Commercial National Reports 21% Full-Year 2020 Earnings Growth

Topic:

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