Commercial National Financial Corp. has a market cap of $47.8 million; its shares were traded at around $16.69 with a P/E ratio of 8.4 and P/S ratio of 2.1. The dividend yield of Commercial National Financial Corp. stocks is 5.3%. Commercial National Financial Corp. had an annual average earning growth of 0.5% over the past 10 years.CNAF is in the portfolios of Chuck Royce of Royce& Associates.
Highlight of Business Operations:The Corporation s total assets decreased by $10.8 million, or 2.87%, from December 31, 2009 to September 30, 2010. Total cash and cash equivalents increased by $1.2 million and investment securities available for sale decreased by $4.3 million. The decrease in investments was mainly due to the purchase of $21.7 million in municipal bonds, $25.7 million in principal pay-downs on mortgage-backed securities, $2.2 million in calls on municipal bonds and a $1.6 million increase in fair value of securities. Net loans outstanding decreased by $8.0 million. The Corporation experienced loan declines for both consumer and commercial loans. The Corporation attributes the loan declines to consumer and commercial customers being cautious for the first nine months of 2010.
Shareholders' equity was $46.8 million on September 30, 2010 compared to $43.5 million on December 31, 2009. Total shareholders equity increased due to the following; the $4.1 million in net income, a $1.1 million increase in other comprehensive income, due to increases in the fair value of securities available for sale and a $1.9 million decrease from cash dividends paid to shareholders. Book value per common share increased from $15.20 at December 31, 2009 to $16.36 at September 30, 2010.
Interest income for the nine months ended September 30, 2010 was $13.8 million, compared with $14.7 million in 2009. Loan income for the nine months ended September 30, 2010 was $8.6 million compared to $9.1 million in 2009. The decrease in loan income was due to lower average loan balances and lower yields in 2010 compared to 2009. Loan outstanding averages in 2010 were $9.0 million lower than 2009, loan yields for the first nine months of 2010 decreased seven (7) basis points to 5.73%. This decrease in the loan yield is due to lower market rates for new loans and existing loans tied to the prime rate. The security portfolio of the Corporation is significantly different in composition for the first nine months of 2010 compared with 2009. The Corporations average balance for tax-free municipal bonds was $52.6 million in 2010 compared with $8.4 million in 2009. These bonds provided a significant benefit of decreasing the Corporation s overall tax rate in 2010. Investment income from securities decreased $391,000 or 6.95% for the nine months ended September 30, 2010 compared with the same period in 2009. The average securities balances increased 5.28% in 2010 compared to 2009. The yield on total average earning assets for the first nine months of 2010 and 2009 was 5.50% and 5.81%, respectively.
Non-interest income for the first nine months of 2010 was $2.2 million, a decrease of $39,000 from non-interest income for the first nine months of 2009. The $39,000 decrease is mainly the result of the following: service charges on deposit accounts decreased by $43,000, due to customers incurring fewer overdraft charges, and income from life insurance increased by $13,000 due to the higher cash surrender values and other income decreased by $16,000.
Non-interest expense for the first nine months of 2010 was $8.7 million, an increase of $219,000 compared to 2009 non-interest expense. This increase was mainly due to the following, salaries and employee benefits increased by $264,000 due to increases in salaries of $125,000 and a significant increase in health care insurance of $135,000. Net occupancy increased by $9,000 and furniture and equipment increased by $34,000, and other expenses increased by $21,000. The increases noted above were offset by a decrease of $105,000 in FDIC insurance and a slight decrease of $5,000 in PA Shares Tax. The FDIC insurance expense was higher in 2009 due to the special assessment of $165,000 that was paid in the second quarter of 2009.
Non-interest expense for the third quarter of 2010 increased by $132,000 or 4.71% compared with same period in 2009. The largest change in non-interest expense was an $86,000 increase in salaries and employee benefits. The $86,000 increase is mainly due to a $27,000 increase in salaries and a $51,000 increase in health insurance premiums. Other changes in non-interest expense were: net occupancy decreased $8,000; furniture and equipment expense increased $10,000 and other expenses increased by $39,000.
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