Commercial National Financial Corporation Reports 1st Quarter 2023 Earnings

Rhea-AI Summary

Commercial National Financial Corporation (CEFC) reported a first quarter 2023 net income of $1.47 million ($0.37 per share), down from $3.05 million ($0.77 per share) in Q1 2022. The Return on Equity (ROE) fell to 14.40% from 26.26% year-over-year. Net interest income decreased by $1.65 million (26.1%), primarily due to lower fees from Paycheck Protection Program (PPP) loans, although net interest income rose by 22.7% when excluding those fees. Total loans, excluding PPP loans, grew by $16.3 million (4%). The company’s total assets were $600.9 million, down from $627.4 million a year earlier. The incurred provision for credit losses rose to $121,000.

Positive

• Net interest income increased by $866,000 (22.7%) excluding PPP loan fees.
• Total loans increased by $16.3 million (4%) year-over-year.

Negative

• Net income decreased by $1.58 million (51.8%) year-over-year.
• Return on Equity (ROE) dropped from 26.26% to 14.40%.
• Total assets decreased by $26.5 million (4.23%) compared to the previous year.
• Provision for credit losses increased from $0 to $121,000.

ITHACA, Mich., April 26, 2023 (GLOBE NEWSWIRE) -- Commercial National Financial Corporation (Pink Sheets: CEFC) today announced first quarter 2023 net income of $1,470,000, or $.37 per share compared to first quarter 2022 net income of $3,050,000, or $.77 per share. Return on Equity (ROE) was 14.40% for the first quarter of 2023 compared to 26.26% for the first quarter of 2022.

For the first quarter of 2023, net interest income decreased by $1.65 million, or 26.1% compared to the first quarter of 2022 primarily due to substantially lower Paycheck Protection Program (PPP) loan fee accretion by approximately $2.5 million ($.50 per share, after taxes). When excluding PPP loan fee accretion, net interest income increased by $866,000, or 22.7% primarily due to an increase in net interest margin. Total loans, excluding PPP loans, increased $16.3 million, or 4% when comparing March 31, 2023 to March 31, 2022. The provision for credit losses expense increased from zero to $121,000 primarily due to general reserves being added corresponding to loan growth during the first quarter of 2023 as required by the new credit losses accounting standard adopted January 1, 2023. Non-interest income decreased by $106,000, or 18.4% primarily due to lower miscellaneous income. Operating expenses increased by $123,000, or 3.9% primarily due to higher wages and miscellaneous expense.

Total assets were $600.9 million at March 31, 2023 compared to $627.4 million at March 31, 2022. The decrease was primarily due to the repayment of $18.6 million of brokered certificates of deposit and $15.4 million of Federal Home Loan Bank borrowings with excess liquidity. At March 31, 2023, PPP loans outstanding were approximately $.5 million compared to $3.8 million at March 31, 2022. CEFC’s wholly owned subsidiary, Commercial Bank, remains significantly above “well capitalized” for regulatory purposes.

Visit www.commercial-bank.com to view the latest news releases and other information about CEFC and Commercial Bank.

Selected Financial Data (unaudited):
	Quarter Ended March 31,
		2023				2022
Return on Equity (ROE)		14.40	%			26.26	%
Return on Assets (ROA)		0.98	%			1.99	%
Net Interest Margin		3.28	%			4.37	%
	March 31,
		2023				2022
Non-performing Assets Ratio		0.13	%			0.70	%
Tier 1 Leverage Capital(1)		9.04	%			8.59	%
Total Risk-based Capital(1)		15.06	%			14.94	%
Book Value Per Share	$	10.66			$	11.51
Market Value Per Share	$	10.75			$	13.30
(1)Ratios are for Commercial Bank.

Consolidated Statements of Income (unaudited):
	Quarter Ended March 31,
		2023				2022
Interest Income	$	6,076,059			$	6,876,555
Interest Expense		1,385,415				531,862
Net Interest Income		4,690,644				6,344,693
Provision for credit losses		121,000				-
Non-interest income		472,504				578,875
Operating Expenses		3,270,792				3,147,305
Income before taxes		1,771,356				3,776,263
Income tax expense		301,300				726,000
Net Income	$	1,470,056			$	3,050,263
Net Income per share - diluted	$	0.37			$	0.77
Dividends declared	$	0.14			$	0.14

Consolidated Balance Sheets (unaudited):
	March 31,
		2023				2022
Assets
Cash and cash equivalents	$	45,031,302			$	67,543,910
Time deposits with other banks		4,482,000				14,380,000
Securities		98,252,929				108,533,063
Loans		423,195,140				410,228,551
Allowance for credit losses		(3,881,282	)			(3,831,809	)
Loans, net		419,313,858				406,396,742
Premises and equipment, net		8,718,868				8,377,785
Other assets		25,101,915				22,165,771
Total Assets	$	600,900,872			$	627,397,271
Liabilities
Deposits	$	523,072,519			$	531,049,989
FHLB borrowings		19,000,000				34,400,000
Trust preferred		13,403,000				13,403,000
Other liabilities		3,170,449				2,886,462
Total Liabilities		558,645,968				581,739,451
Equity
Total Equity		42,254,904				45,657,820
Total Liabilities and Equity	$	600,900,872			$	627,397,271

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

FAQ

What was the net income of Commercial National Financial Corporation (CEFC) for Q1 2023?

The net income for Q1 2023 was $1.47 million, or $0.37 per share.

How did the return on equity (ROE) change for CEFC in Q1 2023?

The ROE for CEFC decreased to 14.40% in Q1 2023 from 26.26% in Q1 2022.

What was the primary reason for the decrease in net interest income for CEFC?

The net interest income decreased by $1.65 million (26.1%) primarily due to lower Paycheck Protection Program loan fees.

Did CEFC experience loan growth in Q1 2023?

Yes, total loans increased by $16.3 million, or 4%, year-over-year.

What were CEFC's total assets as of March 31, 2023?

The total assets were $600.9 million, down from $627.4 million a year earlier.