*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
wpiper@cbthebank.com
724-537-9923
*SOURCE:* Commercial National Financial Corporation
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Commercial National Reports 21% Full-Year 2020 Earnings Growth
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