LATROBE, PA / ACCESSWIRE / October 27, 2020 / Commercial National Financial Corporation (OTCQX:CNAF)(Company), parent Company of Commercial Bank & Trust of PA, has reported results for the quarter ended September 30, 2020. The Company recorded a $67,000 (or $0.02 per average share outstanding) loss in the third quarter 2020 compared to earnings of $1,277,000 (or $0.45 per average share outstanding) in the third quarter of 2019. The Company earned $3,201,000 (or $1.12 per average share outstanding) for the nine-month period ended September 30, 2020 and $3,517,000 (or $1.23 per average share outstanding) for the nine-month period ended September 30, 2019.
The Company's third quarter and nine-month 2020 earnings results were influenced by a COVID-19 driven loan loss reserve build of $1,700,000. A portion of the Company's far greater than banking industry standard net unrealized AFS bond portfolio securities gains was not utilized via sales to offset the earnings impact of this COVID-19 reserve build in order to optimize ongoing net interest margin which is a primary driver of future core earnings generation in the present lower-for-longer interest rate environment.
At third quarter end 2020 the Company's reserve for loan losses was $3,769,000, which represented a $2,395,000, or 174.31%, increase over the $1,374,000 year-end 2019 reserve for loan losses. The reserve build in 2020 consisted of $295,000 in recoveries along with $2,100,000 in COVID-19 induced loan loss provisions. No charge-offs were recorded during the first nine months of 2020.
Third quarter and nine-month 2020 tax equivalent net interest margin strengthened to 4.21% and 4.18% respectively. Overhead cost containment through significant reductions-in-workforce and branch consolidation continue to provide material efficiencies. Net unrealized AFS bond portfolio market value gains of $14,865,000 represented 11.50% of book value. Tier one risk-based, total risk-based, leverage and common equity tier one capital ratios for September 30, 2020 were 20.61%, 21.86%, 13.66% and 20.61% respectively. Capital adequacy remains appropriate relative to 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 our shareholders through the safe and sound operation of the subsidiary bank is a long-standing top priority for the Company.
Direct and beneficial ownership by executive officers and directors of the Company's outstanding shares totaled 434,727 shares, or 15.20% on September 30, 2020.
As disclosed each year in the Annual Report to Shareholders, on September 30, 2020, the Company employed 81 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) active 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, except per share data)
| September 30, | December 31, | September 30, | ||||||||||
| 2020 | 2019 | 2019 | ||||||||||
| ASSETS | ||||||||||||
| Cash and due from banks on demand | $ | 7,214 | $ | 4,510 | $ | 9,083 | ||||||
| Interest bearing deposits with banks | 50 | 47 | 45 | |||||||||
| Total cash and cash equivalents | 7,264 | 4,557 | 9,128 | |||||||||
| Securities available for sale | 140,865 | 150,838 | 158,796 | |||||||||
| Restricted investments in bank stock | 422 | 899 | 1,319 | |||||||||
| Loans | 254,034 | 238,407 | 237,717 | |||||||||
| Allowance for loan losses | (3,769 | ) | (1,374 | ) | (1,374 | ) | ||||||
| Net loans | 250,265 | 237,033 | 236,343 | |||||||||
| Premises and equipment | 2,887 | 2,618 | 2,674 | |||||||||
| Investment in Life Insurance | 18,944 | 20,310 | 20,172 | |||||||||
| Other assets | 3,618 | 3,319 | 3,322 | |||||||||
| Total assets | $ | 424,265 | $ | 419,574 | $ | 431,754 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
| Liabilities: | ||||||||||||
| Deposits: | ||||||||||||
| Non-interest bearing | $ | 156,343 | $ | 133,362 | $ | 134,091 | ||||||
| Interest bearing | 191,231 | 198,986 | 192,094 | |||||||||
| Total deposits | 347,574 | 332,348 | 326,185 | |||||||||
| Short-term borrowings | 5,166 | 20,200 | 33,551 | |||||||||
| Other liabilities | 3,869 | 4,102 | 6,569 | |||||||||
| Total liabilities | 356,609 | 356,650 | 366,305 | |||||||||
| 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 | 7,200 | |||||||||
| Retained earnings | 61,524 | 60,554 | 61,510 | |||||||||
| Accumulated other comprehensive income | 11,476 | 7,714 | 9,283 | |||||||||
| Less treasury stock, at cost, 739,047 shares in 2020 and 2019 | (12,544 | ) | (12,544 | ) | (12,544 | ) | ||||||
| Total shareholders' equity | 67,656 | 62,924 | 65,449 | |||||||||
| Total liabilities and shareholders' equity | $ | 424,265 | $ | 419,574 | $ | 431,754 | ||||||
COMMERCIAL NATIONAL FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
| Three Months | Nine Months | |||||||||||||||
| Ended September 30 | Ended September 30 | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| INTEREST INCOME: | ||||||||||||||||
| Interest and fees on loans | $ | 2,719 | $ | 2,657 | $ | 8,079 | $ | 7,830 | ||||||||
| Interest and dividends on securities: | ||||||||||||||||
| Taxable | 986 | 1,044 | 3,051 | 3,142 | ||||||||||||
| Exempt from federal income taxes | 309 | 471 | 1,049 | 1,568 | ||||||||||||
| Other | 5 | 28 | 39 | 91 | ||||||||||||
| Total interest income | 4,019 | 4,200 | 12,218 | 12,631 | ||||||||||||
| INTEREST EXPENSE: | ||||||||||||||||
| Interest on deposits | 67 | 193 | 340 | 570 | ||||||||||||
| Interest on short-term borrowings | 6 | 179 | 145 | 688 | ||||||||||||
| Total interest expense | 73 | 372 | 485 | 1,258 | ||||||||||||
| NET INTEREST INCOME | 3,946 | 3,828 | 11,733 | 11,373 | ||||||||||||
| PROVISION FOR LOAN LOSSES | 1,700 | - | 2,100 | - | ||||||||||||
| NET INTEREST INCOME AFTER | ||||||||||||||||
| PROVISION FOR LOAN LOSSES | 2,246 | 3,828 | 9,633 | 11,373 | ||||||||||||
| OTHER OPERATING INCOME: | ||||||||||||||||
| Asset management and trust | 338 | 421 | 1,016 | 1,092 | ||||||||||||
| Service charges on deposit accounts | 166 | 186 | 469 | 540 | ||||||||||||
| Net Security gains/(losses) | (2 | ) | - | 503 | (7 | ) | ||||||||||
| Gain on sale of OREO | - | - | - | 4 | ||||||||||||
| Income from investment in life insurance | 117 | 130 | 345 | 380 | ||||||||||||
| Life insurance proceeds | - | - | 730 | - | ||||||||||||
| Other income | 33 | 32 | 133 | 132 | ||||||||||||
| Total other operating income | 652 | 769 | 3,196 | 2,141 | ||||||||||||
| OTHER OPERATING EXPENSES: | ||||||||||||||||
| Salaries and employee benefits | 1,798 | 1,868 | 5,626 | 5,641 | ||||||||||||
| Net occupancy | 193 | 200 | 594 | 620 | ||||||||||||
| Furniture and equipment | 110 | 95 | 318 | 309 | ||||||||||||
| Pennsylvania shares tax | 142 | 142 | 426 | 426 | ||||||||||||
| Legal and professional | 123 | 100 | 333 | 275 | ||||||||||||
| FDIC insurance | 23 | - | 35 | 56 | ||||||||||||
| Other expenses | 708 | 742 | 2,008 | 2,285 | ||||||||||||
| Total other operating expenses | 3,097 | 3,147 | 9,340 | 9,612 | ||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | (199 | ) | 1,450 | 3,489 | 3,902 | |||||||||||
| Income tax (benefit) expense | (132 | ) | 173 | 288 | 385 | |||||||||||
| Net income (loss) | $ | (67 | ) | $ | 1,277 | $ | 3,201 | $ | 3,517 | |||||||
| Average Shares Outstanding | 2,860,953 | 2,860,953 | 2,860,953 | 2,860,953 | ||||||||||||
| Earnings (Loss) Per Share | $ | (0.02 | ) | $ | 0.45 | $ | 1.12 | $ | 1.23 | |||||||
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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https://www.accesswire.com/612547/Commercial-National-Reports-September-30-2020-Earnings
