Commercial National Reports Strong 2012 Results

LATROBE, Pa., Nov. 5, 2012 /PRNewswire/ -- Commercial National Financial Corporation (OTC Markets:CNAF)(Company), parent Company of Commercial Bank & Trust of PA, has reported earnings for the quarter ended September 30, 2012. The Company earned $1,074,000 (or $.38 per average share outstanding) in 2012 compared to $1,879,000 (or $.65 per average share outstanding) in 2011. The Company earned $6,089,000 (or $2.13 per average share outstanding) for the nine-month period ended September 30, 2012 and $4,726,000 (or $1.65 per average share outstanding) for the nine-month period ended September 30, 2011. The Company's annualized return on average assets and average equity were 1.16% and 7.70%, respectively, for the quarter ended September 30, 2012 compared to 1.92% and 15.36%, respectively, for the quarter ended September 30, 2011. The Company's annualized return on average assets and average equity were 2.14% and 14.74%, respectively, for the nine-month period ended September 30, 2012 compared to 1.69% and 13.22%, respectively, for the nine-month period ended September 30, 2011. During the second half of 2011 an expansion of high-yield municipal bond leverage materially influenced earnings for that time period. During the first quarter of 2012 that leverage position was extensively reduced inducing an earnings and equity capture of considerable magnitude which profoundly shaped individual quarterly and full year results for 2012. In the aftermath of this deleveraging, the Company's ongoing core earnings continue to exceed prevailing banking industry norms. Major contributors to the Company's high profitability include outstanding earning asset credit quality, strong net interest margin and exceptional tax efficiency.

President and Chief Executive Officer, Gregg E. Hunter noted, "Sequential third quarter 2012 earnings were impacted by non-recurring expense events. During the quarter, a $182,000 wire fraud charge stemming from a series of counterfeit non-U.S./foreign check deposits was recorded. Legal costs related to this matter amounted to an additional $5,000. Full recovery on this wire fraud recognition and all associated legal costs is being aggressively pursued by corporate legal counsel against the local parties responsible for this incident. The Company and its legal counsel consider the case for recovery to be strong even though such actions are always to some degree uncertain. Also during the third quarter, settlement was reached by corporate counsel with a claimant who had brought multiple legal actions against many banks in western Pennsylvania alleging non-compliance with federal disabilities access requirements for selected automated teller machine (ATM) locations. The Company's total expenditures related to the legal settlement of this matter were $35,000 including corporate attorney's fees."

Mr. Hunter added, "Loan approvals and fundings greatly improved during 2012's third quarter relative to the first six months of the year. Outstanding loan portfolio credit quality was evidenced by minimal delinquencies and no required loan loss provisioning thus far in 2012 along with a complete lack of any non-accrual or restructured loans at third quarter-end. In addition, no loan loss provisions have been needed since the fourth quarter of 2008. On September 30, 2012 the Company's relatively large $108.2 million book value securities portfolio had a 6.46% tax equivalent yield, a 4.4 year average life, a 3.9 year duration and was favorably characterized by $9,391,000 in net unrealized market value gains. Deposit growth was solid during the first nine months of 2012. It was also profitable with non-interest bearing demand deposits continuing to represent the Company's largest funding source. Non-core funding dependence remains immaterial. At third quarter-end, excess funds on deposit in the Company's interest bearing Federal Reserve account provided a substantial liquidity enhancing and market exposure moderating balance sheet cushion pending future deployment into high quality earning assets as opportunities arise. Tier one risk-based, total risk-based and leverage capital ratios for the Company were 25.10%, 25.94% and 13.76% respectively at third quarter-end. All of these critical capital ratios vastly surpass both present and proposed regulatory requirements. The Company's capital base and anticipated earnings remain well-supportive of the regular quarterly $0.26 per share common stock cash dividend."

In addition to Latrobe, Pennsylvania where it is headquartered, the Company operates ten community banking facilities in Greensburg, Hempfield Township, 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.

SOURCE Commercial National Financial Corporation