LATROBE, Pa., Jan. 31, 2017 /PRNewswire/ -- Commercial National Financial Corporation (OTC Markets: CNAF)(Company), parent Company of Commercial Bank & Trust of PA, has reported results for the quarter ended December 31, 2016. The Company earned $755,000(or $0.26 per average share outstanding) in the fourth quarter 2016 compared to $1,073,000 (or $0.38 per average share outstanding) in the fourth quarter 2015. The Company earned $4,035,000 (or $1.41 per average share outstanding) for the twelve-month period ended December 31, 2016 and $5,688,000 (or $1.99 per average share outstanding) for the twelve-month period ended December 31, 2015.
The Company's annualized return on average assets and average equity were .83% and 5.24%, respectively, for the quarter ended December 31, 2016 compared to 1.09% and 7.70%, respectively, for the quarter ended December 31, 2015. The Company's annualized return on average assets and average equity for the twelve-month period ended December 31, 2016 were 1.07% and 6.99%, respectively, compared to 1.48% and 10.23%, respectively, for the twelve-month period ended December 31, 2015. Tier one risk-based, total risk-based, leverage and common equity tier one capital ratios for December 31, 2016 were 22.70%, 23.26%, 14.93% and 22.70%, respectively. Fourth quarter tax equivalent net interest margin was 4.42%.
Throughout 2016, the Company accelerated its transition toward greater loan portfolio emphasis against an ultimate backdrop of rising market interest rates and yields. This transition began in 2014's third quarter and gained substantial momentum in 2016 following extensive 2015 sales force refreshening and the second quarter 2016 implementation of more effective loan underwriting and promotional practices. This transition is producing more diverse and sustainable financial performance going into future years. In 2016, net loan outstandings rose $19.2 million, or 10.60%, and new money loan amounts pending close at year-end were $17.4 million. Loan portfolio credit quality remains strong with 2016 marking the Company's ninth consecutive year without any need for loan loss provisioning. Partial funding for 2016's loan growth came from first half bond portfolio sales into an over-bought market which as a by-product helped generate net realized gains of $1,196,000 prior to the late-year 2016 deep bond market sell-off that still left the Company's high-yield and high-credit quality bond portfolio with net unrealized market value gains as a percentage of book value that were far in excess of peer banks.
Also during 2016, the Company materially expanded the features of its deposit service offerings via the successful late-year roll-out of real-time internet and mobile banking capabilities for both consumer and commercial customers. These enhanced capabilities will accentuate growth in the Company's deposit footings through broadened appeal to a wider range of potential customers. In addition, these new technological service delivery features helped facilitate a long planned for limited community branch office network consolidation in mid-December for a material savings in ongoing future Company-wide overhead expense. Finally in 2016, the Company's Asset Management and Trust operation was meaningfully restructured to greatly improve the client service quality experience and further promote more earnings accretive new business acquisition.
Cash dividends paid per share during 2016 were $1.04. The Company's dividend payout ratio remains strong and this strength is evident in the very high dividend yield of the Company's stock shares. The Company's underlying core earnings in conjunction with its solid capital base provide the capacity to maintain the regular $0.26 per share quarterly common stock cash dividend payments to shareholders. Providing an attractive and reliable cash dividend income stream to all our shareholders in the most equitable manner possible through the prudent operation of the subsidiary bank remains a long-standing top priority for the Company.
As disclosed each year in the Annual Report to Shareholders, on December 31, 2016, the Company employed 99 people in full-time and part-time positions. Forty-seven (47) employees are represented by the United Auto Workers, Local 1799. The Company has had unionized employees since 1972. In 2013, the Company and the bargaining unit entered into a labor agreement that will expire in February 2019. 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 nine community banking facilities in Greensburg, Hempfield Township, Latrobe, Ligonier, North Huntingdon, 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 from an Internet banking site (www.cbthebank.com) and an automated TouchTone Teller banking system.
COMMERCIAL NATIONAL FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(Dollars in thousands)
December 31 December 31
2016 2015
---- ----
ASSETS
Cash and due from banks on demand $5,006 $6,092
Interest bearing deposits with banks 8,788 3,032
----- -----
Total cash and cash equivalents 13,794 9,124
Securities available for sale 128,197 184,442
Restricted investments in bank stock 111 992
Loans 201,664 182,751
Allowance for loan losses (1,318) (1,603)
Net loans 200,346 181,148
Premises and equipment 3,155 3,298
Investment in Life Insurance 18,682 18,181
Other assets 2,134 2,317
----- -----
Total assets $366,419 $399,502
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing $118,439 $115,197
Interest bearing 191,182 204,716
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Total deposits 309,621 319,913
Short-term borrowings - 22,158
Other liabilities 1,847 2,311
Total liabilities 311,468 344,382
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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 2016 and 2015. 7,200 7,200
Retained earnings 59,165 58,106
Accumulated other comprehensive income 1,130 2,358
Less treasury stock, at cost,
739,047 shares in 2016 and 2015 (12,544) (12,544)
Total shareholders' equity 54,951 55,120
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Total liabilities and shareholders'
equity $366,419 $399,502
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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
2016 2015 2016 2015
---- ---- ---- ----
INTEREST INCOME:
Interest and fees on loans $2,118 $1,962 $8,172 $7,848
Interest and dividends on
securities:
Taxable 434 687 2,264 2,085
Exempt from federal income taxes 804 1,064 3,246 4,454
Other 8 8 77 71
--- --- --- ---
Total Interest income 3,364 3,721 13,759 14,458
INTEREST EXPENSE:
Interest on deposits 72 91 306 398
Interest on short-term borrowings - 19 50 34
Total Interest expense 72 110 356 432
NET INTEREST INCOME 3,292 3,611 13,403 14,026
PROVISION FOR LOAN LOSSES - - - -
--- --- --- ---
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,292 3,611 13,403 14,026
----- ----- ------ ------
OTHER OPERATING INCOME:
Asset management and trust income 368 295 1,375 1,356
Service charges on deposit accounts 202 218 806 894
Net Security gains 8 - 1,196 3,605
Income from investment in life
insurance 172 137 500 489
Other income 38 43 229 226
Total other operating income 788 693 4,106 6,570
OTHER OPERATING EXPENSES
Salaries and employee benefits 1,763 1,745 7,305 7,018
Net occupancy expense 215 204 862 836
Furniture and equipment 178 142 569 529
Pennsylvania shares tax 119 132 484 512
Legal and professional 107 112 382 413
FDIC Insurance expense 2 36 145 180
Other expenses 743 662 2,980 2,820
Total other operating expenses 3,127 3,033 12,727 12,308
INCOME BEFORE INCOME TAXES 953 1,271 4,782 8,288
Income tax expense 198 198 747 2,600
--- --- --- -----
Net income $755 $1,073 $4,035 $5,688
Average Shares Outstanding 2,860,953 2,860,953 2,860,953 2,860,953
Earnings Per Share 0.26 0.38 1.41 1.99
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.
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SOURCE Commercial National Financial Corporation
