OREANDA-NEWS. Commercial National Financial Corporation (Pink Sheets:CEFC) today announced 2016 second quarter net income of $689,000, or $.21 per share compared to 2015 second quarter net income of $687,000, or $.21 per share.  Excluding merger-related expenses of the previously announced merger with Capital Directions, Inc., the holding company for Mason State Bank, second quarter 2016 net income was $750,000, or $.23 per share.

Total assets were $397.9 million at June 30, 2016 compared to $376.6 million at June 30, 2015. Total loans grew $14.7 million, or 5.2% when comparing June 30, 2016 to June 30, 2015. The majority of loan growth occurred in the commercial loan portfolio.  We have experienced increased residential mortgage loan activity with the continued low interest rate environment and an uptick in home listings and new construction loans.  We are continuing our efforts to increase loan volume while maintaining our credit quality standards. 

For the quarter ended June 30, 2016, net interest income increased $124,000, or 4.7% due to growth in interest-earning assets, partially offset by lower interest margin compared to the quarter ended June 30, 2015.  Provision for loan losses expense decreased by $95,000 due to improved credit quality metrics.   Loss share reimbursement revenue, a component of non-interest income, decreased by $65,000 primarily due to its linkage to the lower provision for loan losses expense.  Loss share reimbursement revenue represents an expected reimbursement from the FDIC of 80% of losses on covered loans acquired in 2010 in the FDIC-assisted transaction of MainStreet Savings Bank.   Operating expenses increased by $230,000 primarily due to merger-related cost of $93,000.

Commercial National Financial Corporation operates through a single subsidiary bank, Commercial Bank, with full-service banking offices in Alma, Greenville, Hastings, Ithaca, Lake Odessa, Middleton and St. Louis and loan production offices in Grand Rapids and Mount Pleasant, Michigan.   

Selected Financial Data (unaudited):
  Quarter Ended June 30,   Six Months Ended June 30,
  2016   2015     2016   2015
Return on Equity (ROE)   11.39 %   11.85 %   11.03   11.59
Return on Assets (ROA)   .69     .74     .67   .71
Interest Margin   2.93     3.06     2.93   3.10
           
  June 30,        
  2016   2015          
Non-performing Assets Ratio   .42 %   .69 %        
Tier 1 Leverage Capital(1)   8.35     8.72          
Total Risk-based Capital(1)   14.50     15.24          
Book Value Per Share $ 7.52   $ 7.13          
(1) Ratios are for Commercial Bank.
Consolidated Statements of Income ($ in 000’s except per share data):
                           
  Quarter Ended June 30, Six Months Ended June 30,
   2016    2015      2016    2015  
Interest Income $ 3,611   $ 3,463     $ 7,179   $ 7,031  
Interest Expense   840     816       1,695     1,662  
Net Interest Income   2,771     2,647       5,484     5,369  
Provision for loan losses   11     106       43     212  
Non-interest income   419     435       772     878  
Operating Expenses   2,216     1,986       4,368     4,171  
Income before taxes   963     990       1,845     1,864  
Income tax expense   274     303       520     540  
Net Income $ 689   $ 687     $ 1,325   $ 1,324  
Net Income per share – basic $ 0.21   $ 0.21     $ 0.41   $ 0.41  
Net Income per share – diluted $ 0.21   $ 0.21     $ 0.41   $ 0.41