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Commercial National Financial Corporation Reports 1st Quarter 2017 Earnings

ITHACA, Mich., April 27, 2017 -- Commercial National Financial Corporation (OTC:CEFC) today announced a 2017 first quarter net loss of $206,000, or $.05 per share compared to 2016 first quarter net income of $636,000, or $.20 per share.  Excluding merger-related expenses of the previously announced merger with Capital Directions, Inc., the holding company for Mason State Bank, 2017 first quarter net income was $803,000, or $.21 per share.

Total assets were $535.9 million at March 31, 2017 compared to $408.2 million at March 31, 2016. Total loans grew $97.3 million, or 33.5% year over year. Approximately $75.4 million of loan growth related to the merger with Mason State Bank with the remainder related to commercial loan originations.  We are continuing our efforts to increase loan volume while maintaining our credit quality standards. 

For the quarter ended March 31, 2017, net interest income increased $887,000, or 32.7% primarily due to the growth in loans mentioned above as compared to the March 31, 2016 quarter.  Non-interest income increased $68,000 or 19.2% over the same time frame primarily due to higher service charges and other income levels as a result of combining both banks.  Operating expenses increased by $2.2 million mostly due to merger-related obligations and costs related to the conversion of Mason State Bank data processing systems to ours.

President and CEO Kevin D. Collison stated “We are pleased to have closed the merger with Capital Directions, Inc.  The first quarter results were significantly affected by the remaining merger-related expenses as well as the costs to convert Mason State Bank’s data processing systems to ours.  We sincerely appreciate the long hours our staff have put in to make the conversion as seamless as possible for our customers.  We look forward to seeing the benefits of this merger in the coming months.”

Selected Financial Data (unaudited): 
   
 Quarter Ended March 31, 
  2017  2016 
       
Return on Equity (ROE) (2.61)% 10.67%
Return on Assets (ROA) (.16) .64 
Net Interest Margin 2.95  2.93 
   
 March 31, 
  2017  2016 
   
Non-performing Assets Ratio .48%  .45% 
Tier 1 Leverage Capital(1) 7.76  8.35 
Total Risk-based Capital(1) 13.34  14.64 
Book Value Per Share$7.99 $7.41 
Market Value Per Share 11.37  9.75 
       
(1) Ratios are for Commercial Bank. 


Consolidated Statements of Income: 
 Quarter Ended March 31, 
  2017  2016 
Interest Income$4,560,656 $3,567,884 
Interest Expense   959,834    854,203 
Net Interest Income 3,600,822  2,713,681 
Provision for loan losses 15,814   31,752  
Non-interest income 420,523  352,714 
Operating Expenses 4,389,526  2,152,900 
Income (loss) before taxes (383,995) 881,743 
Income tax expense (benefit)  (178,000)   246,055 
Net Income (loss)$(205,995)$  635,688 
Net Income (loss) per share – basic$(0.05)$0.20 
Net Income (loss) per share – diluted$(0.05)$0.20 
Dividends declared$0.13 $0.13 
   
   
Consolidated Balance Sheets: 
 March 31, 
  2017  2016 
Assets  
Cash and cash equivalents$39,635,041  $28,479,701  
Time deposits with other banks 41,293,000  35,588,000 
Securities 38,948,461  36,323,874 
Loans 387,305,804  290,022,094 
Allowance for loan losses   (2,752,545)   (2,593,972)
Loans, net 384,553,259  287,428,122 
Bank premises and equipment 7,122,992  4,243,159 
Other assets   24,300,812    16,183,760  
Total Assets$535,853,565 $408,246,616 
   
Liabilities  
Deposits$435,628,474 $329,180,486 
Other borrowings 50,290,819  41,377,962 
Trust preferred 13,403,000  10,310,000 
Other liabilities   4,846,800    3,257,229  
Total Liabilities 504,169,093  384,125,677 
   
Equity  
Common stock and paid in capital 21,324,921  13,572,835 
Retained earnings 10,361,306  10,389,620 
Accumulated OCI   (1,755)   158,484  
Total Equity   31,684,472    24,120,939  
Total Liabilities and Equity$535,853,565 $408,246,616 


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

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