Commercial National Reports Continued Core Earnings Growth For June 30, 2017

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Commercial National Financial Corporation

Jul 20, 2017, 10:13 ET

LATROBE, Pa., July 20, 2017 /PRNewswire/ -- Commercial National Financial Corporation (OTC Markets: CNAF) (Company), parent Company of Commercial Bank & Trust of PA, has reported results for the quarter ended June 30, 2017. The Company earned $1,142,000 (or $0.40 per average share outstanding) in the second quarter 2017 compared to $1,211,000 (or $0.42 per average share outstanding) in the second quarter 2016 which included $719,000 in realized net securities gains. The Company earned $2,156,000 (or $0.75 per average share outstanding) for the six-month period ended June 30, 2017 and $2,457,000 (or $0.86 per average share outstanding) for the six-month period ended June 30, 2016 which included $1,188,000 in realized net securities gains. No realized net securities gains were generated during 2017's first six months. Linked sequential quarterly core earnings have greatly increased throughout 2017's first six months with second quarter 2017 earnings representing a $387,000, or 51.3%, improvement over fourth quarter 2016 earnings due to earning asset growth and successful new operating expense control efficiencies.

The Company's annualized return on average assets and average equity for the quarter ended June 30, 2017 were 1.09% and 7.96%, respectively, compared to 1.30% and 8.40%, respectively, for the quarter ended June 30, 2016. The Company's annualized return on average assets and average equity for the six-month period ended June 30, 2017 were 1.08% and 7.63%, respectively, compared to 1.28% and 8.62%, respectively, for the six-month period ended June 30, 2016. Tier one risk-based, total risk-based, leverage and common equity tier one capital ratios for June 30, 2017 were 20.68%, 21.17%, 13.13% and 20.68%, respectively. Second quarter tax equivalent net interest margin was 4.29%. No loan loss provisioning has been needed over the past thirty-eight consecutive fiscal quarters. Earning asset credit quality metrics remain outstanding relative to banking industry norms. During 2017's first six months the Company's capital leverage was progressively improved resulting in a material strengthening of ongoing core earnings. The Company's strong capital position, supplemented by recent and reasonably anticipated core earnings, remains supportive of the regular $0.26 quarterly common stock cash dividend payments to shareholders.

As disclosed each year in the Annual Report to Shareholders, on June 30, 2017, the Company employed 104 people in full-time and part-time positions. Fifty-two (52) employees are represented by the United Auto Workers, Local 1799. Of that bargaining unit total, thirty-five (35) employees are full-time, twelve (12) employees are part-time and five (5) employees are seasonal part-time. The Company has had unionized employees since 1972. In 2013, the Company and the bargaining unit entered into a labor agreement that will expire in February 2019. The Commonwealth of Pennsylvania and the National Labor Relations Board both afford protection to the organized status of pre-existing collective bargaining units. The Company has been advised that bargaining unit status may limit the Company's strategic options relative to those of non-unionized insured depository institutions. The Company continues to consider this as a factor in its strategic and capital management decisions.

The Company operates nine community banking facilities in Greensburg, Hempfield Township, Latrobe, Ligonier, North Huntingdon, Unity Township and West Newton, Pennsylvania and also maintains a commercial business development sales force throughout its entire market area. The Company operates an asset management and trust division of Commercial Bank & Trust of PA headquartered in Greensburg, Pennsylvania. Commercial Bank & Trust of PA also serves its customer base from an Internet banking site (www.cbthebank.com) and an automated TouchTone Teller banking system.

Safe Harbor Statement

Forward-looking statements (statements which are not historical facts) in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "to," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements are based on information currently available to the Company, and the Company assumes no obligation to update these statements as circumstances change. Investors are cautioned that all forward-looking statements involve risk and uncertainties, including changes in general economic and financial market conditions, unforeseen credit problems, and the Company's ability to execute its business plans. The actual results of future events could differ materially from those stated in any forward-looking statements herein.

COMMERCIAL NATIONAL FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(Dollars in thousands, except per share data)

			June 30,	December 31	June 30,
			2017	2016	2016


ASSETS
Cash and due from banks on demand			$ 5,112	$ 5,006	$ 5,767
Interest bearing deposits with banks			109	8,788	11,464
	Total cash and cash equivalents		5,221	13,794	17,231

Securities available for sale			181,128	128,197	135,601
Restricted investments in bank stock			2,236	111	111

Loans			212,919	201,664	191,305
	Allowance for loan losses		(1,288)	(1,318)	(1,610)
		Net loans	211,631	200,346	189,695

Premises and equipment			3,037	3,155	3,310
Investment in Life Insurance			18,953	18,682	18,405
Other assets			2,818	2,134	2,050

	Total assets		$ 425,024	$ 366,419	$ 366,403

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
	Deposits:
		Non-interest bearing	$ 119,348	$ 118,439	$ 113,245
		Interest bearing	194,756	191,182	190,282
		Total deposits	314,104	309,621	303,527

	Short-term borrowings		48,400	-	-
	Other liabilities		3,572	1,842	3,982
		Total liabilities	366,076	311,463	307,509

Shareholders' equity:
	Common stock, par value $2 per share; 10,000,000 shares authorized; 3,600,000 shares issued; 2,860,953 shares outstanding in 2017 and 2016

			7,200	7,200	7,200
	Retained earnings		59,838	59,170	59,081
	Accumulated other comprehensive (loss) income		4,454	1,130	5,157
	Less treasury stock, at cost, 739,047 shares in 2017 and 2016		(12,544)	(12,544)	(12,544)
		Total shareholders' equity	58,948	54,956	58,894

		Total liabilities and shareholders' equity	$ 425,024	$ 366,419	$ 366,403

COMMERCIAL NATIONAL FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)

			Three Months		Six Months
			Ended June 30		Ended June 30
			2017	2016	2017	2016
			(unaudited)	(unaudited)	(unaudited)	(unaudited)

INTEREST INCOME:
	Interest and fees on loans		$ 2,277	$ 2,012	$ 4,500	$ 3,975
	Interest and dividends on securities:
		Taxable	989	581	1,677	1,268
		Exempt from federal income taxes	686	724	1,356	1,750
	Other		23	36	35	50
	Total Interest income		3,975	3,353	7,568	7,043

INTEREST EXPENSE:
	Interest on deposits		73	78	144	159
	Interest on short-term borrowings		137	7	179	50
	Total Interest expense		210	85	323	209

NET INTEREST INCOME			3,765	3,268	7,245	6,834
PROVISION FOR LOAN LOSSES			-	-	-	-

NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES			3,765	3,268	7,245	6,834

OTHER OPERATING INCOME:
	Asset management and trust income		320	326	629	625
	Service charges on deposit accounts		197	204	382	400
	Net Security gains		-	719	-	1,188
	Loss on sale of OREO		-	-	(6)	-
	Income from investment in life insurance		135	105	271	224
	Other income		41	47	142	151
	Total other operating income		693	1,401	1,418	2,588

OTHER OPERATING EXPENSES:
	Salaries and employee benefits		1,764	1,859	3,512	3,769
	Net occupancy expense		218	209	436	460
	Furniture and equipment		58	139	183	256
	Pennsylvania shares tax		128	119	250	247
	Legal and professional		93	100	177	196
	FDIC insurance expense		29	50	56	97
	Other expenses		816	785	1,501	1,512
	Total other operating expenses		3,106	3,261	6,115	6,537

INCOME BEFORE INCOME TAXES			1,352	1,408	2,548	2,885
Income tax expense			210	197	392	428

	Net income		$ 1,142	$ 1,211	$ 2,156	$ 2,457

Average Shares Outstanding			2,860,953	2,860,953	2,860,953	2,860,953

Earnings Per Share			$ 0.40	$ 0.42	$ 0.75	$ 0.86