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 $51.5 million; its shares were traded at around $18 with a P/E ratio of 10.7 and P/S ratio of 2.2. The dividend yield of Commercial National Financial Corp. stocks is 4.9%.
Highlight of Business Operations:The Corporation s total assets increased by $9.9 million, or 2.8%, from December 31, 2008 to September 30, 2009. Total cash and cash equivalents increased by $362,000. Investment securities available for sale increased by $19.0 million, this increase in investments was mainly due to security purchases of $47.1 million, security maturities of $1.0 million, principal pay-downs of $30.6 million and market value increases of $3.2 million on the securities. Net loans outstanding decreased by $10.6 million. The decrease in loans was mainly the result of declines in the following categories; $7.9 million in mortgages, $4.0 million in installment loans and a $376,000 decrease in tax-free loans. These decreases were slightly offset by increases of $1.1 million in commercial loans and an $894,000 increase in construction mortgages. The Corporation attributes the loan declines to consumer and commercial customers being cautious in 2009.
Shareholders' equity was $42.6 million on September 30, 2009 compared to $39.1 million on December 31, 2008. Total shareholders equity increased due to following; $3.6 million in net income, a $2.1 million increase in other comprehensive income due to increases in fair value of securities available for sale, a $306,000 decrease from the purchase of treasury stock and the $1.9 million decrease from cash dividends paid to shareholders. Book value per common share increased from $13.56 at December 31, 2008 to $14.88 at September 30, 2009.
Interest income for the nine months ended September 30, 2009 was $14.7 million, an increase of 0.86% from interest income of $14.6 million for the nine months ended September 30, 2008. Loan income for the nine months ended September 30, 2009 was $9.1 million compared to $9.9 million in 2008. The decrease in loan income was due to lower average loan balances in 2009 compared to 2008. Loan averages in 2009 were $10.8 million lower than 2008. In addition, loan yields for the first nine months of 2009 decreased eighteen (18) basis points to 5.80%. This decrease in the loan yield is due to lower market rates for new loans in 2009. Investment income from securities increased $900,000 or 19.07% for the first nine months of 2009 compared with the same period of 2008. Investment income increased due to a $22.8 million or 21.57% increase in average outstanding investments in 2009 compared with 2008. The yield on the securities portfolio in 2009 decreased twelve (12) basis points to 5.83%. The yield on total average earning assets for the first nine months of 2009 and 2008 was 5.81% and 5.97%, respectively.
Total interest expense of $3.4 million for the first nine months of 2009 decreased by $1.4 million or 29.45% compared with the same period of 2008. The average interest bearing liabilities in 2009 were $255 million, an increase of $9.0 million or 3.67% over 2008 averages. Interest on deposits decreased $1.4 million or 36.10% in 2009 compared to 2008. The cost of certificates of deposits decreased by $1.3 million in 2009 compared with 2008. The decrease was due a decline of $18.4 million in certificates of deposit average balances in 2009 compared with 2008 and lower market cost for the certificates in 2009 compared with 2008. The expense on short-term borrowings decreased $233,000 from the first nine months of 2009 compared to the same period in 2008. Long-term borrowing expense increased $172,000 to $839,000 in 2009. The corporation increased short and long-term borrowings from the FHLB to offset the decreases in interest bearing deposit accounts and to fund the increase in investments available for sale. The cost of the FHLB advances decreased significantly in 2009 compared with 2008. The average cost of interest-bearing liabilities for the first nine months of 2009 was 1.77%, an eighty-three (83) basis points decrease from the same period in 2009. These factors led to the decrease in interest expense for the first nine months of 2009.
Non-interest expense for the first nine months of 2009 was $8.6 million, an increase of $350,000 or 4.25% from non-interest expense for the first nine months of 2008. The major change in 2009 was the $337,000 increase in FDIC expense compared with 2008. This increase was the result of the FDIC insurance costs increasing $172,000 in 2009 compared with 2008 and the FDIC special assessment of $165,000 in 2009. Personnel costs decreased $16,000, net occupancy increased $67,000, furniture and equipment expense decreased $37,000. Legal and professional fees decreased by $9,000 and other expenses increased slightly by $24,000.
Non-interest expense increased $114,000 during the third quarter of 2009, a 4.20% increase from the same period in 2008. Personnel costs increased by $17,000, occupancy cost increased $39,000 primarily due to a $33,000 increase in repair and maintenance costs, furniture and fixture costs decreased $20,000, mainly due to a $15,000 decrease in equipment depreciation cost. Legal and professional costs decreased for the three-month period in 2009 by $11,000 compared to same period 2008. FDIC insurance expense increased by $79,000 due to higher FDIC assessment rates in 2009. Other expenses increased by $16,000.
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