Commercial National Reports Increased September 30, 2019 Earnings

LATROBE, PA / ACCESSWIRE / October 24, 2019 / Commercial National Financial Corporation (OTCQX:CNAF)(Company), parent Company of Commercial Bank & Trust of PA, has reported results for the quarter ended September 30, 2019. The Company earned $1,277,000 (or $0.45 per average share outstanding) in the third quarter 2019 compared to $1,125,000 (or $0.39 per average share outstanding) in the third quarter of 2018. The Company earned $3,517,000 (or $1.23 per average share outstanding) for the nine-month period ended September 30, 2019 and $3,202,000 (or $1.12 per average share outstanding) for the nine-month period ended September 30, 2018.

Third quarter earnings increased $152,000, or 13.51%, while nine month earnings increased $315,000, or 9.83%, in 2019 relative to prior time periods for 2018. The Company’s annualized return on average assets for the quarter ended September 30, 2019 was 1.20%, compared to 1.08% for the quarter ended September 30, 2018. The Company’s annualized return on average assets for the nine-month period ended September 30, 2019 was 1.11% compared to 1.07% for the nine-month period ended September 30, 2018. The Company’s very large AFS bond portfolio net unrealized market value gains, which represented 7.99% of book value at third quarter-end, have materially influenced selected diagnostic calculations thus far in 2019. Third quarter tax equivalent net interest margin was 4.11%. The effective tax rate for the quarter ended September 30, 2019 was 11.93% and the first nine month effective tax rate was 9.86%. Tier one risk-based, total risk-based, leverage and common equity tier one capital ratios for September 30, 2019 were 20.89%, 21.40%, 13.51% and 20.89%, respectively.

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. Providing an attractive and reliable cash dividend income stream to all our shareholders through the safe and sound operation of the subsidiary bank is a long-standing top priority for the Company. In September 2019, the Company declared a special cash dividend of $1.00 per share payable on October 4, 2019.

Direct and beneficial ownership by executive officers and directors of the Company’s outstanding shares totaled 472,975 shares, or 16.53% on September 30, 2019.

As disclosed each year in the Annual Report to Shareholders, on September 30, 2019, the Company employed 97 people in full-time and part-time positions. Forty-five (45) employees are represented by the United Auto Workers, Local 1799. Of that bargaining unit total, Thirty-five (35) employees are full-time and ten (10) employees are part-time. The Company has had unionized employees since 1972. In October 2018, the agreement between the Company and the bargaining unit was negotiated and subsequently ratified by the bargaining unit with an effective date of February 16, 2019. The labor agreement will expire in February 2024. 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.

Contact Information:

Wendy S. Piper
First Senior Vice President
Secretary/Treasurer
wpiper@cbthebank.com
724-537-9923

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

                   
 
  September 30,     December 31,     September 30,  
 
  2019     2018     2018  
 
                 
 
                 
ASSETS
                 
Cash and due from banks on demand
  9,083     5,642     8,183  
Interest bearing deposits with banks
    45       59       50  
Total cash and cash equivalents
    9,128       5,701       8,233  
 
                       
Securities available for sale
    158,796       159,741       160,194  
Restricted investments in bank stock
    1,319       1,411       1,563  
 
                       
Loans
    237,717       227,747       226,132  
Allowance for loan losses
    (1,374 )     (1,349 )     (1,348 )
Net loans
    236,343       226,398       224,784  
 
                       
Premises and equipment
    2,674       2,800       2,889  
Investment in Life Insurance
    20,172       19,767       19,633  
Other assets
    3,322       3,808       4,530  
 
                       
Total assets
  431,754     419,626     421,826  
 
                       
LIABILITIES AND SHAREHOLDERS’ EQUITY
                       
Liabilities:
                       
Deposits:
                       
Non-interest bearing
  134,091     128,437     130,450  
Interest bearing
    192,094       197,482       195,706  
Total deposits
    326,185       325,919       326,156  
 
                       
Short-term borrowings
    33,551       32,822       37,155  
Other liabilities
    6,569       1,351       1,067  
Total liabilities
    366,305       360,092       364,378  
 
                       
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 2019 and 2018
                       
Common stock, par value $2 per share; 10,000,000 shares authorized; 3,600,000 shares issued; 2,860,953 shares outstanding in 2019 and 2018
    7,200       7,200       7,200  
Retained earnings
    61,510       63,085       62,686  
Accumulated other comprehensive income
    9,283       1,793       106  
Less treasury stock, at cost, 739,047 shares in 2019 and 2018
    (12,544 )     (12,544 )     (12,544 )
Total shareholders’ equity
    65,449       59,534       57,448  
 
                       
Total liabilities and shareholders’ equity
  431,754     419,626     421,826  
                         

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

 
  Three Months     Nine Months  
 
  Ended September 30     Ended September 30  
 
  2019     2018     2019     2018  
 
  (unaudited)     (unaudited)     (unaudited)     (unaudited)  
 
                       
INTEREST INCOME:
                       
Interest and fees on loans
  2,657     2,397     7,830     6,882  
Interest and dividends on securities:
                               
Taxable
    1,044       1,097       3,142       3,234  
Exempt from federal income taxes
    471       601       1,568       1,575  
Other
    28       23       91       51  
Total Interest income
    4,200       4,118       12,631       11,742  
 
                               
INTEREST EXPENSE:
                               
Interest on deposits
    193       147       570       373  
Interest on short-term borrowings
    179       212       688       384  
Total Interest expense
    372       359       1,258       757  
 
                               
NET INTEREST INCOME
    3,828       3,759       11,373       10,985  
PROVISION FOR LOAN LOSSES
                       
 
                               
NET INTEREST INCOME AFTER
                               
PROVISION FOR LOAN LOSSES
    3,828       3,759       11,373       10,985  
 
                               
OTHER OPERATING INCOME:
                               
Asset management and trust income
    421       318       1,092       995  
Service charges on deposit accounts
    186       185       540       547  
Net Security loses
          (11 )     (7 )     (11 )
Gain on sale of OREO
                4        
Income from investment in life insurance
    130       131       380       378  
Other income
    32       41       132       170  
Total other operating income
    769       664       2,141       2,079  
 
                               
OTHER OPERATING EXPENSES:
                               
Salaries and employee benefits
    1,868       1,795       5,641       5,421  
Net occupancy expense
    200       212       620       639  
Furniture and equipment
    95       189       309       369  
Pennsylvania shares tax
    142       142       426       412  
Legal and professional
    100       89       275       323  
FDIC insurance expense
          28       56       84  
Other expenses
    742       725       2,285       2,257  
Total other operating expenses
    3,147       3,180       9,612       9,505  
 
                               
INCOME BEFORE INCOME TAXES
    1,450       1,243       3,902       3,559  
Income tax expense
    173       118       385       357  
 
                               
Net income
  1,277     1,125     3,517     3,202  
 
                               
Average Shares Outstanding
    2,860,953       2,860,953       2,860,953       2,860,953  
 
                               
Earnings Per Share
  0.45     0.39     1.23     1.12  
 
                               

SOURCE: Commercial National Financial Corporation

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