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Commercial National Financial Corporation Reports 3rd Quarter 2016 Earnings

ITHACA, Mich., Oct. 27, 2016 (GLOBE NEWSWIRE) -- Commercial National Financial Corporation (Pink Sheets:CEFC) today announced 2016 third quarter net income of $673,000, or $.21 per share compared to 2015 third quarter net income of $762,000, or $.23 per share. Excluding merger-related expenses of the previously announced merger with Capital Directions, Inc., the holding company for Mason State Bank, and expenses related to the conversion to our new Online Banking system, third quarter 2016 net income was $809,000, or $.25 per share.

For the quarter ended September 30, 2016, net interest income increased $189,000, or 7% due to the growth in interest-earning assets, mainly loans. Loss share reimbursement revenue, a component of non-interest income, decreased by $69,000 primarily due to its linkage to the lower provision for loan losses expense. Loss share reimbursement revenue represents an expected reimbursement from the FDIC of 80% of losses on covered loans acquired in 2010 in the FDIC-assisted transaction of MainStreet Savings Bank. Operating expenses increased by $172,000 primarily due to merger-related costs of $99,000 as well as by $55,000 of data processing conversion costs related to our new Online Banking system.

Total assets were $399.8 million at September 30, 2016 compared to $381.2 million at September 30, 2015. Total loans grew $16.1 million, or 5.6% when comparing September 30, 2016 to September 30, 2015. The majority of loan growth occurred in the commercial loan portfolio. We have also experienced increased residential mortgage loan activity compared to last year with the continued low interest rate environment and an uptick in home listings and new construction loans. We are continuing our efforts to increase loan volume while maintaining our credit quality standards.

The merger with Capital Directions, Inc. is progressing as planned and we expect the closing to be effective January 1, 2017. We will provide you with more details about the merger in the coming months.

Commercial National Financial Corporation operates through a single subsidiary bank, Commercial Bank, with nine full-service banking offices and two loan production offices. Visit www.commercial-bank.com to view the latest consolidated Annual Report, news releases and other information about CEFC and Commercial Bank.

Selected Financial Data (unaudited):
Quarter Ended Sept. 30, Nine Months Ended Sept. 30,
2016 2015 2016 2015
Return on Equity (ROE) 10.86% 12.92% 10.97% 12.04%
Return on Assets (ROA) .68 .80 .67 .74
Interest Margin 3.04 3.05 2.99 3.10
September 30,
2016 2015
Non-performing Assets Ratio .56% .68%
Tier 1 Leverage Capital(1) 8.53 8.65
Total Risk-based Capital(1) 14.22 14.84
Book Value Per Share$7.60 $7.29
(1) Ratios are for Commercial Bank.

Consolidated Statements of Income:
Quarter Ended Sept. 30,Nine Months Ended Sept. 30,
2016 2015 2016 2015
Interest Income$3,619,479 $3,520,947 $10,798,239 $10,552,086
Interest Expense 730,916 821,142 2,425,261 2,427,222
Net Interest Income 2,888,563 2,699,805 8,372,978 8,124,864
Provision for loan losses 1,476 1,840 44,536 214,256
Non-interest income 406,138 485,786 1,178,205 1,363,697
Operating Expenses 2,317,187 2,145,510 6,685,392 6,372,330
Income before taxes 976,038 1,038,241 2,821,255 2,901,975
Income tax expense 302,840 275,874 822,947 815,883
Net Income$673,198 $762,367 $1,998,308 $2,086,092
Net Income per share – basic$0.21 $0.23 $0.61 $0.64
Net Income per share – diluted$0.21 $0.23 $0.61 $0.64

Consolidated Balance Sheets:
September 30,
2016 2015
Assets
Cash and cash equivalents$18,049,338 $11,585,726
Time deposits with other banks 35,818,000 28,354,000
Securities 26,972,669 36,429,571
Loans 301,420,050 285,328,243
Allowance for loan losses (2,743,998) (2,444,689)
Loans, net 298,676,052 282,883,554
Bank premises and equipment 4,520,048 4,378,991
Other assets 15,796,157 17,614,013
Total Assets$399,832,264 $381,245,855
Liabilities
Deposits$319,470,026 $301,416,186
Other borrowings 42,221,912 41,968,565
Trust preferred 10,310,000 10,310,000
Other liabilities 3,123,103 3,843,478
Total Liabilities 375,125,041 357,538,229
Equity
Common stock and paid in capital 13,572,835 13,572,835
Retained earnings 10,906,456 10,000,572
Accumulated OCI 227,932 134,219
Total Equity 24,707,223 23,707,626
Total Liabilities and Equity$399,832,264 $381,245,855


Contact: Kevin A. Twardy CFO and COO (989) 875-5528

Source: Commercial National Financial Corporation