Commercial National Financial Corporation Reports 3rd Quarter 2021 Earnings

Rhea-AI Summary

Commercial National Financial Corporation (CEFC) reported a third-quarter 2021 net income of $1,478,000 ($0.37 per share), up from $1,177,000 ($0.30 per share) in Q3 2020. The Return on Equity (ROE) improved to 13.35% from 11.50%. Net interest income grew by 4.1% to $4,067,298, attributed to a higher average balance of interest-earning assets despite a slight decrease in net interest margin. Operating expenses increased by 12%, influenced by new hires and professional fees. Assets rose to $591.8 million, primarily due to core deposit growth and increased Paycheck Protection Program loans.

Positive

• Net income increased by 25.6% year-over-year.
• Return on Equity (ROE) rose to 13.35%, indicating improved profitability.
• Net interest income grew by 4.1%, reflecting higher interest-earning assets.
• Total assets increased to $591.8 million, showing solid growth.
• Non-interest income up by 6.9%, driven by higher debit card fees.

Negative

• Operating expenses increased by 12%, raising cost pressures.
• Net interest margin decreased by 11 basis points, indicating reduced efficiency.

ITHACA, Mich., Oct. 29, 2021 (GLOBE NEWSWIRE) -- Commercial National Financial Corporation (Pink Sheets: CEFC) today announced third quarter 2021 net income of $1,478,000, or $.37 per share compared to third quarter 2020 net income of $1,177,000, or $.30 per share. Return on Equity (ROE) was 13.35% for the third quarter of 2021 compared to 11.50% for the third quarter of 2020.

For the third quarter of 2021, net interest income increased $160,000, or 4.1% compared to the third quarter of 2020 primarily due to a higher average balance of interest-earning assets, partially offset by 11 basis points of lower net interest margin. Non-interest income increased by $39,000, or 6.9% primarily due to higher debit card fees. Operating expenses increased by $333,000, or 12% primarily due to the hiring of additional commercial lending and treasury employees as well as from professional fees related to our core data processing conversion that was completed in September.

The provision for loan losses expense was negative $225,000 for the third quarter of 2021, compared to $300,000 for the third quarter of 2020. The negative provision expense in the third quarter of 2021 was primarily due to significantly improved economic conditions and lower allocations to classified loans as compared to the third quarter of 2020.

Total assets were $591.8 million at September 30, 2021 compared to $548.1 million at September 30, 2020. The increase was primarily due to core deposit growth, partially offset by lower wholesale borrowings. At September 30, 2021, Paycheck Protection Program loans outstanding were approximately $54.4 million compared to $32.2 million at September 30, 2020.

Commercial National Financial Corporation operates through a single subsidiary bank, Commercial Bank. 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 September 30,								Nine Months Ended September 30,
		2021				2020				2021				2020
Return on Equity (ROE)		13.35	%			11.50	%			14.28	%			10.45	%
Return on Assets (ROA)		1.00	%			0.85	%			1.07	%			0.78	%
Net Interest Margin		2.90	%			3.01	%			3.07	%			3.09	%
	September 30,
		2021				2020
Non-performing Assets Ratio		0.74	%			0.77	%
Tier 1 Leverage Capital(1)		8.83	%			8.84	%
Total Risk-based Capital(1)		15.38	%			15.39	%
Book Value Per Share	$	11.07			$	10.27
Market Value Per Share	$	10.58			$	9.11
(1) Ratios are for Commercial Bank.	.				.
Consolidated Statements of Income (unaudited):
	Quarter Ended September 30,								Nine Months Ended September 30,
		2021				2020				2021				2020
Interest Income	$	4,657,097			$	4,715,503			$	14,320,497			$	14,401,670
Interest Expense		589,799				807,886				1,838,321				2,785,487
Net Interest Income		4,067,298				3,907,617				12,482,176				11,616,183
Provision for loan losses		(225,000	)			300,000				(225,000	)			1,250,000
Non-interest income		605,799				566,672				1,791,714				1,560,698
Operating Expenses		3,106,093				2,772,687				8,885,551				8,201,942
Income before taxes		1,792,004				1,401,602				5,613,339				3,724,939
Income tax expense		314,000				224,500				1,012,000				597,500
Net Income	$	1,478,004			$	1,177,102			$	4,601,339			$	3,127,439
Net Income per share - diluted	$	0.37			$	0.30			$	1.16			$	0.79
Dividends declared	$	0.14			$	0.14			$	0.42			$	0.42
Consolidated Balance Sheets (unaudited):
	September 30,
		2021				2020
Assets
Cash and cash equivalents	$	35,881,247			$	51,221,763
Time deposits with other banks		20,854,000				22,839,000
Securities		59,058,059				38,306,539
Loans		449,036,166				409,697,305
Allowance for loan losses		(4,086,664	)			(4,043,266	)
Loans, net		444,949,502				405,654,039
Premises and equipment, net		8,311,175				8,217,624
Other assets		22,785,377				21,884,842
Total Assets	$	591,839,360			$	548,123,807
Liabilities
Deposits	$	497,771,045			$	451,610,662
Other borrowings		34,400,000				39,480,000
Trust preferred		13,403,000				13,403,000
Other liabilities		2,371,146				2,904,766
Total Liabilities		547,945,191				507,398,428
Equity
Total Equity		43,894,169				40,725,379
Total Liabilities and Equity	$	591,839,360			$	548,123,807

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

FAQ

What were the earnings for CEFC in Q3 2021?

CEFC reported earnings of $1,478,000, or $0.37 per share for Q3 2021.

How did CEFC's Return on Equity (ROE) change in Q3 2021?

ROE increased to 13.35% in Q3 2021 from 11.50% in Q3 2020.

What is the trend in CEFC's total assets?

Total assets grew to $591.8 million as of September 30, 2021, compared to $548.1 million a year earlier.

How did the operating expenses of CEFC change in Q3 2021?

Operating expenses rose by 12%, primarily due to hiring and professional fees.

What is the current status of CEFC's Paycheck Protection Program loans?

As of September 30, 2021, CEFC's Paycheck Protection Program loans outstanding were approximately $54.4 million.