UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter ended SEPTEMBER 30, 1996
Commission file number 0-18676
COMMERCIAL NATIONAL FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-1623213
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
900 LIGONIER STREET LATROBE, PA 15650
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (412) 539-3501
Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock.
CLASS OUTSTANDING AT OCTOBER 31, 1996
Common Stock, $2 Par Value 1,800,000 Shares
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Included in Part I of this report:
Page
Commercial National Financial Corporation
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Changes in
Shareholders' Equity 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
Other Information 14
Signatures 15
<PAGE>
<TABLE>
COMMERCIAL NATIONAL FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30 December 31
1996 1995
<S> <C> <C>
ASSETS
Cash and due from banks $ 9,785,269 $ 7,550,942
Interest bearing deposits with
other banks 138,614 82,651
------- ------
Total cash and due from banks 9,923,883 7,633,593
Federal funds sold 0 5,425,000
Investment securities available for sale 40,571,920 58,232,862
Investment securities held to maturity
(Market value $63,630,084 in 1996 and 63,307,806 45,247,754
$46,427,423 in 1995)
Loans (all domestic) 155,991,747 144,523,375
Less unearned income (125,424) (235,373)
Less reserve for possible loan losses (2,081,657) (2,081,700)
------------- -------------
Net loans 153,784,666 142,206,302
Premises and equipment 4,552,778 3,825,878
Other assets 4,440,816 3,604,629
------------ ------------
Total Assets $276,581,869 $266,176,018
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits (all domestic):
Non-interest bearing $ 37,286,603 $ 36,054,886
Interest bearing 202,471,013 194,681,425
------------ ------------
Total deposits 239,757,616 230,736,311
Federal funds purchased 100,000 0
Other liabilities 2,087,312 2,403,237
------------ ------------
Total Liabilities 241,944,928 233,139,548
------------ ------------
Shareholders' Equity:
Common stock, par value $2
Authorized 1,800,000 shares, issued
and outstanding 1,800,000 shares 3,600,000 3,600,000
Retained earnings 31,192,308 29,143,045
Unrealized gain/(loss) on investment securities
available for sale net of taxes (155,367) 293,425
------------- ------------
Total Shareholders' Equity 34,636,941 33,036,470
------------ ------------
Total Liabilities and
Shareholders' Equity $276,581,869 $266,176,018
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
COMMERCIAL NATIONAL FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
Three Months Nine Months
Ending Sept 30 Ending Sept 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $3,312,913 $3,250,334 $9,872,220 $9,592,682
Interest and dividends on investments:
Taxable interest 1,242,289 1,221,261 3,716,660 3,573,241
Interest exempt from federal
income tax 351,119 334,662 1,033,087 1,000,038
Interest on federal funds sold 11,377 55,326 85,149 169,466
Interest on bank deposits 1,711 860 4,355 1,662
---------- ---------- ---------- ---------
Total interest income 4,919,409 4,862,443 14,711,471 14,337,089
INTEREST EXPENSE
Interest on deposits 2,111,954 2,146,413 6,238,760 6,123,413
Interest on short-term borrowings 15,045 - 20,134 365
---------- ---------- ---------- ----------
Total interest expense 2,126,999 2,146,413 6,258,894 6,123,778
---------- ---------- ---------- ----------
NET INTEREST INCOME 2,792,410 2,716,030 8,452,577 8,213,311
PROVISION FOR POSSIBLE LOAN LOSSES 30,000 15,000 75,000 75,000
---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 2,762,410 2,701,030 8,377,577 8,138,311
---------- ---------- ---------- ----------
OTHER INCOME
Asset management and trust income 21,857 7,607 53,663 17,185
Service charges on deposit accounts 130,727 117,763 372,637 362,081
Other service charges and fees 57,412 68,261 231,069 227,851
Securities gains/losses 0 4,979 577 6,212
Other income 93,762 85,294 285,227 220,744
---------- ---------- ---------- ----------
Total other income 303,758 283,904 943,173 834,073
---------- ---------- ---------- ----------
OTHER EXPENSES
Salaries and employee benefits 933,766 941,472 2,974,222 2,903,003
Net occupancy expense 122,935 110,146 354,259 339,306
Furniture and equipment expense 134,205 106,898 397,424 310,729
FDIC insurance expense 500 (14,813) 1,500 229,265
PA shares tax 67,578 61,711 187,578 172,711
Other expense 545,563 460,068 1,547,504 1,341,002
---------- ---------- ---------- ----------
Total other expenses 1,804,547 1,665,482 5,462,487 5,296,016
---------- ---------- ---------- ----------
INCOME BEFORE TAXES 1,261,621 1,319,452 3,858,263 3,676,368
Applicable income taxes 318,000 334,300 975,000 929,700
---------- ---------- ---------- ----------
NET INCOME $ 943,621 $ 985,152 $2,883,263 $2,746,668
========== ========== ========== ==========
Average Shares Outstanding 1,800,000 1,800,000 1,800,000 1,800,000
========== ========== ========== ==========
EARNINGS PER SHARE $ .52 $ .55 $ 1.60 $ 1.53
========= ========= ========= =========
CASH DIVIDENDS DECLARED PER SHARE $ .16 $ .14 $ .46 $ .42
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
COMMERCIAL NATIONAL FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<CAPTION>
Unrealized
Gain/(Loss)
on Investment
Additional Securities Total
Common Paid-in Retained Available Shareholders
Stock Capital Earnings for Sale Equity
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1994 $1,200,000 $2,400,000 $26,457,852 $ (500,909) $29,556,943
Net income - - 2,746,668 - 2,746,668
Cash dividends
declared ($.42 per share) - (750,000) - (750,000)
Net change in
unrealized gain/(loss)
on investment securities
AFS net of taxes - - - 658,207 658,207
---------- ---------- ------------ ----------- ------------
Balance at
September 30, 1995 $1,200,000 $2,400,000 $28,454,520 $ 157,298 $32,211,818
========== ========== ============ =========== ============
Balance at
December 31, 1995 $3,600,000 $ - $29,143,045 $ 293,425 $33,036,470
Net income - - 2,883,263 - 2,883,263
Cash dividends
declared ($.46 per share) - - (834,000) - (834,000)
Net change in
unrealized gain/(loss)
on investment securities
AFS net of taxes - - - (448,792) (448,792)
---------- ---------- ------------ ----------- -----------
Balance at
September 30, 1996 $3,600,000 $ - $31,192,308 $ (155,367) $34,636,941
========== ========== ============ =========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
COMMERCIAL NATIONAL FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For Nine Months
Ended September 30
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,883,263 $ 2,746,668
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation 371,308 318,367
Provision for credit losses 75,000 75,000
Net (accretion)/amortization of securities
and loan fees 64,626 (23,202)
(Increase) in interest receivable (257,143) (267,384)
Increase (decrease) in interest payable (92,866) 248,183
(Decrease) in taxes payable (80,332) (23,553)
(Decrease) in other liabilities (142,727) (90,775)
(Increase) in other assets (74,929) (79,051)
Net securities gains (577) (6,213)
--------- ---------
Net cash provided by operating activities 2,745,623 2,898,040
---------- ----------
INVESTING ACTIVITIES
Net decrease (increase) in deposits
with other banks 44,037 (53,555)
Net decrease (increase) in fed funds sold 5,425,000 (1,775,000)
Purchase of securities AFS (10,768,047) (8,794,297)
Purchase of securities HTM (23,179,071) (7,886,925)
Maturities and calls of securities AFS 11,104,410 6,890,634
Maturities and calls of securities HTM 5,089,061 6,040,940
Sale of securities AFS 16,641,321 0
Net increase in loans (11,957,104) (5,063,141)
Purchase of premises and equipment (1,098,208) (715,823)
----------- ------------
Net cash used in investing activities (8,698,601) (11,357,167)
----------- ------------
FINANCING ACTIVITIES
Increase in non-interest deposits 1,231,717 647,013
Increase in int. bearing deposits 7,789,588 9,261,434
Dividends paid (834,000) (750,000)
----------- -----------
Net cash provided by financing activities 8,187,305 9,158,447
----------- -----------
Increase in cash and cash equivalents 2,234,327 699,320
Cash and cash equivalents at beginning of year 7,550,942 7,763,321
------------ -----------
Cash and cash equivalents at end of quarter $ 9,785,269 $ 8,462,641
============= =============
Supplemental disclosures of cash flow information:
Non-cash items during the year for:
Transfer from loans to O.R.E.O. $ 272,919 $ 0
========= ==========
Change in unrealized gain/(loss) AFS securities $(679,989) $1,024,636
Deferred taxes (231,197) 348,376
Net change in unrealized gain/(loss) on ---------- ----------
AFS securities $(448,792) $ 676,260
========== ==========
Cash paid during the year for:
Interest $6,351,760 $3,626,837
=========== ==========
Income taxes $1,000,000 $620,228
========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
COMMERCIAL NATIONAL FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
Note 1 Management Representation
- ------ -------------------------
The accompanying unaudited consolidated interim financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information. However, they do not
include all information and footnotes required by generally accepted
accounting principles for complete financial statements and should be
read in conjunction with the annual financial statements of
Commercial National Financial Corporation for the year ending
December 31, 1995, including the notes thereto. In the opinion of
management, the unaudited interim consolidated financial statements
include all adjustments (consisting of only normal recurring
adjustments) necessary for a fair statement of financial position as
of September 30, 1996 and the results of operations for the three and
nine month periods ended September 30, 1996 and 1995, and the
statements of cash flows and changes in shareholders' equity for the
nine month periods ended September 30, 1996 and 1995. The results of
the nine months ended September 30, 1996 are not necessarily
indicative of the results to be expected for the entire year.
<TABLE>
Note 2 Reserve for Possible Loan Losses
- ------ --------------------------------
Description of changes:
<CAPTION>
1996 1995
<S> <C> <C>
Reserve balance January 1 $ 2,081,700 $ 2,077,553
Additions:
Provision charged to operating expenses 75,000 75,000
Recoveries on previously charged off
loans 21,905 8,845
Deductions:
Loans charged off (96,948) (63,634)
------------ ------------
Reserve balance September 30 $ 2,081,657 $ 2,097,764
============= ============
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
First Nine Months of 1996 as compared to the First Nine Months of 1995
- ----------------------------------------------------------------------
Pre-tax net income for the first nine months of 1996 was $3,858,263 compared to
$3,676,368 during the same period of 1995, representing a 4.95% increase.
Interest income was $14,711,471, an increase of 2.61%. The loan return rate
decreased twelve (12) basis points to 8.86% and the securities return rate
decreased ten (10) basis points to 6.02%. As a result, the return rate on total
average earning assets decreased eleven (11) basis points to 7.67%. Average
earning asset volume rose $10,048,653, a 4.09% increase.
Interest expense was $6,258,894, an increase of 2.21%. The cost rate on average
interest bearing liabilities was 4.19%, a six (6) basis point decrease from a
year ago. Average interest bearing deposit volume rose $6,873,448, an increase
of 3.58%.
Net interest income increased 2.91% to $8,452,577, and represented 4.21% of
average total assets compared to 4.27% during the first nine months of 1995.
The average reserve for loan losses declined .33% to $2,085,885. By comparison,
total average loans grew 4.31% during the same period. The 1996 first nine
months provision for loan losses was $75,000, compared to $75,000 for the first
nine months of 1995.
Net interest income after the application of the provision for possible loan
losses grew 2.94% to $8,377,577 representing a 4.17% return on total average
assets compared to 4.23% for the first nine months of 1995.
Non-interest income increased 13.08% to $943,173. Service charges on deposit
accounts grew 2.92% to $372,637. Other service charges and fees rose 1.41%,
reaching $231,069. Other income increased 29.21% to $285,227 due mostly to
increased activity of the credit card merchant program. Securities gains of $577
were realized on called investments and bonds sold. Asset management and trust
fees totaled $53,663.
Non-interest expense was $5,462,487, an increase of 3.14%, or $166,471, while
total average assets grew 4.36%. Personnel costs rose 2.45%, a $71,219 increase.
Net occupancy expense rose 4.41%, or $14,953. Furniture and equipment expense
grew 27.90%, representing a cost increase of $86,695. This was mainly attributed
to the opening of our new office in Murrysville. FDIC insurance expense fell
99.35%, a $227,765 decrease. This was due to the assessment adjustment made by
the FDIC during the second half of 1995 when the bank insurance fund reached its
congressionally mandated reserve target. The impact of this has reduced our
assessment to $2,000 annually. Pennsylvania shares tax expense was $187,578, an
increase of 8.61%. Other expense rose 15.40%, an increase of $206,502.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (continued)
- ---------------------------------
First Nine Months of 1996 as compared to the First Nine Months of 1995 (cont)
- -----------------------------------------------------------------------------
Federal income tax on total first nine months earnings was $975,000 compared to
$929,700 a year ago. Net income after taxes rose 4.97% to $2,883,263, an
increase of $136,595. The annualized return on average assets was 1.43% for the
first nine months of 1996 compared to 1.43% for the nine months ended September
30, 1995. The annualized return on average equity through September 30, 1996 was
11.38% and had been 11.87% through the first nine months of 1995.
Three Months Ended Sept 30, 1996 as Compared to the Three Months Ended Sept 1995
- --------------------------------------------------------------------------------
Pre-tax net income for the third quarter of 1996 declined 4.38% and was
$1,261,621 compared to $1,319,452 during the same period of 1995.
Interest income was $4,919,409, an increase of 1.17%. The loan return rate
decreased thirty-seven (37) basis points to 8.66%, the securities return rate
decreased eleven (11) basis points to 6.04% and the return rate on total average
earning assets decreased twenty-three (23) basis points to 7.59%. Volume growth
in total average earning assets was $10,517,806.
Interest expense was $2,126,999, a decrease of .90%. The volume increase on
average interest bearing liabilities was $8,741,998. Cost rate decline to
4.20%, a twenty-three (23) basis point decrease from a year ago.
The average reserve for loan losses declined .25% to $2,090,656, while total
average loans grew 6.23%. The 1996 third quarter provision for loan losses was
$30,000, compared to $15,000 for the third quarter of 1995, a 100% increase.
Net interest income after the application of the provision for possible loan
losses grew 2.27% to $2,762,410 representing a 4.06% return on total average
assets compared to 4.15% for the third quarter of 1995.
Non-interest income increased 6.99%, or $19,854, to $303,758. Service charges
on deposit accounts increased 11.01% to $130,727. Other service charges and fees
declined 15.89% to $57,412. Other income increased 9.93% to $93,762. Asset
management and trust fees totaled $21,857.
Non-interest expense grew 8.35%, a $139,065 increase, compared to total average
asset growth of 4.54%. Personnel costs fell .82%, a $7,706 decrease. Net
occupancy expense rose 11.61% a $12,789 increase. Furniture and equipment
expense rose 25.54%, a $27,307 increase. FDIC insurance expense rose 103.38%,
a $15,313 increase. This was due to the refund made by the FDIC in the third
quarter of 1995 when the bank insurance fund reached its congressionally
mandated reserve target. Pennsylvania shares tax expense was 67,578, an
increase of 9.51%. Other expense rose 18.58%, a $85,495 increase.
Federal income tax on total third quarter earnings was $318,000 compared to
$334,300 a year ago. Net income after taxes fell 4.22% to $943,621. The
annualized return on average assets was 1.39% for the three months ended
September 1996 compared to 1.51% for the third quarter of 1995. The annualized
return on average equity for the third quarter of 1996 was 11.01% compared to
12.43% for the third quarter of 1995.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS (Continued)
- ---------------------------------
LIQUIDITY
- ---------
Liquidity, the measure of the corporation's ability to meet the normal cash flow
needs of depositors and borrowers in an efficient manner, is generated primarily
from the acquisition of deposit funds and the maturity of loans and securities.
Additional liquidity can be provided by the sale of investment securities
available for sale which amounted to $39,874,124 on September 30, 1996.
During the first nine months of 1996, average deposits increased $6,395,834 over
the same period in 1995. Investments maturing within one year were 6.02% of
total assets on September 30, 1996 and 7.46% on September 30, 1995.
Average loans grew by $6,136,134 and the average securities portfolio, including
federal funds sold, increased $3,912,519.
INTEREST SENSITIVITY
- --------------------
Interest rate management seeks to maintain a balance between consistent income
growth and the risk that is created by variations in ability to reprice deposit
and investment categories. The effort to determine the effect of potential
interest rate changes normally involves measuring the so called "gap" between
assets (loans and securities) subject to rate fluctuation and liabilities
(interest bearing deposits) subject to rate fluctuation as related to earning
assets over different time periods and calculating the ratio of interest
sensitive assets to interest sensitive liabilities.
Repricing periods for the loans, securities, interest bearing deposits, non-
interest bearing assets and non-interest bearing liabilities are based on
contractual maturities, were applicable, as well as the corporation's historical
experience regarding the impact of interest rate fluctuations on the prepayment
and withdrawal patterns of certain assets and liabilities. Regular savings, NOW
and other similar interest bearing demand deposit accounts are subject to
immediate withdrawal and therefore are presented as beginning to reprice in the
earliest period presented in the "gap" table.
<PAGE> <PAGE>
INTEREST SENSITIVITY (In thousands)
- -----------------------------------
The following table presents this information as of Sept 30, 1996 and December
31, 1995:
<TABLE>
<CAPTION>
September 30, 1996
0-30 DAYS 31-90 DAYS 91-180 DAYS 181-365 DAYS 1 - 5 YEARS OVER 5 YRS
<S> <C> <C> <C> <C> <C> <C>
Interest sensitive
assets $ 42,302 $ 5,779 $ 9,210 $ 24,767 $ 117,298 $ 59,582
Interest sensitive
liabilities $ 10,107 $ 18,304 $ 25,633 $ 32,573 $ 115,790 $ 684
Interest sensitivity ---------------------------------------------------------------------
gap $ 32,195 $(12,525) $ (16,423) $ (7,806) $ 1,508 $ 58,898
=====================================================================
Cumulative gap $ 19,670 $ 3,247 $ (4,559) $ (3,051) $ 55,847
Ratio of cumulative gap =========================================================
to earning assets 7.58% 1.25% (1.76%) (1.18%) 21.51%
=========================================================
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
0-30 DAYS 31-90 DAYS 91-180 DAYS 181-365 DAYS 1 - 5 YEARS OVER 5 YRS
<S> <C> <C> <C> <C> <C> <C>
Interest sensitive
assets $ 42,312 $ 5,474 $ 7,934 $ 19,533 $ 109,224 $ 68,355
Interest sensitive
liabilities $ 11,295 $ 18,446 $ 22,607 $ 30,069 $ 111,589 $ 675
Interest sensitivity ---------------------------------------------------------------------
gap $ 31,017 $(12,972) $ (14,673) $ (10,536) $ (2,365) $ 67,680
=====================================================================
Cumulative gap $ 18,045 $ 3,372 $ (7,164) $ (9,529) $ 58,151
Ratio of cumulative gap =========================================================
to earning assets 7.14% 1.33% (2.83%) (3.77%) 23.00%
==========================================================
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
CREDIT QUALITY RISK
- -------------------
The following table presents a comparison of loan performance as of September
30, 1996 with that of September 30, 1995. Non-accrual loans are those for which
interest income is recorded only when received and past due loans are those
which are contractually past due 90 days or more in respect to interest or
principal payments. As of September 30, 1996 the corporation had $272,919 in
other real estate owned and no in substance foreclosures. Expense on other real
estate owned was $1,296.
<TABLE>
<CAPTION>
At Sept 30,
1996 1995
<S> <C> <C>
Non-performing loans:
Loans on non-accrual basis $ 23,172 $ 571,911
Past due loans 48,063 45,531
------------- -------------
Total non-performing loans $ 71,235 $ 617,442
============= =============
Other real estate owned $ 272,919 $ 0
Total non-performing assets $ 344,154 $ 583,970
============= =============
Loans outstanding at end of period $ 155,866,324 $ 144,106,646
Average loans outstanding (year-to-date) $ 148,595,845 $ 142,459,711
Non-performing loans as percent of total
loans .22% .43%
Provision for possible loan losses $ 75,000 $ 75,000
Net charge-offs $ 75,043 $ 54,789
Net charge-offs as percent of average
loans .05% .04%
Provision for possible loan losses as
percent of net charge-offs 99.94% 136.89%
Reserve for possible loan losses as
percent of average loans outstanding 1.40% 1.47%
</TABLE>
CAPITAL RESOURCES
- -----------------
Shareholders' equity for the first nine months of 1996 averaged $33,780,860
which represented an increase of $2,925,138 over the average capital of
$30,855,722 recorded in the same period of 1995. These capital levels
represented a capital ratio of 12.61% in 1996 and 12.02% in 1995. When the loan
loss reserve is included, the 1996 capital ratio becomes 13.39%.
The Federal Reserve Board has issued risk-based capital adequacy guidelines
which went into effect in stages through 1992. The risk-based capital standard
is designed principally as a measure of credit risk. These guidelines require
that:(1) at least 50% of a banking organization's total capital be common and
certain other "core" equity capital ("Tier I Capital"); (2) assets and
off-balance sheet items must be weighted according to risk; and (3) the total
capital to risk-weighted assets ratio be at least 8%; and (4) a minimum 4.00%
leverage ratio of Tier I capital to average total assets. The minimum leverage
ratio is not specifically defined, but is generally expected to be 4-5 percent
for all but the most highly rated banks, as determined by a regulatory rating
system. As of September 30, 1996, the corporation, under these guidelines, had
a Tier I and total equity capital to risk adjusted assets ratio of 22.19% and
23.44% respectively. The leverage ratio was 12.77%.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
<TABLE>
CAPITAL RESOURCES (continued)
- -----------------------------
The table below presents the corporation's capital position at September 30,
1996
(Dollar amounts in thousands)
<CAPTION>
Percent
of Adjusted
Amount Assets
<S> <C> <C>
Tier I Capital $ 34,792 22.19
Risk-Based Requirement 6,271 4.00
Total Capital $ 36,753 23.44
Risk-Based Requirement 12,542 8.00
- -------------------------------------------------------------------------------
Minimum Leverage Capital $ 34,792 12.77
Minimum Leverage Requirement 10,895 4.00
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
Not applicable.
ITEM 2. CHANGES IN SECURITIES
---------------------
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
Not applicable
ITEM 5. OTHER INFORMATION
-----------------
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
Not applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMERCIAL NATIONAL FINANCIAL CORPORATION
(Registrant)
Dated: November 1, 1996 /s/ Louis A. Steiner
Louis A. Steiner
Chairman of the Board
Dated: November 1, 1996 /s/ Sandra L. Neiderhiser
Sandra L. Neiderhiser
Secretary/Treasurer
<PAGE>
Commercial National Financial Corporation
900 Ligonier Street
Latrobe, Pennsylvania 15650
Telephone (412) 539-3501
Banking Subsidiary:
Commercial National Bank of Westmoreland County
Banking Offices
Latrobe Area
900 Ligonier Street (412) 539-3501
1900 Lincoln Avenue (412) 537-9980
11 Terry Way * (412) 539-9774
Pleasant Unity
Church Street * (412) 423-5222
Ligonier
201 Main Street * (412) 238-9538
West Newton
109 East Main Street * (412) 872-5100
Greensburg Area
Georges Station Road * (412) 836-7600
19 North Main Street (412) 836-7699
Asset Management and (412) 836-7670
Trust Division
19 North Main Street
Drive-up Facility
Latrobe
Lincoln Road at
Josephine Street * (412) 537-9927
Murrysville
4785 Old William Penn Highway * (412) 733-4888
* Automatic Teller Facilities
Automatic Teller Facilities also located at
Latrobe Area Hospital, Westmoreland County Airport,
and Saint Vincent College
<PAGE>
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0
0
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