Commercial National Financial Corporation Reports 4th Quarter 2016 Earnings

Thursday, January 26, 2017 11:00 AM UTC

ITHACA, Mich., Jan. 26, 2017 -- Commercial National Financial Corporation (Pink Sheets:CEFC) today announced 2016 fourth quarter net income of $599,000, or $.18 per share compared to 2015 fourth quarter net income of $599,000, or $.18 per share. Excluding merger-related expenses of the previously announced merger with Capital Directions, Inc., the holding company for Mason State Bank, fourth quarter 2016 net income was $738,000, or $.23 per share.

Net income for the year ended December 31, 2016 was $2,598,000, or $.80 per share compared to net income for 2015 of $2,685,000, or $.83 per share. Excluding merger-related expenses, net income for 2016 was $2,891,000, or $.89 per share.

For the quarter ended December 31, 2016, net interest income increased $148,000, or 5.4% due to the growth in loans as compared to the quarter ended December 31, 2015. The provision for loan losses was negative $45,000 for the December 2016 quarter but was $109,000 higher than the negative $154,000 provision for the December 2015 quarter. Noninterest income increased $117,000 primarily due to higher loss share reimbursement revenue. 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 $72,000 primarily due to merger-related costs.

Total assets were $400.4 million at December 31, 2016 compared to $385.2 million at December 31, 2015. Total loans grew $23 million, or 8% year over year. The majority of loan growth occurred in the commercial loan portfolio. We also experienced increased residential mortgage loan activity compared to last year with the 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. closed January 1, 2017. Immediately following the closing of the merger, Mason State Bank was merged into Commercial Bank. Commercial National Financial Corporation operates through a single subsidiary bank, Commercial Bank. 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 December 31,						Year Ended December 31,
		2016			2015		2016		2015
Return on Equity (ROE)		9.59	%		9.95	%	10.62	%	11.50	%
Return on Assets (ROA)		.59			.62		.65		.71
Interest Margin		3.08			3.04		3.02		3.09

	December 31,
		2016			2015
Non-performing Assets Ratio		.58	%		.58	%
Tier 1 Leverage Capital⁽¹⁾		8.45			8.59
Total Risk-based Capital⁽¹⁾		13.91			14.65
Book Value Per Share	$	7.56		$	7.31
Market Value Per Share		11.99			8.99

⁽¹⁾Ratios are for Commercial Bank.

Consolidated Statements of Income:
	Quarter Ended December 31,						Year Ended December 31,
		2016			2015			2016		2015
Interest Income	$	3,685,324		$	3,556,619		$	14,483,563	$	14,108,705
Interest Expense		807,224			826,020			3,232,485		3,253,242
Net Interest Income		2,878,100			2,730,599			11,251,078		10,855,463
Provision for loan losses		(44,536	)		(153,556	)		-		60,700
Non-interest income		359,610			242,125			1,537,815		1,605,822
Operating Expenses		2,365,786			2,294,264			9,051,178		8,666,594
Income before taxes		916,460			832,016			3,737,715		3,733,991
Income tax expense		317,234			232,874			1,140,181		1,048,757
Net Income	$	599,226		$	599,142		$	2,597,534	$	2,685,234
Net Income per share – basic	$	0.18		$	0.18		$	0.80	$	0.83
Net Income per share – diluted	$	0.18		$	0.18		$	0.80	$	0.83
Dividends declared	$	0.13		$	0.13		$	0.52	$	0.52

Consolidated Balance Sheets:
	December 31,
		2016			2015
Assets
Cash and cash equivalents	$	8,439,901		$	14,851,190
Time deposits with other banks		35,818,000			26,870,000
Securities		26,364,794			37,744,441
Loans		310,699,984			287,667,563
Allowance for loan losses		(2,691,895	)		(2,489,755	)
Loans, net		308,008,089			285,177,808
Bank premises and equipment		4,784,022			4,314,758
Other assets		16,952,000			16,210,910
Total Assets	$	400,366,806		$	385,169,107

Liabilities
Deposits	$	317,286,037		$	307,124,795
Other borrowings		44,342,134			40,165,686
Trust preferred		10,310,000			10,310,000
Other liabilities		3,833,263			3,786,139
Total Liabilities		375,771,434			361,386,620

Equity
Common stock and paid in capital		13,572,835			13,572,835
Retained earnings		11,082,790			10,176,823
Accumulated OCI		(60,253	)		32,829
Total Equity		24,595,372			23,782,487
Total Liabilities and Equity	$	400,366,806		$	385,169,107

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

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