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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.

 

COMMERCIAL NATIONAL FINANCIAL CORPORATION


CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


(Unaudited)

(Dollars in thousands)













September


September






2012


2011










ASSETS






Cash and due from banks on demand


$                      6,729


$                      7,238


Interest bearing deposits with banks


56,320


324



Total cash and cash equivalents


63,049


7,562










Securities available for sale


117,540


177,772


Restricted investments in bank stock


2,884


3,720










Loans



170,332


187,391



Allowance for loan losses


(1,652)


(1,673)




Net loans


168,680


185,718










Premises and equipment


3,146


3,136


Investment in Life Insurance


16,387


15,836


Other assets


4,320


6,693











Total assets


$                  376,006


$                  400,437










LIABILITIES AND SHAREHOLDERS' EQUITY






Liabilities:







Deposits:








Non-interest bearing


$                    99,738


$                    90,198




Interest bearing


216,305


205,376




Total deposits


316,043


295,574











Short-term borrowings


-


36,275



Long-term borrowings


-


10,000



Other liabilities


4,077


7,154




Total liabilities


320,120


349,003










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 2012 and 2011.


7,200


7,200



Retained earnings


55,032


49,930



Accumulated other comprehensive income


6,198


6,848



Less treasury stock, at cost,







739,047 shares in 2012 and 2011


(12,544)


(12,544)




Total shareholders' equity


55,886


51,434












Total liabilities and shareholders' equity

$                  376,006


$                  400,437










 

 

COMMERCIAL NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share data)

















Three Months


Nine Months






Ended September 30


Ended September 30






2012


2011


2012


2011














INTEREST INCOME:











Interest and fees on loans


$               2,243


$               2,670


$               6,954


$               8,053



Interest and dividends on securities:












Taxable


534


1,068


2,269


2,878




Exempt from federal income taxes


849


1,018


2,695


2,656




Other


28


-


68


1



Total Interest income


3,654


4,756


11,986


13,588














INTEREST EXPENSE:











Interest on deposits


277


408


924


1,368



Interest on short-term borrowings


-


16


16


45



Interest on long-term borrowings


-


59


1


177



Total Interest expense


277


483


941


1,590














NET INTEREST INCOME


3,377


4,273


11,045


11,998


PROVISION FOR LOAN LOSSES


-


-


-


-














NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES











3,377


4,273


11,045


11,998














OTHER OPERATING INCOME:











Asset management and trust income


232


327


706


833



Service charges on deposit accounts


273


268


818


794



Net Securities gains


122


-


3,317


-



Income from investment in life insurance


125


121


366


365



Other income


45


43


198


186



Total other operating income


797


759


5,405


2,178














OTHER OPERATING EXPENSES











Salaries and employee benefits


1,567


1,524


4,782


4,625



Net occupancy expense


188


218


616


632



Furniture and equipment


81


92


266


305



Pennsylvania shares tax


125


124


377


377



Legal and professional


84


84


247


306



FDIC Insurance expense


48


8


144


178



Other expenses


949


766


2,361


2,179



Total other operating expenses


3,042


2,816


8,793


8,602














INCOME BEFORE INCOME TAXES


1,132


2,216


7,657


5,574


Income tax expense


58


337


1,568


848















Net income


$               1,074


$               1,879


$               6,089


$               4,726














Average Shares Outstanding


2,860,953


2,860,953


2,860,953


2,860,953














Earnings Per Share


$                 0.38


$                 0.65


$                 2.13


$                 1.65














 

SOURCE Commercial National Financial Corporation

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