Commercial National Financial Corporation Reports 3rd Quarter 2016 Earnings

Thursday, October 27, 2016 10:00 AM UTC

ITHACA, Mich., Oct. 27, 2016 -- Commercial National Financial Corporation (Pink Sheets:CEFC) today announced 2016 third quarter net income of $673,000, or $.21 per share compared to 2015 third quarter net income of $762,000, or $.23 per share. Excluding merger-related expenses of the previously announced merger with Capital Directions, Inc., the holding company for Mason State Bank, and expenses related to the conversion to our new Online Banking system, third quarter 2016 net income was $809,000, or $.25 per share.

For the quarter ended September 30, 2016, net interest income increased $189,000, or 7% due to the growth in interest-earning assets, mainly loans. Loss share reimbursement revenue, a component of non-interest income, decreased by $69,000 primarily due to its linkage to the lower provision for loan losses expense. Loss share reimbursement revenue represents an expected reimbursement from the FDIC of 80% of losses on covered loans acquired in 2010 in the FDIC-assisted transaction of MainStreet Savings Bank. Operating expenses increased by $172,000 primarily due to merger-related costs of $99,000 as well as by $55,000 of data processing conversion costs related to our new Online Banking system.

Total assets were $399.8 million at September 30, 2016 compared to $381.2 million at September 30, 2015. Total loans grew $16.1 million, or 5.6% when comparing September 30, 2016 to September 30, 2015. The majority of loan growth occurred in the commercial loan portfolio. We have also experienced increased residential mortgage loan activity compared to last year with the continued low interest rate environment and an uptick in home listings and new construction loans. We are continuing our efforts to increase loan volume while maintaining our credit quality standards.

The merger with Capital Directions, Inc. is progressing as planned and we expect the closing to be effective January 1, 2017. We will provide you with more details about the merger in the coming months.

Commercial National Financial Corporation operates through a single subsidiary bank, Commercial Bank, with nine full-service banking offices and two loan production offices. Visit www.commercial-bank.com to view the latest consolidated Annual Report, news releases and other information about CEFC and Commercial Bank.

Selected Financial Data (unaudited):
	Quarter Ended Sept. 30,						Nine Months Ended Sept. 30,
		2016			2015			2016		2015
Return on Equity (ROE)		10.86	%		12.92	%		10.97	%	12.04	%
Return on Assets (ROA)		.68			.80			.67		.74
Interest Margin		3.04			3.05			2.99		3.10

	September 30,
		2016			2015
Non-performing Assets Ratio		.56	%		.68	%
Tier 1 Leverage Capital⁽¹⁾		8.53			8.65
Total Risk-based Capital⁽¹⁾		14.22			14.84
Book Value Per Share	$	7.60		$	7.29
⁽¹⁾Ratios are for Commercial Bank.

Consolidated Statements of Income:
	Quarter Ended Sept. 30,				Nine Months Ended Sept. 30,
		2016		2015		2016		2015
Interest Income	$	3,619,479	$	3,520,947	$	10,798,239	$	10,552,086
Interest Expense		730,916		821,142		2,425,261		2,427,222
Net Interest Income		2,888,563		2,699,805		8,372,978		8,124,864
Provision for loan losses		1,476		1,840		44,536		214,256
Non-interest income		406,138		485,786		1,178,205		1,363,697
Operating Expenses		2,317,187		2,145,510		6,685,392		6,372,330
Income before taxes		976,038		1,038,241		2,821,255		2,901,975
Income tax expense		302,840		275,874		822,947		815,883
Net Income	$	673,198	$	762,367	$	1,998,308	$	2,086,092
Net Income per share – basic	$	0.21	$	0.23	$	0.61	$	0.64
Net Income per share – diluted	$	0.21	$	0.23	$	0.61	$	0.64

Consolidated Balance Sheets:
	September 30,
		2016			2015
Assets
Cash and cash equivalents	$	18,049,338		$	11,585,726
Time deposits with other banks		35,818,000			28,354,000
Securities		26,972,669			36,429,571
Loans		301,420,050			285,328,243
Allowance for loan losses		(2,743,998	)		(2,444,689	)
Loans, net		298,676,052			282,883,554
Bank premises and equipment		4,520,048			4,378,991
Other assets		15,796,157			17,614,013
Total Assets	$	399,832,264		$	381,245,855

Liabilities
Deposits	$	319,470,026		$	301,416,186
Other borrowings		42,221,912			41,968,565
Trust preferred		10,310,000			10,310,000
Other liabilities		3,123,103			3,843,478
Total Liabilities		375,125,041			357,538,229

Equity
Common stock and paid in capital		13,572,835			13,572,835
Retained earnings		10,906,456			10,000,572
Accumulated OCI		227,932			134,219
Total Equity		24,707,223			23,707,626
Total Liabilities and Equity	$	399,832,264		$	381,245,855

Contact:
Kevin A. Twardy
CFO and COO
(989) 875-5528

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