Commercial National Financial Corp. Reports Operating Results (10-Q)
Commercial National Financial Corporation is a bank holding company. The corporation is owner of 100% of the outstanding shares of common stock of Commercial National Bank of Pennsylvania. Commercial National Financial Corp. has a market cap of $44.55 million; its shares were traded at around $15.4999 with a P/E ratio of 10.13 and P/S ratio of 1.96. The dividend yield of Commercial National Financial Corp. stocks is 5.68%. Highlight of Business Operations:The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) voted to amend the restoration plan for the Deposit Insurance Fund (DIF). The FDIC Board also took action to ensure the continued strength of the insurance fund by imposing a special assessment on insured institutions of 20 basis points, implementing changes to the risk-based assessment system, and setting rates beginning the second quarter of 2009. The amended restoration plan was accompanied by a final rule that sets assessment rates and makes adjustments that improve how the assessment system differentiates for risk. Currently most banks are in a risk category with assessments between 12 cents per $100 of deposits to 14 cents per $100 of deposits in insurance. Under the final rule, most banks will pay initial base rates of between 12 and 16 cents per $100 in deposits on an annual basis beginning April 1, 2009. The FDIC board also adopted an interim rule imposing a special emergency assessment of 20 cents per $100, payable September 30, 2009. In addition, the interim FDIC ruling also permits the Board to impose an emergency special assessment after June 30, 2009 of up to 10 basis points if necessary to maintain public confidence in federal deposit insurance. The FDIC may reduce the emergency assessment payable on September 30, 2009 from 20 cents to 10 cents per $100 if congress expands the FDIC s borrowing authority with the Treasury Department to $100 billion. The Corporation anticipates special assessment will effect the quarter ending June 30, 2009.
The Corporation s total assets increased by $12.2 million, or 3.4% from December 31, 2008 to March 31, 2009. Investments Available for Sale increased by $12.8 million. The increase in investments was due to the purchase of $20.0 million in GNMA mortgage backed securities, principal pay-downs on mortgage backed securities of $9.2 million and $1.9 million increase in the fair value of the securities. Net loans outstanding decreased by $5.3 million. The decrease in loans was a result of declines in the following categories; $500,000 in commercial loans, $1.7 million in commercial mortgages, $1.2 million in installment loans and $1.8 million in mortgages. The Corporation attributes the loan declines to consumer and commercial customers being cautious in the first quarter of 2009.
The Corporation s total deposits increased $6.2 million from December 31, 2008 to March 31, 2009. Non-interest bearing deposits increased by $300,000 and interest-bearing deposits increased by $5.9 million. The increase in interest-bearing deposits was mainly due to a $4.6 million increases in money market accounts, a $2.0 million increase in savings accounts, a $200,000 increase in now accounts and a $300,000 increase in individual retirement accounts. These increases were offset by $1.4 million decline in certificate of deposits. The Corporation attributes the increase in money market accounts to customers placing their funds in liquid, FDIC insured accounts that provide flexibility and safety.
Shareholders' equity was $40.8 million on March 31, 2009 compared to $39.1 million on December 31, 2008. Total shareholders equity increased due to the $1.3 million in net income and a $1.3 million net of tax increase in other comprehensive income due to increases in fair value of securities available for sale. These increases were offset by $631,000 paid in dividends to shareholders and $127,000 in Treasury stock purchases. Book value per common share increased from $13.56 at December 31, 2008 to $14.21 at March 31, 2009.
Non- interest income for the first three months of 2009 was $784,000, a decrease from $799,000 for first three months of 2008. Asset management and trust income declined by $10,000, service charges on deposit accounts decreased by $11,000 and other service charges decreased by $5,000. These decreases were partially offset by a $6,000 increase in income from investments in life insurance and a $5,000 increase in other income.
Non-interest expense for the first three months of 2009 was $2.8 million, the same as 2008. Personnel costs decreased $11,000, net occupancy increased $9,000, furniture and equipment expense decreased $11,000. PA shares tax decreased slightly by $3,000 and legal and audit increased by $10,000. Other expenses decreased by $14,000.
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