,572,057Securities
                  sold under agreements
                to
                  repurchase
              548,367
              548,367
              
              522,540
              522,540Accrued
                  interest payable
              53,571
              53,571
              
              46,550
              46,550Off-balance
                  sheet commitments
              -
              -
              
              -
              -
 
 The
        fair
        value of cash and due from banks, federal funds sold, interest bearing deposits,
        accrued interest receivable and mortgage serving rights are equal to the
        carrying amounts. The fair values of Government agency securities and
        mortgage-backed securities are determined using market quotations. Loans
        receivable were discounted using a single discount rate, comparing the current
        rates at which similar loans would be made to borrowers with similar credit
        ratings and for the same remaining maturities. The fair value of variable
        rate
        loans is estimated to equal the carrying amount. The valuation of loans is
        adjusted for possible credit losses.
 
 The
        fair
        value of non-interest bearing deposits, interest-bearing checking, savings,
        and
        money market deposit accounts, securities sold under agreements to repurchase,
        and accrued interest payable are equal to the carrying amounts. The fair
        value
        of fixed-maturity time deposits is estimated based on interest rates currently
        offered for deposits of similar remaining maturities.
 
 **Note
        15. Parent Company Financial Information**
 
 Information
        as to the financial position of CN Bancorp, Inc. as of December 31, 2005
        and
        2004 and results of operations and cash flows for the years then ended
        follows:
 
 December
                  31,
              
              December
                  31,*Statements
                  of Financial Condition*
              
              2005
              
              2004Cash
                  in bank and on hand
              
              $
              3,406,752
              
              $
              1,527,001Loans
                  receivable
              
              
              4,059,558
              
              
              3,343,705Investment
                  in subsidiary
              
              
              11,659,569
              
              
              10,745,532Investment
                  in stock of Maryland Financial Bank
              
              
              150,000
              
              
              150,000Other
                  assets
              
              
              13,280
              
              
              13,000$
              19,289,159
              
              $
              15,779,238
   36
  **CN
            BANCORP, INC. AND SUBSIDIARY**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **Note
        15. Parent Company Financial Information- Continued**
 December
                    31,
                
                December
                    31,*Statements
                    of Financial Condition*
                
                2005
                
                2004Cash
                    in bank and on hand
                
                $
                3,406,752
                
                $
                1,527,001Loans
                    receivable
                
                
                4,059,558
                
                
                3,343,705Investment
                    in subsidiary
                
                
                11,659,569
                
                
                10,745,532Investment
                    in stock of Maryland Financial Bank
                
                
                150,000
                
                
                150,000Other
                    assets
                
                
                13,280
                
                
                13,000$
                19,289,159
                
                $
                15,779,238
  December
                    31,
                
                December
                    31,*Statements
                    of Financial Condition- Continued*
                
                2005
                
                2004Dividends
                    payable
                
                $
                166,434
                
                $
                55,383Other
                    payables
                
                
                26,146
                
                
                -Payable
                    to County National Bank
                
                
                -
                
                
                29,000192,580
                
                
                84,383Stockholders’
                    equity
                
                
                19,096,579
                
                
                15,694,855$
                19,289,159
                
                $
                15,779,238
  Year
                    ended
                
                Year
                    ended*Statements
                    of Operations*
                
                December
                    31, 2005
                
                December
                    31, 2004Dividends
                    from bank subsidiary
                
                $
                -
                
                $
                -Interest
                    income
                
                
                273,525
                
                
                104,605Less
                    expenses:Management
                    fees
                
                
                120,000
                
                
                29,000Other
                    administrative expenses
                
                
                93,425
                
                
                75,443213,425
                
                
                104,443Income
                    before equity in undistributed net incomeOf
                    bank subsidiary and income tax benefit
                
                
                60,100
                
                
                162Income
                    tax expense
                
                
                23,211
                
                
                -Income
                    before equity in undistributed net incomeof
                    bank subsidiary
                
                
                36,889
                
                
                162Equity
                    in undistributed net income of bank subsidiary
                
                
                1,047,418
                
                
                582,106Net
                    income
                
                $
                1,084,307
                
                $
                582,268
 
 Year
                        ended
                    
                    Year
                        ended*Statements
                        of Cash Flows*
                    
                    December
                        31, 2005
                    
                    December
                        31, 2004Cash
                        flows from operating activities:Net
                        income
                    
                    $
                    1,084,307
                    
                    $
                    582,268Equity
                        in undistributed earnings of bank subsidiary
                    
                    
                    (1,047,418
                    )
                    
                    (582,106
                    )Increase
                        in other assets
                    
                    
                    (280
                    )
                    
                    (8,342
                    )Increase
                        (decrease) in payables
                    
                    
                    (2,855
                    )
                    
                    29,000Net
                        cash provided by operating activities
                    
                    
                    33,754
                    
                    
                    20,820Cash
                        flows from investing activities:Investment
                        in stock of Maryland Financial Bank
                    
                    
                    -
                    
                    
                    (50,000
                    )Increase
                        in loans receivable
                    
                    
                    (715,853
                    )
                    
                    (3,148,933
                    )Net
                        cash used in investing activities
                    
                    
                    (715,853
                    )
                    
                    (3,198,933
                    )
 Cash
                      flows from financing activities:Sales
                      of stock under Dividend Reinvestment Plan
                  
                  
                  105,314
                  
                  
                  76,019Sales
                      of stock under Employee Stock Purchase Plan
                  
                  
                  -
                  
                  
                  32,193Proceeds
                      from warrant exercises
                  
                  
                  2,726,000
                  
                  
                  1,301,600Dividends
                  
                  
                  (269,464
                  )
                  
                  (268,716
                  )Net
                      cash provided by financing activities
                  
                  
                  2,561,850
                  
                  
                  1,141,096
  Increase
                      (decrease) in cash and cash equivalents
                  
                  
                  1,879,751
                  
                  
                  (2,037,017
                  )Cash
                      and cash equivalents at beginning of period
                  
                  
                  1,527,001
                  
                  
                  3,564,018Cash
                      and cash equivalents at end of period
                  
                  $
                  3,406,752
                  
                  $
                  1,527,001
 
 37
 
 **Note
        16. Recent Accounting Pronouncements**
 
 **FSP
        FAS No. 115-1 and FAS 124-1**
 
 In
        March
        2004, the EITF reached a consensus on Issue No. 03-1, “The Meaning of
        Other-Than-Temporary Impairment and Its Application to Certain Investments.”
EITF 03-1 provides guidance on other-than-temporary impairment models for
        marketable debt and equity securities accounted for under SFAS 115 and
        non-marketable equity securities accounted for under the cost method. The
        EITF
        developed a basic three-step model to evaluate whether an investment is
        other-than-temporarily impaired. In November 2005, the FASB approved the
        issuance of FASB Staff Position FAS No. 115-1 and FAS 124-1, “The Meaning
        of Other-Than-Temporary Impairment and Its Application to Certain Investments.”
The FSP addresses when an investment is considered impaired, whether the
        impairment is other-than-temporary and the measurement of an impairment loss.
        The FSP also includes accounting considerations subsequent to the recognition
        of
        an other-than-temporary impairment and requires certain disclosures about
        unrealized losses that have not been recognized as other-than-temporary.
        The FSP
        is effective for reporting periods beginning after December 15, 2005 with
        earlier application permitted. The effective date will be the first quarter
        of
        2006. The adoption of this accounting principle is not expected to have a
        significant impact on our financial position or results of operations.
 
 
 38














**DIRECTORS
        AND OFFICERS**
 
 **CN
        BANCORP, INC.**
 
 **Board
        of Directors**
 
 Jan
                  W. Clark, Chairman of the Board
              John
                  E. DeGrange, Sr., Vice Chairman of the BoardCarl
                  L. Hein, Jr. (Treasurer)
              Creston
                  G. TateGerald
                  V. McDonald
              John
                  G. Warner
 
 Henry
        L.
        Hein, Director Emeritus
 Shirley
        S. Palmer, Secretary
 
 *Executive
        Officers*
 Jan
                  W. Clark
              President
                  & Chief Executive OfficerJohn
                  G. Warner
              Executive
                  Vice PresidentMichael
                  T. Storm
              Chief
                  Financial Officer
 
 
 **COUNTY
        NATIONAL BANK**
 
 **Board
        of Directors**
 
 Gerald
                  V. McDonald, Chairman of the Board
              John
                  E. DeGrange, Sr., Vice Chairman of the BoardJan
                  W. Clark
              Daljit
                  S. Sawhney, MDF.
                  Paul Dorr
              Creston
                  G. TateCarl
                  L. Hein, Jr. (Treasurer)
              LeRoy
                  C. TaylorRobert
                  P. Musselman, Sr.
              John
                  G. WarnerWade
                  H. Ritchie III
              K.
                  Patricia Wellford
 
 Henry
        L.
        Hein, Director Emeritus
 Shirley
        S. Palmer, Secretary
 
 *Executive
        Officers*
 Jan
                  W. Clark
              President
                  & Chief Executive OfficerJohn
                  G. Warner
              Executive
                  Vice President & Chief Operating OfficerMichael
                  T. Storm
              Senior
                  Vice President & Chief Financial OfficerMichael
                  L. Derr
              Vice
                  President
 
 *Other
        Officers*
 Douglas
                  W. DeVaughn
              Vice
                  PresidentRalph
                  F. Ebbenhouse
              Vice
                  PresidentJanet
                  M. King
              Vice
                  PresidentBridget
                  K. Bunch
              Assistant
                  Vice PresidentSusan
                  M. Liebenthal
              Assistant
                  Vice PresidentLinda
                  Loane
              Assistant
                  Vice PresidentG.
                  Claudia Madison
              Assistant
                  Vice President
 
 CN
        BANCORP, INC. WILL PROVIDE, WITHOUT CHARGE, TO SHAREHOLDERS OF RECORD OR
        ANY
        BENEFICIAL OWNER OF COMMON STOCK, A COPY OF ITS 2005 ANNUAL REPORT ON FORM
        10-KSB FILED WITH THE SECURITIES AND EXCHANGE COMMISSSION, UPON WRITTEN REQUEST.
        REQUESTS SHOULD BE DIRECTED TO SHIRLEY PALMER, CORPORATE SECRETARY, 7401
        RITCHIE
        HIGHWAY, GLEN BURNIE, MARYLAND 21061.
  39