Commercial National Reports 21% Full-Year 2020 Earnings Growth
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Commercial National Reports 21% Full-Year 2020 Earnings Growth

Monday, January 25, 2021 1:00 PM
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LATROBE, PA / ACCESSWIRE / January 25, 2021 / Commercial National Financial Corporation (OTCQX:CNAF)(Company), parent Company of Commercial Bank & Trust of PA, has reported results for the quarter ended December 31, 2020. The Company earned $2,512,000 (or $0.88 per average share outstanding) in the fourth quarter 2020 compared to earnings of $1,219,000 (or $0.43 per average share outstanding) in the fourth quarter of 2019. The Company earned $5,713,000 (or $2.00 per average share outstanding) for the twelve-month period ended December 31, 2020 and $4,736,000 (or $1.66 per average share outstanding) for the twelve-month period ended December 31, 2019. Fourth quarter earnings increased $1,293,000, or 106%, due primarily to the after-tax effect of a loan loss reserve release and twelve-month earnings increased $977,000, or 21%.

The Company's exceptional earnings performance for 2020 starkly contrasts with the national banking industry's numerous earnings declines. The superior profitability achieved by Commercial National Financial Corporation was primarily attributable to its traditionally atypical asset/liability management strategy in conjunction with its longstanding and highly disciplined loan underwriting practices.

The Company's annualized return on average assets for 2020 rose to 1.35%. Tax equivalent net interest margin improved to 4.14% and was indicative of continued successful administration of overall balance sheet optionality relative to evolving financial market conditions. Asset quality metrics remained favorable despite the economic impact of COVID-19. Overhead cost containment through significant reductions-in-workforce and branch consolidation continue to provide material operating efficiencies. Marginal funding reliance was essentially eliminated during 2020 and the Company's year-end liquidity position is exceedingly strong. The Company is well-positioned for a bear-steepening yield curve. Net unrealized AFS bond portfolio market value gains of $14,531,000 represented 12.23% of portfolio book value. Tier one risk-based, total risk-based, leverage and common equity tier one capital ratios for year-end 2020 were 22.55%, 23.33%, 14.19% and 22.55% respectively. The Company's capital adequacy remains appropriate in the context of ongoing banking industry COVID-19 uncertainties.

The Company's strong capital position in conjunction with underlying core earnings remain 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 shareholders through the safe and sound operation of the subsidiary bank is a long-standing top priority for the Company. Extreme COVID-19 induced economic and broader societal instability throughout 2020 precluded any responsible special extra cash dividend declarations for that unprecedentedly volatile year. As circumstances may permit, special extra cash dividends will continue to be periodically considered by the Board of Directors.

Direct and beneficial ownership by executive officers and directors of the Company's outstanding shares totaled 445,969 shares, or 15.59% on December 31, 2020.

As disclosed each year in the Annual Report to Shareholders, on December 31, 2020, the Company employed 80 people in full-time and part-time positions. Thirty (30) employees are represented by the United Auto Workers, Local 1799. Of that bargaining unit total, Twenty nine (29) employees are full-time and there is one (1) part-time employee. 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 eight community banking facilities in Greensburg, Hempfield Township, Latrobe, Ligonier, 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 through an online banking site (www.cbthebank.com) with mobile banking features 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)

             
 
  December 31     December 31  
 
  2020     2019  
 
           
ASSETS
           
Cash and due from banks on demand
  $ 3,744     $ 4,510  
Interest bearing deposits with banks
    24,596       47  
Total cash and cash equivalents
    28,340       4,557  
 
               
Securities available for sale
    133,317       150,838  
Restricted investments in bank stock
    148       899  
 
               
Loans
    241,080       238,407  
Allowance for loan losses
    (1,991 )     (1,374 )
Net loans
    239,089       237,033  
 
               
Premises and equipment
    2,805       2,618  
Investment in Life Insurance
    19,070       20,310  
Other assets
    2,662       3,319  
 
               
Total assets
  $ 425,431     $ 419,574  
 
               
LIABILITIES AND SHAREHOLDERS' EQUITY
               
Liabilities:
               
Deposits:
               
Non-interest bearing
  $ 148,399     $ 133,362  
Interest bearing
    203,001       198,986  
Total deposits
    351,400       332,348  
 
               
Short-term borrowings
    -       20,200  
Other liabilities
    4,604       4,102  
Total liabilities
    356,004       356,650  
 
               
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 2020 and 2019.
    7,200       7,200  
Retained earnings
    63,292       60,554  
Accumulated other comprehensive income
    11,479       7,714  
Less treasury stock, at cost,
               
739,047 shares in 2020 and 2019
    (12,544 )     (12,544 )
Total shareholders' equity
    69,427       62,924  
 
               
Total liabilities and shareholders' equity
  $ 425,431     $ 419,574  
                 

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

             
 
  Three Months     Twelve Months  
 
  Ended December 31     Ended December 31  
 
  2020     2019     2020     2019  
 
                       
INTEREST INCOME:
                       
Interest and fees on loans
    2,584       2,690     10,663     10,520  
Interest and dividends on securities:
                               
Taxable
    985       1,041       4,036       4,183  
Exempt from federal income taxes
    254       429       1,303       1,997  
Other
    7       25       46       116  
Total Interest income
    3,830       4,185       16,048       16,816  
 
                               
INTEREST EXPENSE:
                               
Interest on deposits
    63       179       403       749  
Interest on short-term borrowings
    2       149       147       837  
Total Interest expense
    65       328       550       1,586  
 
                               
NET INTEREST INCOME
    3,765       3,857       15,498       15,230  
PROVISION(CREDIT) FOR LOAN LOSSES
    (1,700 )     -       400       -  
 
                               
NET INTEREST INCOME AFTER
                               
PROVISION(CREDIT) FOR LOAN LOSSES
    5,465       3,857       15,098       15,230  
 
                               
OTHER OPERATING INCOME:
                               
Asset management and trust income
    380       337       1,396       1,429  
Service charges on deposit accounts
    166       184       635       724  
Net Security gains/losses
    55       75       558       68  
Gain on sale of OREO
    -       -       -       4  
Income from investment in life insurance
    117       130       462       510  
Life Insurance proceeds
    -       -       730       -  
Other income
    27       31       160       163  
Total other operating income
    745       757       3,941       2,898  
 
                               
OTHER OPERATING EXPENSES
                               
Salaries and employee benefits
    1,809       1,911       7,435       7,552  
Net occupancy expense
    206       179       800       799  
Furniture and equipment
    120       104       438       413  
Pennsylvania shares tax
    155       143       581       569  
Legal and professional
    113       121       446       396  
FDIC Insurance expense
    30       -       65       56  
Other expenses
    697       759       2,705       3,044  
Total other operating expenses
    3,130       3,217       12,470       12,829  
 
                               
INCOME BEFORE INCOME TAXES
    3,080       1,397       6,569       5,299  
Income tax (benefit) expense
    568       178       856       563  
 
                               
Net income
  2,512     1,219     5,713     4,736  
 
                               
Average Shares Outstanding
    2,860,953       2,860,953       2,860,953       2,860,953  
 
                               
Earnings Per Share
    0.88       0.43       2.00       1.66  
                                 

Contact Information:
Wendy S. Piper
First Senior Vice President
Secretary/Treasurer
[email protected]
724-537-9923

SOURCE: Commercial National Financial Corporation

Commercial National Financial Corporation
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