Commercial National Financial

Commercial National Financial operates as a financial services company primarily through its wholly-owned subsidiary, Commercial Bank. Commercial Bank, originally chartered in 1962 as Commercial National Bank, converted to a state-chartered bank on December 30, 1992. The company's operations also include Commercial National Financial Services Incorporated (the Agency), an inactive insurance agency acquired by the Bank on July 16, 1997. The Agency previously held a minority interest in Michigan Bankers Title of Northern Michigan, LLC, which was dissolved during 2000, and made a similar, non-material investment in Michigan Bankers Title of Eastern Michigan. Commercial Bank focuses its efforts primarily on commercial lending and residential real estate lending, designing its loan, deposit, and other products to support these market segments. It also provides a full range of traditional banking services to individuals, including checking, savings, money market, individual retirement accounts, certificates of deposit, and repurchase agreements. The principal markets for these financial services are the mid-Michigan communities where the Bank is located and the immediately surrounding areas. The Bank serves these markets through nine locations. Commercial also extends loans outside its principal geographic market to support existing customers. In 2000, the Bank established a relationship with The Centennial Group, a financial planning group headquartered in Lansing, Michigan. Through customer referrals to a registered representative of Centennial, the Agency receives commissions for the placement of products and fee-based services. During 2001, Commercial Bank formed CNFC Mortgage Corporation, a 100% owned mortgage company, to pursue out-of-market mortgages and offer products and services not typically provided by community banks. The principal source of revenue for Commercial National Financial is interest and fees on loans. The company does not have any material foreign assets or income.