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 JUNE 30, 2000
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: (724) 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 JULY 31, 2000
Common Stock, $2 Par Value 3,517,836 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 16
<PAGE>
<TABLE>
COMMERCIAL NATIONAL FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30 December 31
2000 1999
<S> <C> <C>
ASSETS
Cash and due from banks $ 9,368,603 $ 8,654,617
Interest bearing deposits with
other banks 128,950 558,781
--------------------------------
Total cash and due from banks 9,497,553 9,213,398
Federal funds sold - 5,750,000
Investment securities available for sale 143,016,192 124,743,186
Loans (all domestic) 210,171,990 204,959,798
Less unearned income (57,903) (120,463)
Less allowance for loan losses (2,295,909) (1,919,453)
----------------------------------
Net loans 207,818,178 202,919,882
Premises and equipment 6,302,409 6,304,454
Other assets 5,156,076 6,367,070
----------------------------------
Total Assets $371,790,408 $355,297,990
==================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits (all domestic):
Non-interest bearing $ 45,297,686 $ 41,534,998
Interest bearing 227,292,193 231,412,405
----------------------------------
Total deposits 272,589,879 272,947,403
Short-term borrowings 30,875,000 15,000,000
Other liabilities 2,311,741 2,946,694
Long-term borrowings 25,000,000 25,000,000
----------------------------------
Total Liabilities 330,776,620 315,894,097
Shareholders' Equity:
Common stock, par value $2; 10,000,000
Shares authorized; 3,600,000 issued;
3,517,836 and 3,539,643 shares
outstanding in 2000 and 1999 7,200,000 7,200,000
Retained earnings 36,251,386 35,190,986
Accumulated other comprehensive income -
net of deferred taxes of $(454,389)
in June 2000 and $(931,219) in
December 1999 (882,050) (1,807,660)
Treasury stock, 82,164 shares at cost (1,555,548) (1,179,433)
----------------------------------
Total Shareholders' Equity 41,013,788 39,403,893
----------------------------------
Total Liabilities and
Shareholders' Equity $371,790,408 $355,297,990
==================================
</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 Six Months
Ending June 30 Ending June 30
2000 1999 2000 1999
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $4,288,154 $4,121,839 $ 8,581,315 $ 8,263,419
Interest and dividends on investments:
Taxable interest 1,808,934 1,264,841 3,205,442 2,561,178
Interest exempt from federal
income tax 377,444 505,503 971,125 1,022,408
Interest on federal funds sold 26,506 81,589 94,140 81,762
Interest on bank deposits 4,254 1,736 10,078 2,924
-----------------------------------------------------
Total Interest Income 6,505,292 5,975,508 12,862,100 11,931,691
INTEREST EXPENSE
Interest on deposits 2,278,443 2,140,327 4,587,484 4,271,945
Interest on short-term borrowings 235,600 69,666 399,742 193,742
Interest on long-term borrowings 355,052 201,741 656,747 356,032
-----------------------------------------------------
Total interest expense 2,869,095 2,411,734 5,643,973 4,821,719
NET INTEREST INCOME 3,636,197 3,563,774 7,218,127 7,109,972
PROVISION FOR LOAN LOSSES 465,000 120,000 630,000 240,000
-----------------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,171,197 3,443,774 6,588,127 6,869,972
OTHER INCOME
Asset management and trust income 122,993 73,353 240,962 139,401
Service charges on deposit accounts 176,207 171,179 348,322 333,689
Other service charges and fees 174,073 148,430 351,093 326,994
Securities gains/(losses) - 8,537 (862,844) 49,067
Other income 52,705 89,206 955,535 181,360
-----------------------------------------------------
Total Other Income 525,978 490,705 1,033,068 1,030,511
OTHER EXPENSES
Salaries and employee benefits 1,278,503 1,238,756 2,656,725 2,547,499
Net occupancy expense 139,469 148,618 289,460 301,852
Furniture and equipment expense 210,041 169,784 412,965 306,677
Pennsylvania shares tax 97,006 87,713 187,817 168,904
Other expense 626,311 624,075 1,202,172 1,215,753
-----------------------------------------------------
Total Other Expenses 2,351,330 2,268,946 4,749,139 4,540,685
INCOME BEFORE INCOME TAXES 1,345,845 1,665,533 2,872,056 3,359,798
Income tax expense 308,500 406,100 613,200 813,900
-----------------------------------------------------
NET INCOME $1,037,345 $1,259,433 $2,258,856 $2,545,898
=====================================================
Average Shares Outstanding 3,591,229 3,591,229 3,528,114 3,591,229
=====================================================
EARNINGS PER SHARE $ .29 $ .35 $ .64 $ .71
=====================================================
CASH DIVIDENDS DECLARED PER SHARE $ .17 $ .15 $ .34 $ .28
=====================================================
</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>
Accumulated
Other Total
Common Retained Treasury Comprehensive Shareholders'
Stock Earnings Stock Income Equity
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1998 $7,200,000 $34,133,006 - $1,828,643 $43,161,649
Comprehensive Income
Net income - 2,545,898 - - 2,545,898
Other comprehensive income, net of tax:
Unrealized losses on securities
of $(2,295,501), net of reclassification
adjustment for gains included in net
income of $(32,384) - - - (2,327,885) (2,327,885)
Total Comprehensive Income 218,013
Cash dividends declared
$.28 per share - (1,004,958) - - (1,004,958)
Purchase of treasury stock - - (458,126) - (458,126)
-------------------------------------------------------------------------
Balance at June 30, 1999 $7,200,000 $35,673,946 (458,126) $ (499,242) $41,916,578
=========================================================================
Balance at December 31, 1999 $7,200,000 $35,190,986 $(1,179,433) $(1,807,660) $39,403,893
Comprehensive Income
Net income - 2,258,856 - - 2,258,856
Other comprehensive income, net of tax:
Unrealized net gains on securities
of $(1,495,087), net of reclassification
adjustment for losses included in net
income of $569,477 - - - 925,610 925,610
Total Comprehensive Income 3,184,466
Cash dividends declared
$.34 per share - (1,198,456) - - (1,195,456)
Purchase of treasury stock - - (376,115) - (376,115)
-------------------------------------------------------------------------
Balance at June 30, 2000 $7,200,000 $36,251,386 $(1,555,548) $(882,050) $41,013,788
=========================================================================
</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 Six Months
Ended June 30
2000 1999
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $2,258,856 $2,545,898
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation and amortization 400,020 304,487
Provision for loan losses 630,000 240,000
Net(accretion)/amortization of securities
and loan fees (143,969) 36,891
Increase in interest receivable (300,055) (14,785)
Decrease in interest payable (85,175) (139,653)
(Increase) decrease in taxes payable 746,798 (90,429)
Decrease in other liabilities (549,778) (424,157)
Increase in other assets 287,422 24,344
Net securities gains 862,844 (49,067)
------------------------
Net cash provided by operating activities 4,106,963 2,433,529
------------------------
INVESTING ACTIVITIES
Net decrease in deposits
with other banks 429,831 17,161
Net (increase) decrease in fed funds sold 5,750,000 (550,000)
Purchase of securities AFS (58,049,159) (42,465,542)
Maturities and calls of securities AFS 8,792,066 16,008,029
Sale of securities AFS 31,611,460 22,284,142
Net increase in loans (5,472,105) (205,325)
Purchase of premises and equipment (397,976) (663,472)
--------------------------
Net cash used in investing activities (17,335,883) (5,575,007)
--------------------------
FINANCING ACTIVITIES
Net decrease in deposits (357,524) (1,418,935)
Net increase in short-term borrowings 15,875,000 1,225,000
Net increase in long-term borrowings - 5,000,000
Dividends paid (1,198,455) (1,004,958)
Purchase of treasury stock (376,115) (458,126)
--------------------------
Net cash provided by financing activities 13,942,906 3,342,981
--------------------------
713,986 201,503
Cash and cash equivalents at beginning of year 8,654,617 7,655,963
--------------------------
Cash and cash equivalents at end of quarter $ 9,368,603 $ 7,857,466
==========================
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 5,729,148 $ 4,961,373
==========================
Income Taxes $ 484,000 $ 729,000
==========================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
COMMERCIAL NATIONAL FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
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, 1999, 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 June 30, 2000 and the
results of operations for the three and six month periods ended
June 30, 2000 and 1999, and the statements of cash flows and
changes in shareholders' equity for the six month periods ended
June 30, 2000 and 1999. The results of the six months ended June
30, 2000 are not necessarily indicative of the results to be
expected for the entire year.
Note 2 Allowance for Loan Losses
----------------------------------
Description of changes:
2000 1999
Allowance balance January 1 $ 1,919,453 $1,914,174
Additions:
Provision charged to operating expenses 630,000 240,000
Recoveries on previously charged off
loans 25,405 6,445
Deductions:
Loans charged off (278,949) (284,620)
----------------------------
Allowance balance June 30 $ 2,295,909 $ 1,875,999
============================
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
---------------------
First Six Months of 2000 as compared to the First Six Months of 1999
-----------------------------------------------------------------------
Pre-tax net income for the first six months of 2000 was
$2,872,056 compared to $3,359,798 during the same period of 1999,
representing a 14.52% decrease.
Interest income was $12,862,100, an increase of 7.80%. The loan
return rate decreased twenty-three (23) basis points to 8.42% and
the securities return rate increased thirty-nine (39) basis
points to 6.39%. The return rate on total average earning assets
remained constant at 7.62%. Average earning asset volume rose
24,398,475, a 7.79% increase.
Interest expense was $5,643,973, an increase of 17.05%. The cost
rate on average interest-bearing liabilities was 4.25%, a thirty
(30) basis point increase from a year ago. Average interest-
bearing liability volume rose $21,314,255, an increase of 8.73%.
Net interest income rose 1.52% to $7,218,127 and represented
4.12% of average total assets compared to 4.30% during the first
six months of 1999.
The average allowance for loan losses increased 2.00% to
$1,954,445. By comparison, total average loans grew 6.63% during
the same period. The 2000 first six months provision for loan
losses was $630,000, compared to $240,000 for the first six
months of 1999, an increase of 162.50%. The increase was due to a
reevaluation of the reserve required for commercial loans and as
an added safeguard against potential changes in general economic
conditions.
Net interest income after the application of the provision for
loan losses declined 4.10% to $6,588,127, representing a 3.76%
return on total average assets compared to 4.15% for the first
six months of 1999.
Non-interest income increased .25% to $1,033,068. Asset
management and trust fees increased 72.86% to $240,962. Service
charges on deposit accounts increased 4.39% to $348,322. Other
service charges and fees rose 7.37% reaching $351,093. Other
income increased 426.87% to $955,535. This increase reflects an
$817,413 premium that the bank received from selling its' credit
card portfolio. Net securities losses of $862,844 were realized
on sold investments. The bank repositioned the investment
portfolio to take advantage of higher yields that were available
in the bond market.
Non-interest expense reached $4,749,139, an increase of 4.59%, or
$208,454, while total average assets grew 5.90%. Personnel costs
rose 4.29%, a $109,226 increase. Net occupancy expense declined
4.11%, or $12,392. Furniture and equipment expense rose 34.66%,
representing a cost increase of $106,288. Pennsylvania shares tax
expense was $187,817, an increase of 11.20%. Other expense
declined 1.12%, which equated to a $13,581 decrease.
Federal income tax on total first six months earnings was
$613,200 compared to $813,900 a year ago. Net income after taxes
decreased $287,042 to $2,258,856, a decrease of 11.27%. The
annualized return on average assets was 1.29% for the first six
months of 2000 compared to 1.54% for the six months ended June
30, 1999. The annualized return on average equity through June
30, 2000 was 11.11% and had been 11.72% through the first six
months of 1999.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (continued)
---------------------------------
Three Months Ended June 30, 2000 as Compared to the Three Months
Ended June 30, 1999
-----------------------------------------------------------------
Pre-tax net income for the second quarter of 2000 declined 19.19%
and was $1,345,845 compared to $1,665,533 during the same period
of 1999.
Interest income was $6,505,292 an increase of 8.87%. The loan
return rate decreased twenty-three (23) basis points to 8.41%,
the securities return rate increased sixty-five (65) basis points
to 6.62% and the return rate on total average earning assets
increased twelve (12) basis points to 7.70%. Volume growth in
total average earning assets was $22,879,890.
Interest expense was $2,869,095 an increase of 18.96%. The volume
increase in average interest-bearing liabilities was $20,591,559.
The cost rate increased to 4.32%, a thirty-eight (38) basis point
increase from a year ago.
The average allowance for loan losses increased 3.56% to
$1,968,868, while total average loans grew 6.86%. The 2000 second
quarter provision for loan losses was $465,000, compared to
$120,000 for the second quarter of 1999, a 287.50% increase.
Reasons for this increase were mentioned on a previous page.
Net interest income after the application of the provision for
loan losses declined 7.92% to $3,171,197 representing a 3.61%
return on total average assets compared to 4.14% for the second
quarter of 1999.
Non-interest income increased 35,273 or 7.19%, to $525,978.
Service charges on deposit accounts increased 2.94% to $176,207.
Other service charges and fees grew 17.28% to $174,073. Other
income decreased 40.92% to $52,705. Asset management and trust
income increased 67.67% to $122,993.
Non-interest expense rose $82,384, a 3.63% increase, compared to
total average asset growth of 5.57%. Personnel costs rose
$39,747, a 3.21% increase. Net occupancy expense declined $9,149
a 6.16% decrease. Furniture and equipment expense rose $40,257, a
23.71% increase. Pennsylvania shares tax expense was $9,293, an
increase of 10.59%. Other expense rose $2,236, a .36% increase.
Federal income tax on total second quarter earnings was $308,500
compared to $406,100 a year ago. Net income after taxes decreased
$222,090 to $1,037,345, a 17.63% decrease. The annualized return
on average assets was 1.18% for the three months ended June 30,
2000 compared to 1.51% for the second quarter of 1999. The
annualized return on average equity for the second quarter of
2000 was 10.30% compared to 11.60% for the second quarter of
1999.
<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 debt
investment securities available for sale which amounted to
$140,985,718 on June 30, 2000.
During the first six months of 2000, average interest-bearing
liabilities increased $21,314,255 over the same period in 1999.
Investments maturing within one year were 3.08% of total assets
on June 30, 2000 and 4.79% on June 30, 1999.
Average loans grew by $12,668,792 and the average securities
portfolio including federal funds sold increased $11,729,683.
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, where
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>
INTEREST
SENSITIVITY (In thousands)
The following table presents this information as of June 30, 2000 and
December 31, 1999:
<TABLE>
<CAPTION>
June 30, 2000
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 $ 36,335 $ 6,270 $ 9,207 $ 20,669 $ 136,859 $141,292
Interest sensitive
liabilities $ 44,950 $ 25,278 $ 20,184 $ 38,936 $ 95,905 $ 57,914
Interest sensitivity ---------------------------------------------------------------------------------------------
gap $ (8,615) $(19,008) $(10,977) $(18,267) $ 40,954 83,378
=============================================================================================
Cumulative gap $(27,623) $(38,600) $(56,867) $ (15,913) $ 67,465
Ratio of cumulative gap ===============================================================================
to earning assets (7.83%) (10.95%) (16.13%) (4.51%) 19.13%
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
December 31, 1999
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 $ 47,052 $ 5,652 $ 10,254 $ 19,052 $ 134,734 $117,867
Interest sensitive
liabilities $ 32,528 $ 35,983 $ 24,841 $ 29,907 $ 91,278 $ 56,875
Interest sensitivity ---------------------------------------------------------------------------------------------
gap $ 14,524 $(30,331) $(14,587) $(10,855) $ 43,456 $ 60,992
=============================================================================================
Cumulative gap $(15,807) $(30,394) $(41,249) $ 2,207 $ 63,199
Ratio of cumulative gap =============================================================================
to earning assets (4.68%) (9.00%) (12.20%) 0.65% 18.70%
=============================================================================
</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 June 30,
2000 with that of June 30, 1999. 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 June 30, 2000 the corporation
had $73,154 in other real estate owned and no in-substance
foreclosures.
At June 30,
2000 1999
Non-performing Loans:
Loans on non-accrual basis $ 436,791 $ 275,284
Past due loans 60,129 208,464
Renegotiated loans 449,548 534,421
--------------------------------
Total Non-performing Loans $ 946,468 $ 1,018,169
Other real estate owned $ 73,154 $ -
Total Non-performing Assets $ 1,019,622 $ 1,018,169
================================
Loans outstanding at end of period $ 210,114,087 $ 192,072,104
Average loans outstanding (year-to-date) $ 203,835,795 $ 191,167,003
Non-performing loans as percent of total
loans .49% .53%
Provision for loan losses $ 630,000 $ 240,000
Net charge-offs $ 253,544 $ 278,175
Net charge-offs as percent of average
loans .12% .15%
Provision for loan losses as
percent of net charge-offs 248.48% 86.28%
Allowance for loan losses as
percent of average loans outstanding 113.19% .98%
CAPITAL RESOURCES
Shareholders' equity for the first six months of 2000 averaged $40,668,311
which represented a decrease of $2,763,077 over the average capital of
$43,431,388 recorded in the same period of 1999. These capital levels
represented a capital ratio of 11.60% in 2000 and 13.12 in 1999. When
the loan loss allowance is included, the 2000 capital ratio becomes
12.16%.
The Federal Reserve Board's risk-based capital adequacy guidelines are
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 to be
4-5 percent for all but the most highly rated banks, as determined by
a regulatory rating system. As of June 30, 2000, the corporation,
under these guidelines, had a Tier I and total equity capital to risk
adjusted assets ratio of 19.87% and 20.96% respectively. The leverage
ratio was 11.84%.
<PAGE>
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
CAPITAL RESOURCES (continued)
The table below presents the corporation's capital position at June 30, 2000
(Dollar amounts in thousands)
Percent
of Adjusted
Amount Assets
-------------------------
Tier I Capital $ 41,896 19.87
Tier I Requirement 8,433 4.00
Total Equity Capital $ 44,192 20.96
Total Equity Capital Requirement 16,866 8.00
Leverage Capital $ 41,896 11.84
Leverage Requirement 14,153 4.00
-------------------------------------------------------------------------
YEAR 2000
---------
During 1999 and years prior, the corporation completed the
process of preparing for the year 2000 date change. This
process involved reviewing, modifying and replacing
existing hardware and software, as necessary. The
corporation also assessed the preparedness of our third
party vendors, whom we are heavily dependent upon, along
with our major commercial loan customers. Contingency
plans for the year 2000 were developed and maintained
throughout the pre-event period in order to be prepared
for any year 2000 glitches that may occur.
To date, the corporation has not encountered any materially
significant problems associated with our mission
critical systems or vendors. Occurrences related to the
year 2000 issue could still occur and may have a
material impact on the operations and the financial
condition of the corporation and its customers. In the
event that the customers' financial positions are
weakened due to the year 2000 issue, credit quality
could be affected. The corporation will continue to
monitor the year 2000 issue throughout 2000 and act
accordingly should any problem arise.
<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
a. April 18, 2000 Annual Meeting of Shareholders
b.c. Directors elected at the meeting and results of voting:
Director For Against Withheld Abstentions
------------------------------------------------------------------------
Gregg E. Hunter 2,982,186 11,910
Joedda M. Sampson 2,981,986 12,110
Debra L. Spatola 2,981,236 12,860
Louis A. Steiner 2,982,136 11,960
George V. Welty 2,982,186 11,910
Continuing directors:
John T. Babilya Roy M. Landers
George A. Conti, Jr. John C. McClatchey
Richmond H. Ferguson Joseph A. Mosso
Dorothy S. Hunter Louis T. Steiner
Frank E. Jobe E. Edward Wible
Ratification of the appointment of Stokes Kelly and Hinds, LLC,
as independent auditors:
For Against Withheld Abstained
-----------------------------------------------
2,982,246 8,040 3,810
d. N/A
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Not applicable
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: August 10, 2000 /s/ Louis T. Steiner
------------------------
Louis T. Steiner,
President and Chief Executive Officer
Dated: August 10, 2000 /s/ Wendy S. Schmucker
-------------------------
Wendy S. Schmucker
Secretary/Treasurer
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Commercial National Financial Corporation
900 Ligonier Street
Latrobe, Pennsylvania 15650
Telephone (724) 539-3501
Banking Subsidiary:
Commercial National Bank of Pennsylvania
OFFICE LOCATIONS
Latrobe Area
900 Ligonier Street (724) 539-3501
1900 Lincoln Avenue (724) 537-9980
11 Terry Way * (724) 539-9774
Pleasant Unity
Church Street * (724) 423-5222
Ligonier
201 Main Street * (724) 238-9538
West Newton
109 East Main Street * (724) 872-5100
Greensburg Area
Georges Station Road * (724) 836-7600
19 North Main Street (724) 836-7699
Asset Management and (724) 836-7670
Trust Division
19 North Main Street
Drive-up Facility
Latrobe
Lincoln Road at
Josephine Street * (724) 537-9980
Murrysville
4785 Old William Penn Highway (724) 733-4888
* Automatic Teller Facilities
In addition to full-service MAC machines located at all Commercial
National offices listed above (except Latrobe and Courthouse
Square) additional 24-hour ATMs are available for your convenience
at Arnold Palmer Regional Airport, Greensburg Kirk Nevin Arena,
Latrobe Area Hospital, New Alexandria Qwik Mart, Norvelt Open Pantry
and Saint Vincent College. All are linked to the national
Cirrus, Honor and Plus networks and also accept MasterCard, Visa,
Discover and American Express for cash advances.
Touchtone Teller 24-hour banking service: Website Address:
(724)537-9977 www.cnbthebank.com
Free from Blairsville, Derry,
Greensburg, Kecksburg, Latrobe,
Ligonier and New Alexandria.
1-800-803-BANK
Free from all other locations.
INSURANCE
Commercial National Insurance Services Commercial National Insurance
232 North Market Street Services is a partnership of Gooder
Ligonier, PA 15658 & Mary, Inc., and Commercial
(724)238-4617 National Investment Corporation, a
(877)205-4617 (toll free) wholly owned subsidiary of
(724)238-0160 (fax) Commercial National Financial
[email protected] Corporation.
www.cnbinsurance.com
