December 31 2005 financial press release


NEWS RELEASE



Contact:  Wendy S. Schmucker
Senior Vice President, Secretary and Treasurer
724-537-9923

For Immediate Release

COMMERCIAL NATIONAL ANNOUNCES DECEMBER 31, 2005 RESULTS - CORE EARNINGS IMPROVEMENT OF 20.4% FOR YEAR AND 29.2% FOR FOURTH QUARTER

LATROBE, PA, January 23, 2006 - Commercial National Financial Corporation (NASDAQ:CNAF)(Company), parent Company of Commercial Bank & Trust of PA, has reported earnings for the year ended December 31, 2005. The Company earned $3,377,000 (or $.99 per average share outstanding) in 2005 compared to $621,000 (or $.18 per average share outstanding) in 2004. Earnings for the fourth quarter of 2005 were $833,000 (or $.24 per average share outstanding) compared to $781,000 (or $.23 per average share outstanding) for the same period in 2004. Earnings-per-share in 2005 and 2004 are based on 3,413,426 and 3,422,881 average shares outstanding, respectively.
 
Year-to-date core earnings are $3,136,000 compared to 2004 core earnings of $2,604,000 - up by approximately 20.4%. To determine its core earnings, the Company excludes from earnings any net credit to its provision for loan losses, its realized securities gains/losses and any non-recurring items (see attached table).



     
Year Ended
December 31, 2005
  
Year Ended
December 31, 2004
Net Income (GAAP)
    
$3,377,000
  
$621,000
Adjustments:
          
 
FHLB Advance Prepayment Penalty
 
-
  
$4,402,000
 
Net Credit - Loan Losses
  
(365,000)
  
(436,000)
 
Securities Gains
  
-
  
(1,195,000)
 
Executive Severance
  
-
  
233,000
     
(365,000)
  
3,004,000
           
Tax Effect (34%)
    
(124,000)
  
1,021,000
Core Earnings
    
$3,136,000
  
$2,604,000
           

The core earnings for the fourth quarter 2005 of $833,000 reflects an improvement of 29.2% compared to core earnings of $645,000 for the fourth quarter 2004.

     
Three Months Ended December 31, 2005
  
Three Months Ended December 31, 2004
Net Income (GAAP)
    
$833,000
  
$781,000
Adjustments:
          
 
Profit Sharing Accrual Reversal
  
-
  
(206,000)
     
-
  
(206,000)
           
Tax Effect (34%)
    
-
  
(70,000)
Core Earnings
    
$833,000
  
$645,000
           

Gregg E. Hunter, President and Chief Executive Officer commented, “Net income for 2005 rose due to the comprehensive business practices improvements which were instituted throughout both 2004 and 2005. Steady progress with concrete results were achieved in profitability, loan and deposit growth, liquidity, and cost control. This progress was only made possible through the extensive corporate enhancements which were implemented by the Board of Directors over the past two years.”

In addition to Latrobe where it is headquartered, the company operates community banking facilities in Greensburg, Hempfield Township, Ligonier, North Huntingdon, Unity Township and West Newton, Pennsylvania and also maintains a commercial business development sales force throughout its entire market area. The Company operates an asset management and trust division headquartered in Greensburg, Pennsylvania. Commercial Bank also serves its customer base from an Internet banking site (www.cbthebank.com) and an automated TouchTone Teller banking system.




Safe Harbor Statement

Forward-looking statements (statements which are not historical facts) in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,”“will,”“to,”“expect,”“believe,”“anticipate,”“intend,”“could,”“would,”“estimate,” or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements are based on information currently available to the Company, and the Company assumes no obligation to update these statements as circumstances change. Investors are cautioned that all forward-looking statements involve risk and uncertainties, including changes in general economic and financial market conditions, unforeseen credit problems, and the Company's ability to execute its business plans. The actual results of future events could differ materially from those stated in any forward-looking statements herein.

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wss/dec06news


COMMERCIAL NATIONAL FINANCIAL CORPORATION
          
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
          
(Dollars in thousands)
          
           
   
December
  
December
  
   
2005
  
2004
  
           
ASSETS
          
Cash and due from banks
  
$
12,760
  
$
7,685
  
Interest bearing deposits with banks
    
121
   
101
 
     
12,881
   
7,786
 
               
Federal funds sold
    
16,950
   
-
 
Securities available for sale
    
66,117
   
99,455
 
Restricted investments in bank stock
    
1,013
   
1,806
 
               
               
Loans
    
207,039
   
192,255
 
Allowance for loan losses 
    
(1,636
)
  
(1,855
)
 Net loans
    
205,403
   
190,400
 
               
Premises and equipment
    
4,301
   
4,644
 
Other assets
    
15,716
   
16,281
 
     
       
Total assets 
  
$
322,381
  
$
320,372
  
               
LIABILITIES AND SHAREHOLDERS' EQUITY
              
Liabilities:
              
Deposits: 
              
 Non-interest bearing
  
$
69,025
  
$
62,284
  
 Interest bearing
    
207,984
   
203,534
 
 Total deposits
    
277,009
   
265,818
 
               
Other liabilities 
    
1,711
   
1,944
 
Short-term borrowings 
    
-
   
7,950
 
 Total liabilities
    
278,720
   
275,712
 
               
Shareholders' equity
              
Common stock, par value $2 per share; 10,000,000 shares authorized; 3,600,000 shares issued; 3,413,426 shares outstanding  
              
               
               
     
7,200
   
7,200
 
               
               
Retained earnings 
    
39,422
   
38,946
 
               
Accumulated other comprehensive income 
    
617
   
2,092
 
               
Less treasury stock, at cost, 186,574 shares 
              
     
(3,578
)
  
(3,578
)
 Total shareholders' equity
    
43,661
   
44,660
 
               
 Total liabilities and shareholders' equity
  
$
322,381
  
$
320,372
  
               
               

COMMERCIAL NATIONAL FINANCIAL CORPORATION
                  
CONSOLIDATED STATEMENTS OF INCOME
                  
(dollars in thousands, except per share amounts)
                  
                   
   
Three Months
      
Year
      
   
Ended December 31
      
Ended December 31
      
   
2005
  
2004
  
2005
  
2004
  
   
(unaudited)
  
(unaudited)
  
(unaudited)
  
(unaudited)
  
                   
INTEREST INCOME:
                  
Interest and fees on loans 
  
$
2,897
  
$
2,721
  
$
11,303
  
$
10,809
  
Interest and dividends on securities: 
                          
 Taxable
    
952
   
1,406
   
4,441
   
6,914
 
 Exempt from federal income taxes
    
33
   
31
   
137
   
395
 
Other 
    
172
   
2
   
303
   
124
 
Total Interest income 
    
4,054
   
4,160
   
16,184
   
18,242
 
                           
INTEREST EXPENSE:
                          
Interest on deposits 
    
1,154
   
969
   
4,360
   
3,662
 
Interest on short-term borrowings 
    
-
   
65
   
22
   
161
 
Interest on long-term borrowings 
    
-
   
-
   
-
   
2,128
 
Total Interest expense 
    
1,154
   
1,034
   
4,382
   
5,951
 
                           
NET INTEREST INCOME
    
2,900
   
3,126
   
11,802
   
12,291
 
PROVISION (CREDIT) FOR LOAN LOSSES
    
90
   
-
   
(365
)
  
(436
)
                           
NET INTEREST INCOME AFTER
                          
PROVISION (CREDIT) FOR LOAN LOSSES
    
2,810
   
3,126
   
12,167
   
12,727
 
                           
OTHER OPERATING INCOME:
                          
Asset management and trust income 
    
204
   
184
   
829
   
876
 
Service charges on deposit accounts 
    
161
   
105
   
604
   
644
 
Other service charges and fees
    
183
   
215
   
701
   
726
 
Net security gains 
    
-
   
-
   
-
   
1,195
 
Commissions and fees from insurance sales 
    
-
   
-
   
-
   
342
 
Income from investment in life insurance
    
148
   
145
   
525
   
529
 
Other income 
    
140
   
43
   
300
   
279
 
Total other operating income
    
836
   
692
   
2,959
   
4,591
 
                           
OTHER OPERATING EXPENSES
                          
Salaries and employee benefits 
    
1,238
   
1,131
   
5,196
   
6,003
 
Executive severance
    
-
   
-
   
-
   
233
 
Net occupancy 
    
184
   
143
   
722
   
702
 
Furniture and equipment 
    
186
   
207
   
742
   
809
 
Pennsylvania shares tax
    
141
   
146
   
559
   
546
 
FHLB Advance prepayment penalty 
    
-
   
-
   
-
   
4,402
 
Other expenses
    
773
   
997
   
3,313
   
4,211
 
Total other operating expenses
    
2,522
   
2,624
   
10,532
   
16,906
 
                           
INCOME BEFORE INCOME TAXES
    
1,124
   
1,194
   
4,594
   
412
 
Income tax expense/(benefit)
    
291
   
413
   
1,217
   
(209
)
                           
Net income 
  
$
833
  
$
781
  
$
3,377
  
$
621
  
                           
Average Shares Outstanding
    
3,413,426
   
3,413,426
   
3,413,426
   
3,422,881
 
                           
Net Income Per Share
  
$
0.24
  
$
0.23
  
$
0.99
  
$
0.18