<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q

           X  Quarterly Report Pursuant to Section 13 or 15(d) of the
                       Securities and Exchange Act of 1934

                For the quarterly period ended March 31, 2000, or

           __ Transition Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

              For the Transition Period from ________ to _________

                           Commission File No. 0-17000


                    COMMERCIAL NATIONAL FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)


           Michigan                                    38-2799780
   (State of Incorporation)                  (IRS Employer Identification No.)


  101 North Pine River Street, Ithaca, Michigan                 48847
     (address of principal executive offices)                 (ZIP Code)


       Registrant's telephone number, including area code: (517) 875-4144

Indicate by check mark 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, as of the latest practicable date.

           Class                            Outstanding at April 28, 2000
        Common Stock                                  3,206,718
        No Par Value










<PAGE>   2


                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


                                      INDEX
<TABLE>
<CAPTION>


PART I                                        FINANCIAL INFORMATION

<S>                <C>                                                                                     <C>
Item 1.             Financial Statements

                    Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999                  (Page 3)

                    Consolidated Statements of Income for the three months ended March 31, 2000 and March   (Page 4)
                    31, 1999

                    Consolidated Statements of Changes in Shareholders' Equity for the periods ended        (Page 5)
                    March 31, 2000 and March 31, 1999

                    Consolidated Statements of Cash Flows for the three months ended March  31, 2000 and    (Page 6)
                    March 31, 1999

                    Notes to Consolidated Financial Statements                                              (Page 7-10)

Item 2.             Management's Discussion and Analysis of Financial Condition and Results of Operations   (Page 11-15)

PART II                                               OTHER INFORMATION

Item 6.             Exhibits and Reports on Form 8-K
                    a)       Exhibit 23-Consent of Independent Accountants                                  (Page 18)
                             Exhibit 27-Financial Data Schedule                                             (Page 19)
                    b)       Reports on Form 8-K                                                            (Page 16)

SIGNATURES                                                                                                  (Page 17)
</TABLE>






                                       2

<PAGE>   3

                   COMMERCIAL NATIONAL FINANCIAL CORPORATION

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                             March 31,       December 31,
                                                                               2000              1999
                                                                             ---------       ------------
                                                                            (Unaudited)
<S>                                                                       <C>              <C>
ASSETS
Cash and due from banks                                                    $   7,574,499    $   7,419,093
Federal funds sold                                                             2,800,000        1,250,000
                                                                           -------------    -------------
       Total cash and cash equivalents                                        10,374,499        8,669,093
Securities available for sale                                                 18,452,707       17,746,753
Securities held to maturity (fair value $8,898,948 -
    March 31, 2000; $8,940,714 - December 31, 1999)                            8,811,750        8,813,986
Federal Home Loan Bank stock, at cost                                          1,391,300        1,391,300
Loans receivable, net of allowance for loan losses
    $2,880,962-March 31, 2000; $2,792,293 - December 31, 1999                154,644,516      149,674,589
Premises and equipment, net                                                    2,638,903        2,694,511
Accrued interest receivable and other assets                                   2,071,716        2,031,782
                                                                           -------------    -------------
       Total assets                                                        $ 198,385,391    $ 191,022,014
                                                                           =============    =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
       Deposits
              Noninterest-bearing demand                                   $  18,130,952    $  18,535,251
              Interest-bearing demand                                         25,748,916       26,639,403
              Savings                                                         44,694,542       41,271,920
              Time                                                            64,212,839       60,757,458
                                                                           -------------    -------------
                    Total deposits                                           152,787,249      147,204,032
       Securities sold under agreements to repurchase                          5,741,031        4,689,557
       Other borrowings                                                          455,915        2,190,639
       Federal Home Loan Bank advances                                        18,500,000       16,500,000
       Accrued expenses and other liabilities                                  1,597,356        1,473,253
                                                                           -------------    -------------
              Total liabilities                                              179,081,551      172,057,481

Shareholders' equity
       Common stock and paid in capital, no par value:  5,000,000 shares
         authorized; shares issued and outstanding
         March 31, 2000 - 3,201,329 and December 31,
         1999 - 3,189,025                                                     20,080,279       19,946,643
       Retained earnings (deficit)                                              (588,590)        (830,339)
       Accumulated other comprehensive income/(loss), net of tax                (187,849)        (151,771)
                                                                           -------------    -------------
              Total shareholders' equity                                      19,303,840       18,964,533
                                                                           -------------    -------------
                    Total liabilities and shareholders' equity             $ 198,385,391    $ 191,022,014
                                                                           =============    =============
</TABLE>




                                                          See accompanying notes


                                       3


<PAGE>   4


                   COMMERCIAL NATIONAL FINANCIAL CORPORATION

                  CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

<TABLE>
<CAPTION>

                                                          For Three Months
                                                           Ended March 31,
                                                         2000          1999
                                                         ----          ----
<S>                                                  <C>          <C>
Interest and dividend income
    Loans receivable, including fees                  $3,322,181   $2,839,137
    Taxable securities                                   228,519      233,288
    Nontaxable securities                                143,150      165,183
    Federal funds sold                                    41,941       30,732
    Federal Home Loan Bank stock dividends                27,674       27,445
    Interest on other deposits                             8,179        6,927
                                                      ----------   ----------
        Total interest and dividend income             3,771,644    3,302,712

Interest expense
    Deposits                                           1,238,459    1,095,995
    Securities sold under agreements to repurchase        68,756       77,615
    Federal Home Loan Bank advances                      236,089      164,696
    Other                                                  8,825        4,547
                                                      ----------   ----------
        Total interest expense                         1,552,129    1,342,853

Net interest income                                    2,219,515    1,959,859

Provision for loan losses                                 90,000       90,000
                                                      ----------   ----------

Net interest income after provision for loan losses    2,129,515    1,869,859

Noninterest income
    Service charges and fees                             104,744      109,824
    Net gains on loan sales                               14,111       82,636
    Receivable financing fees                             74,673       66,505
    Other                                                 50,915       68,535
                                                      ----------   ----------
        Total noninterest income                         244,443      327,500

Noninterest expenses
    Salaries and employee benefits                       737,839      672,864
    Occupancy and equipment                              255,301      249,336
    FDIC insurance                                         7,548        5,583
    Printing, postage and supplies                        68,322       70,581
    Professional and outside services                     83,986       80,754
    Other                                                246,513      228,703
                                                      ----------   ----------
        Total noninterest expense                      1,399,509    1,307,821
                                                      ----------   ----------
Income before income tax expense                         974,449      889,538
Income tax expense                                       284,000      247,600
                                                      ----------   ----------
Net income                                            $  690,449   $  641,938
                                                      ==========   ==========
Per share information
    Basic earnings                                    $     0.22   $     0.20
    Diluted earnings                                  $     0.21   $     0.20
    Dividends declared                                $     0.14   $     0.14
</TABLE>





                                                         See accompanying notes


                                       4


<PAGE>   5

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
         Periods ended March 31, 2000 (Unaudited) and December 31, 1999

<TABLE>
<CAPTION>

                                                                                            Accumulated
                                                            Common                             Other
                                                          Stock and        Retained        Comprehensive         Total
                                                           Paid in         Earnings            Income        Shareholders'
                                                           Capital        (deficit)          Net of Tax          Equity
-------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>              <C>              <C>              <C>
Balance at December 31, 1998                             $ 17,525,466     $   (8,483)         $ 143,119     $ 17,660,102

Comprehensive income:
Net income                                                                 2,730,872                           2,730,872
 Net change in unrealized gains/(losses) on
   securities available for sale                                                               (444,669)        (444,669)
Reclassification adjustment for gains/(losses)
   recognized in income                                                                          (2,134)          (2,134)
Tax effect                                                                                      151,913          151,913
                                                                                              ---------     ------------
Total other comprehensive income                                                               (294,890)        (294,890)
                                                                                                            ------------
     Total comprehensive income                                                                                2,435,982
                                                                                                            ------------
Cash dividends declared, $.55 per share                                   (1,730,590)                         (1,730,590)

Payment of 5% stock dividend                                1,822,372     (1,822,138)                                234

Issued under dividend reinvestment program                    686,391                                            686,391
Issued under stock option plan                                159,062                                            159,062
Issued under employee benefit plan                             41,795                                             41,795
Repurchase and retirement of 22,938 shares                   (288,443)                                          (288,443)
                                                        -------------     ----------          ---------     ------------
Balance at December 31, 1999                               19,946,643       (830,339)          (151,771)      18,964,533

Comprehensive income:
Net income                                                                   690,449                             690,449
 Net change in unrealized gains/(losses) on
   securities available for sale                                                                (54,663)         (54,663)
Reclassification adjustment for gains/(losses)
   recognized in income                                                                               -                -
Tax effect                                                                                       18,585           18,585
                                                                                              ---------     ------------
Total other comprehensive income                                                                (36,078)         (36,078)
                                                                                                            ------------
     Total comprehensive income                                                                                  654,371

Cash dividends declared, $.14 per share                                     (448,700)                           (448,700)

Issued under dividend reinvestment program                    173,247                                            173,247
Issued under stock option plan                                 13,655                                             13,655
Issued under employee benefit plan                             38,953                                             38,953
Repurchase and retirement of 6,793 shares                     (92,219)                                           (92,219)
                                                         ------------     ----------          ---------     ------------
Balance at March 31, 2000                                $ 20,080,279     $ (588,590)         $(187,849)    $ 19,303,840
                                                         ============     ==========          =========     ============
</TABLE>


                                                          See accompanying notes


                                       5


<PAGE>   6

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

<TABLE>
<CAPTION>


                                                                             For Three Months Ended
                                                                                   March 31,
                                                                               2000            1999
                                                                               ----            ----
<S>                                                                     <C>             <C>
Cash flows from operating activities
    Net income                                                           $    690,449    $    641,938
    Adjustments to reconcile net income to net
      cash from operating activities
          Provision for loan loss                                              90,000          90,000
          Net gains on loan sales                                             (14,111)        (82,636)
          Originations of loans held for sale                                (427,509)     (3,967,938)
          Proceeds from sales of loans held for sale                          578,620       4,019,351
          Depreciation, amortization and accretion                            141,731         180,133
          Net change in accrued interest receivable and other assets           (6,563)       (205,088)
          Net change in accrued expenses and other liabilities                124,103        (647,520)
                                                                         ------------    ------------
               Net cash from operating activities                           1,176,720          28,240

Cash flows from investing activities
          Purchases of securities available for sale                       (1,840,718)     (2,515,863)
          Proceeds from maturities of securities available for sale         1,075,000            --
          Proceeds from maturities of securities held to maturity                --         1,716,600
          Purchases of securities held to maturity                               --              --
          Net change in loans                                              (5,213,953)     (2,258,644)
          Purchases of premises and equipment, net                            (76,546)       (147,578)
                                                                         ------------    ------------
               Net cash from investing activities                          (6,056,217)     (3,205,485)

Cash flow from financing activities
          Net change in deposits                                            5,583,217      (2,025,387)
          Net change in securities sold under agreements to repurchase      1,051,474         774,032
          Net change in U.S. Treasury demand notes                         (1,734,724)     (1,195,368)
          Federal Home Loan Bank advances                                   8,000,000            --
          Federal Home Loan Bank repayments                                (6,000,000)     (1,000,000)
          Repurchase of common stock shares                                   (92,219)        (83,700)
          Dividends paid and fractional shares                               (448,700)       (428,813)
          Proceeds from sale of common stock                                  225,855         198,971
                                                                         ------------    ------------
               Net cash from financing activities                           6,584,903      (3,760,265)
                                                                         ------------    ------------
Net change in cash and cash equivalents                                     1,705,406      (6,937,510)

Cash and cash equivalents, at beginning of year                             8,669,093      12,555,428
                                                                         ------------    ------------
Cash and cash equivalents, at end of period                              $ 10,374,499    $  5,617,918
                                                                         ============    ============
Cash paid during the period for
          Interest                                                       $  1,545,931    $  1,379,642
          Federal income taxes                                                100,000         333,000
</TABLE>


                                                          See accompanying notes



                                       6

<PAGE>   7

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1-Summary of Significant Accounting Policies

Basic Presentation
The accompanying unaudited condensed consolidated financial statements were
prepared in accordance with Rule 10-01 of regulation S-X and the instructions
for Form 10-Q and, therefore, do not include all disclosures required by
generally accepted accounting principles for complete presentation of financial
statements. In the opinion of management, the condensed consolidated financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial condition of Commercial National
Financial Corporation as of March 31, 2000 and December 31, 1999, and the
results of its operations for the three months ending March 31, 2000 and March
31, 1999. The results for the three months ended March 31, 2000 are not
necessarily indicative of the results expected for the full year.

Principals of Consolidation
The accompanying consolidated financial statements include the accounts of
Commercial National Financial Corporation (CNFC), Commercial Bank (Bank) and
CNFC Financial Services, Inc., a wholly owned subsidiary of the Bank. All
material intercompany accounts and transactions have been eliminated in
consolidation.

Nature of Operations, Industry Segments and Concentrations of Credit Risk
The Corporation is a one-bank holding company, which conducts limited business
activities. The Bank performs the majority of business activities.

The Bank provides a full range of banking services to individuals, agricultural
businesses, commercial businesses and light industries located in its service
area. It maintains a diversified loan portfolio, including loans to individuals
for home mortgages, automobiles and personal expenditures, and loans to business
enterprises for current operations and expansion. The Bank offers a variety of
deposit products, including checking, savings, money market, individual
retirement accounts and certificates of deposit. While the Corporation's chief
decision-makers monitor the revenue stream of various Corporate products and
services, operations are managed and financial performance is evaluated on a
Corporation-wide basis. Accordingly, all of the Corporation's banking operations
are considered by management to be aggregated into one operating segment.

The principal markets for the Bank's financial services are the Michigan
communities in which the Bank is located and the areas immediately surrounding
these communities. The Bank serves these markets through seven offices located
in Gratiot and Montcalm Counties in Michigan.

Use of Estimates
To prepare financial statements in conformity with generally accepted accounting
principles, management makes estimates and assumptions based on available
information. These estimates and assumptions affect the amounts reported in the
financial statements and the disclosures provided, and future results could
differ. The allowance for loan losses and fair values of securities and other
financial instruments are particularly subject to change.

Cash Flow Reporting
Cash and cash equivalents include cash on hand, demand deposits with other
financial institutions and federal funds sold. Cash flows are reported net for
customer loan and deposit transactions, securities sold under agreements to
repurchase with original maturity of 90 days or less and U.S. Treasury demand
notes.

Securities
Securities are classified as held to maturity and carried at amortized cost when
management has the positive intent and ability to hold them to maturity.
Securities are classified as available for sale when they might be sold before
maturity. Securities available for sale are carried at fair value, with net
unrealized holding gains and losses reported separately in other comprehensive
income, net of tax. Trading securities are bought principally for sale in the
near term, and are reported at fair value with unrealized gains and losses
included in earnings. Securities are written down to fair value when a decline
in fair value is not temporary. CNFC did not classify securities for trading at
any time during 2000 or 1999.


                                       7

<PAGE>   8

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


Gains and losses on sales are determined using the amortized cost of the
specific security sold. Interest and dividend income, adjusted by amortization
of purchase premiums and discounts, is included in earnings.

Loans Held for Sale
Loans held for sale are reported at the lower of cost or market value in the
aggregate. Net unrealized losses are recorded in a valuation allowance by
charges to income.

Loans Receivable
Loans receivable are reported at the principal balance outstanding, net of
unearned interest, deferred loan fees and costs, and an allowance for loan
losses. Interest income is reported on the interest method and includes
amortization of net deferred loan fees and costs over the loan term.

Interest income is not reported when full loan repayment is in doubt, typically
when payments are past due over 90 days, unless the loan is both well secured
and in the process of collection. Payments received on such loans are reported
as principal reductions.

Allowance for Loan Losses
The allowance for loan losses is a valuation allowance for probable credit
losses, increased by the provision for loan losses and decreased by charge-offs
less recoveries. Estimating the risk of loss and the amount of loss on any loan
is necessarily subjective. Accordingly, management estimates the allowance
balance required based on past loan loss experience, known and inherent risks in
the portfolio, information about specific borrower situations and estimated
collateral values, economic conditions, and other factors. Allocations of the
allowance may be made for specific loans, but the entire allowance is available
for any loan that, in management's judgment, should be charged-off. A problem
loan is charged-off by management as a loss when deemed uncollectible, although
collection efforts continue and future recoveries may occur.

Loan impairment is reported when full payment under the loan terms is not
expected. Impairment is evaluated in total for smaller-balance loans of similar
nature such as residential mortgage and consumer loans and on an individual loan
basis for other loans. If a loan is impaired, a portion of the allowance is
allocated so that the loan is reported, net, at the present value of estimated
future cash flows using the loan's existing rate or at the fair value of
collateral if repayment is expected solely from the collateral. Loans are
evaluated for impairment when payments are delayed, typically 90 days or more,
or when it is probable that all principal and interest amounts will not be
collected according to the original terms of the loan.

Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using a combination of straight-line and accelerated
methods with useful lives ranging from 10 to 40 years for buildings and
improvements, and 3 to 10 years for furniture and equipment. These assets are
reviewed for impairment when events indicate their carrying amount may not be
recoverable from future undiscounted cash flows. Maintenance, repairs and minor
alterations are charged to current operations as expenditures occur. Major
improvements are capitalized.

Servicing Rights
Servicing rights represent both purchased rights and the allocated value of
servicing rights retained on loans sold. Servicing rights are expensed in
proportion to, and over the period of, estimated net servicing revenues.

Impairment is evaluated based on the fair value of the rights, using groupings
of the underlying loans as to interest rates and then, secondarily, as to
geographic and prepayment characteristics. Any impairment of a grouping is
reported as a valuation allowance.

Excess servicing receivable is reported when a loan sale results in servicing in
excess of normal amounts and is expensed over the life of the servicing on the
interest method.

Other Real Estate Owned
Real estate properties acquired in collection of a loan receivable are recorded
at fair value at acquisition. Any reduction to fair value from the carrying
value of the related loan is accounted for as a loan loss. After acquisition, a
valuation allowance reduces the reported amount to the lower of the initial
amount or fair value less costs to sell. Expenses, gains and losses on
disposition, and changes in the valuation allowance are reported in other
expense.


                                       8

<PAGE>   9

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


Goodwill and Identified Intangibles
Goodwill is the excess of purchase price over identified net assets in business
acquisitions. Goodwill is expensed on the straight-line method over no more than
25 years. Identified intangibles represent the value of depositor relationships
purchased and are expensed on accelerated methods over 10 years. Goodwill and
identified intangibles are assessed for impairment based on estimated
undiscounted cash flows, and written down if necessary.

Securities Sold Under Agreements to Repurchase
All of these liabilities represent amounts advanced by various customers and are
secured by securities owned, as they are not covered by general deposit
insurance.

Employee Benefits
A benefit plan with 401(k) features cover substantially all employees. The plan
allows participant compensation deferrals. The amount of any Corporation
matching contribution is based solely on the discretion of the board of
directors. Historically, the Corporation has matched up to 6% of such deferrals
at 100%.

Expense for employee compensation under stock option plans is reported only if
options are granted below market price at grant date.

Income Taxes
Income tax expense is the sum of the current year income tax due or refundable
and the change in deferred tax assets and liabilities. Deferred tax assets and
liabilities are the expected future tax consequences of temporary differences
between the carrying amounts and tax bases of assets and liabilities, computed
using enacted tax rates. A valuation allowance, if needed, reduces deferred tax
assets to the amount expected to be realized.

Earnings and Dividends Per Share
Basic earnings per common share is based on net income divided by the weighted
average number of common shares outstanding during the period. Diluted earnings
per common share shows the diluted effect of any additional potential common
shares. Earnings and dividends per common share are restated for all stock
splits and stock dividends. On July 21, 1999 the board of directors of the
Corporation approved a 3 for 1 stock split payable on September 1, 1999 to
shareholders of record on August 8, 1999. All earnings per common share and
dividends per common share have been restated to reflect this stock split.

Stock Dividends
Dividends issued in stock are reported by transferring the market value of the
stock issued from retained earnings to common stock and additional paid-in
capital. Fractional shares are paid in cash for all stock dividends.

Comprehensive Income
Comprehensive income consists of net income and other comprehensive income.
Other comprehensive income includes the change in unrealized appreciation and
depreciation on securities available for sale, net of tax, which is also
recognized as a separate component of shareholders' equity.

Financial Instruments with Off-Balance-Sheet Risk
The Corporation, in the normal course of business, makes commitments to make
loans, which are not recorded in the financial statements.

Fair Values of Financial Instruments
Fair values of financial instruments are estimated using relevant market
information and other assumptions, as more fully disclosed separately. Fair
value estimates involve uncertainties and matters of significant judgment
regarding interest rates, credit risk, prepayments, and other factors,
especially in the absence of broad markets for particular items. Changes in
assumptions or in market conditions could significantly affect the estimates.
The fair value estimates of existing on-and off-balance-sheet financial
instruments does not include the value of anticipated future business or values
of assets and liabilities not considered financial instruments.

Reclassifications
Some items in the prior year financial statements have been reclassified to
conform with the current year presentation.


                                       9

<PAGE>   10

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


Recent Accounting Pronouncements
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as
amended by SFAS No. 137, requires derivative instruments be carried at fair
value on the balance sheet. The statement continues to allow derivative
instruments to be used to hedge various risks and sets forth specific criteria
to be used to determine when hedge accounting can be used. The statement also
provides for offsetting changes in fair value or cash flows of both the
derivative and the hedged asset or liability to be recognized in earnings in the
same period; however, any changes in fair value or cash flow that represent the
ineffective portion of a hedge are required to be recognized in earnings and
cannot be deferred. For derivative instruments not accounted for as hedges,
changes in fair value are required to be recognized in earnings.

The adoption of SFAS No. 133 as amended becomes effective beginning January 1,
2001 and is not expected to have a material impact on the Company's financial
position or results of operations.




Note 2 - Earnings Per Share
A reconciliation of the numerators and denominators of the basic earnings per
share and diluted earnings per share computations for the years ended is
presented below:

<TABLE>
<CAPTION>

                                                                       MARCH 31, 2000             MARCH 31, 1999
----------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                       <C>
BASIC EARNINGS PER SHARE:
Net income available to common shareholders                            $       690,449           $       641,938
================================================================================================================

Weighted-average common shares outstanding for
basic earnings per share                                                     3,201,674                 3,143,041
================================================================================================================

BASIC EARNINGS PER SHARE                                               $           .22           $          0.20
================================================================================================================

DILUTED EARNINGS PER SHARE:
Net income available to common shareholders                            $       690,449           $       641,938
================================================================================================================
Weighted-average common shares outstanding for basic
    earnings per share                                                       3,201,674                 3,143,041

Add:
Dilutive effect of assumed exercise of stock options                            20,568                    14,903
----------------------------------------------------------------------------------------------------------------

Weighted-average common and dilutive additional potential
    common shares  outstanding                                               3,222,242                 3,157,944
================================================================================================================

DILUTED EARNINGS PER SHARE                                             $           .21           $           .20
================================================================================================================
</TABLE>




                                       10

<PAGE>   11


                    COMMERCIAL NATIONAL FINANCIAL CORPORATION

ITEM 2: MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
        OPERATIONS

Financial Condition
Total assets at March 31, 2000 increased to $198,385,000 from the $191,022,000
at December 31, 1999. Total loans were $157,525,000 as of March 31, 2000. This
represents a $5,058,000 or 3.3% increase from December 31, 1999 balance of
$152,467,000. The increase in loans was primarily a result of demand for
business loans and management's decision to portfolio an increasing number of
residential mortgage loans. Investment securities also increased to $28,656,000
at March 31, 2000 compared to $27,952,000 at December 31, 1999.

Deposits increased $5,583,000 or 3.8% during the period. Total deposits at March
31, 2000 were $152,787,000 compared to $147,204,000 at December 31, 1999.
Included in the deposit total are certificates of deposit obtained through an
online certificate of deposit network. The Bank is accessing this source of
funding more frequently and regularly. The participants in this network are
primarily banks, credit unions, and savings and loans. Rates are posted on an
electronic bulletin board available to participants in the network. Certificate
of deposits gathered through this method are generally less than 1 year in term
and are in increments of $100,000 or less.

Federal Home Loan Bank (FHLB) advances increased to $18,500,000 from $16,500,000
at December 31, 1999.

Liquidity
Management defines liquidity as the ability to fund appropriate levels of credit
worthy loans, meet the immediate cash withdrawal requirements of depositors, and
maintain access to sufficient resources to meet unexpected contingencies at a
reasonable cost and or with minimum losses.

While loan growth continues, the Bank's retail deposit base has not increased at
the same rate. As discussed above, the Bank continues to attract deposits
through the online service discussed above. The loan to deposit ratio calculated
on March 31, 2000 ending balances was 103.1% compared to 103.6% at December 31,
1999. Management is confident that the combination of available FHLB advances,
Federal funds lines of credit, the available for sale investment portfolio, and
our ability to sell mortgage loans and the government guaranteed portion of
commercial loans provides adequate short and medium term sources of liquidity.
At a minimum the Bank has the following available to meet short-term liquidity
needs: $6,500,000 in available FHLB advances and $9,000,000 in short term lines
of credit with correspondent banks.

CNFC also needs cash to pay dividends to its shareholders. The primary source of
cash is the dividends paid to CNFC by the Bank. Management believes that cash
from operations is sufficient to supply the cash needed to continue paying a
reasonable dividend. CNFC also has a $1,500,000 line of credit with a
correspondent institution, which is renewed annually.

Asset Quality and the Allowance for Loan Loss
The allowance for loan losses was 1.83% of total loans at March 31, 2000 the
same as December 31, 1999. At March 31, 2000 approximately $932,000 is
classified as non-accrual. This balance relates to a single business
relationship. Management is evaluating this relationship for potential loss
exposure, and is in the process of restructuring the affected loans. Management
has specifically identified a portion of the allowance for loan losses in the
event that a portion of the loan is charged off.

Year to date recoveries totaled $11,000 compared to charge-offs of $12,000.
During the quarter the Bank expensed a provision of $90,000 to the allowance
compared to $90,000 during the same period in 1999. Management continues to
systematically evaluate the adequacy of the allowance such that the balance is
commensurate with the performance of the loan portfolio, loan growth, general
market conditions and other relevant factors.


                                       11

<PAGE>   12

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


Capital Resources
CNFC's capital ratios continue to exceed regulatory guidelines for a "well
capitalized" institution. A summary of CNFC's capital ratios follows:

<TABLE>
<CAPTION>

                                           March 31,   December 31,       Minimum Required to be Well
                                             2000         1999              Capitalized Under Prompt
                                           ---------   ------------     Corrective Action Regulations
                                                                        -----------------------------

<S>                                       <C>         <C>              <C>
Total capital to risk weighted assets        14.0%           14.3%                     10.0%
                                             ====            ====                      ====
Tier 1 capital to risk weighted assets       12.8%           13.0%                      6.0%
                                             ====            ====                      ====
Tier 1 capital to average assets             10.0%           10.0%                      5.0%
                                             ====            ====                      ====
</TABLE>

Results of Operations
Net income for the quarter ended March 31, 2000 was $690,000, an increase of
$48,000, or 7.5% compared to the same period in 1999. A 13.2% increase in net
interest income generated by strong loan demand is the primary contributing
factor to the increase in net income. Offsetting the increase in net interest
income is a 25.3% decrease in non-interest income and a 7.0% increase in
non-interest expense. The factors affecting these changes are discussed in the
following paragraphs.

Net Interest Income
The following table illustrates the effect that changes in rates and volumes of
interest-earning assets and interest-bearing liabilities had on net interest
income for the three months ending March 31, 2000 and 1999.

<TABLE>
<CAPTION>

                                    Three Months Ending March 31,

                                       2000             1999
                                       ----             ----
<S>                               <C>             <C>
Interest Income (tax equivalent)   $  3,928,470    $  3,469,424
Interest Expense                      1,552,129       1,342,853
                                   ------------    ------------
Net Interest Income                $  2,376,341    $  2,126,571

Average Volume
Interest-earning Assets            $186,819,659    $170,930,157
Interest-bearing Liabilities        154,857,490     140,835,882
                                   ------------    ------------
Net Differential                   $ 31,962,169    $ 30,094,275
                                   ============    ============
Average Yields/Rates
Yield on Earning Assets                    8.43%           8.23%
Rate Paid on Liabilities                   4.02%           3.87%
                                           ----            ----

Interest Spread                            4.41%           4.36%
                                           ====            ====
Net Interest Margin                        5.10%           5.05%
                                           ====            ====
</TABLE>




                                       12


<PAGE>   13

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION

The change in net interest income is attributable to the following:

<TABLE>
<CAPTION>

                                                Three Months Ending
                                                  March 31, 2000
                                      Volume            Rate         Inc/(Dec)
                                      ------            ----         ---------
<S>                                 <C>              <C>            <C>
Interest Earning Assets              $ 398,360        $ 60,685       $459,045
Interest Bearing Liabilities           165,130          44,145        209,275
                                     ---------        --------       ---------

Net Interest Income                  $ 233,230        $ 16,540       $249,770
                                     =========        ========       ========
</TABLE>


The increase in net interest income for the three months ending March 31, 2000
is due to an increase in earning assets and an increase in margin. Net interest
margin for the three months ending March 31, 2000 increased to 5.10% compared to
5.05% for the three months ending March 31, 1999. Average earning assets for the
three months ending March 31, 2000 increased $15,890,000 compared to the same
period in 1999. During 1999, the Federal Reserve increased the Fed Funds rate
three times, each time by 25 basis points. The Federal Reserve has increased the
Fed Funds rate twice during the first quarter of 2000. This results in an almost
immediate increase in the Bank's prime lending rate. The interest rate on a
significant portion of the Bank's commercial loan portfolio is tied to the
prime-lending rate. Therefore, the Bank receives an immediate short-term benefit
to the increase in prime. In general, local deposit interest rates do not
respond as quickly to changes in the prime lending rate. However, the cost of
certificates of deposits gathered on the electronic network, and FHLB advances
are more sensitive to general changes in interest rates. These funding sources
have become more expensive and over time will offset some of the short-term
increase in net interest income.

Non-interest Income
Non-interest income for the three months ending March 31, 2000 was $244,000.
This represents a $83,000 or 25.4% decrease over the same period in 1999. Rising
interest rates has all but eliminated the mortgage refinance activity. This has
significantly reduced the number of mortgage loans originated and, as a result,
has also reduced the gain on sale of mortgage loans. Also, management has
elected to portfolio a larger number of residential real estate mortgage loans
that previously would have been sold to the secondary market.

Non-interest Expense
Non-interest expense for the three months ending March 31, 2000 totaled
$1,400,000. This represents a $92,000 or 7.0% increase over the same period in
1999.

Salary and benefit expense for the three months ending March 31, 2000 totaled
$738,000 compared to $673,000 an increase of $65,000 or 9.7%. The increase
reflects normal base salary increases, market adjustments and an 8.0% increase
in the cost of medical insurance. The increase in medical cost reflects normal
increases effective August of 1999. Management anticipates a similar increase
during 2000. The Bank is experiencing wage pressure as the area unemployment
rate remains low. The Bank is competing for staff with a large area casino and
newly opened prisons. These organizations have increased the base pay scale for
entry level employees. The increase in salary and benefit expense accounts for
70.1% of the increase in non-interest expenses.

Quantitative and Qualitative Disclosures about Market Risk
Commercial's primary market risk exposure is interest rate risk and, to a lesser
extent, liquidity risk. All of the Corporation's transactions are denominated in
U.S. dollars with no specific foreign exchange exposure. The Corporation has a
limited exposure to commodity prices related to agricultural loans. Any impacts
that changes in foreign exchange rate and commodity prices would have on
interest rates are assumed to be insignificant.

Interest rate risk ("IRR") is the exposure of a banking organization's financial
condition to adverse movements in interest rates. Accepting this risk can be an
important source of profitability and




                                       13

<PAGE>   14

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


stockholder value, however, excessive levels of IRR could pose a significant
threat to the Corporation's earnings and capital base. Accordingly, effective
risk management that maintains IRR at prudent levels is essential to the
Corporation's safety and soundness.

Evaluating a financial institution's exposure to changes in interest rates
includes assessing both the adequacy of the management process used to control
IRR and the organization's quantitative level of exposure. When assessing the
IRR management process, the Corporation seeks to ensure that appropriate
policies, procedures, management information systems and internal controls are
in place to maintain IRR at prudent levels with consistency and continuity.
Evaluating the quantitative level of IRR exposure requires the Corporation to
assess the existing and potential future effects of changes in interest rates on
its consolidated financial condition, including capital adequacy, earnings,
liquidity, and, where appropriate, asset quality.

The following table provides information about the Corporation's financial
instruments that are sensitive to changes in interest rates as of March 31,
2000. The Corporation had no derivative financial instruments, or trading
portfolio, as of that date. The expected maturity date values for loans
receivable, mortgage-backed securities, and investment securities were
calculated without adjusting the instrument's contractual maturity date for
expectations of prepayments. Expected maturity date values for interest-bearing
core deposits were not based upon estimates of the period over which the
deposits would be outstanding, but rather the opportunity for repricing.

Principal/Notional Amount Maturing in:

<TABLE>
<CAPTION>

                                       2000      2001     2002      2003       2004    THEREAFTER    TOTAL     FAIR VALUE
                                       ----      ----     ----      ----       ----    ----------    -----    -----------
<S>                                  <C>      <C>      <C>      <C>         <C>       <C>         <C>         <C>
Rate Sensitive Assets:
Fixed interest rate loans             $7,710   $9,609   $11,725  $ 18,835    $16,392    $ 26,408   $ 90,679    $ 88,811
             Average interest rate      6.97%    8.23%     8.76%     8.44%      8.29%       7.84%      8.13%
 Variable interest rate loans         14,788    8,308     4,400     2,246      5,259      31,846     66,847      66,847
             Average interest rate      9.66%    9.73%     9.47%     9.77%      9.99%       8.15%      8.97%
Fixed interest rate securities         3,455    5,810     4,760     5,690      4,510       3,100     27,325      27,130
             Average interest rate      6.39%    5.93%     6.25%     6.24%      6.92%       7.51%      6.45%
FHLB stock                             1,391                                                          1,391       1,391
             Average interest rate      8.00%                                                          8.00%
Federal funds sold                     2,800                                                          2,800       2,800
             Average interest rate      6.25%                                                          6.25%

Rate Sensitive Liabilities:
Non interest bearing demand           18,131                                                         18,131      18,131
Interest bearing demand               25,749                                                         25,749      25,749
             Average interest rate      1.70%                                                          1.70%
Savings                               44,695                                                         44,695      44,695
             Average interest rate      2.70%                                                          2.70%
Time deposits                         40,525   16,784     3,778     1,988        837         301     64,213      64,520
             Average interest rate      4.90%    4.91%     4.56%     4.93%      5.02%       4.99%      4.88%
Repurchase agreements                  5,741                                                          5,741       5,741
             Average interest rate      5.84%                                                          5.84%
U.S. treasury demand notes               456                                                            456         456
             Average interest rate      5.84%                                                          5.84%
Fixed rate FHLB advances               6,000    2,000         -     2,500          -       3,000     13,500      13,037
             Average interest rate      6.17%    6.63%               6.18%                  6.61%      6.33%
Variable rate FHLB advance             3,000        -         -         -          -       2,000      5,000       4,884
             Average interest rate      6.32%                                               7.34%      6.73%
</TABLE>



                                       14

<PAGE>   15

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


Forward Looking Statements
This discussion and analysis of financial condition and results of operations,
and other sections of this report contain forward looking statements that are
based on management's beliefs, assumptions, current expectations, estimates and
projections about the financial services industry, the economy, and about the
Corporation itself. Words such as "anticipates", "believes", "estimates",
"expects" "forecasts" "intends", "is likely", "plans", "product", "projects",
variations of such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties, and assumptions ("Future
Factors") that are difficult to predict with regard to timing, extent,
likelihood and degree of occurrence. Therefore, actual results and outcomes may
materially differ from what may be expressed or forecasted in such forward
looking statements. Furthermore, CNFC undertakes no obligation to update, amend
or clarify forward-looking statements, whether as a result of new information,
future events, or otherwise.

Future Factors include changes in interest rates and interest rate
relationships; demand for products and services; the degree of competition by
traditional and non-traditional competitors; changes in banking regulations and
tax laws; changes in prices, levies, and assessments; the impact of technology,
governmental and regulatory policy changes; the outcome of pending and future
litigation and contingencies; trends in customer behavior including their
ability to repay loans; and vicissitudes of the national and local economies.
These are representative of the Future Factors that could cause a difference
between an actual outcome and a forward-looking statement.




                                       15




<PAGE>   16




                    COMMERCIAL NATIONAL FINANCIAL CORPORATION



PART II.                           OTHER INFORMATION
Item 6 (a)                         Exhibit 23 Consent of Independent Accountants
                                   Exhibit 27 Financial Data
Item 6 (b)                         Reports on Form 8-K  None





















                                       16




<PAGE>   17



                    COMMERCIAL NATIONAL FINANCIAL CORPORATION

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)
Date: May 3, 2000

                                  /S/ Jeffrey S. Barker
                                  Jeffrey S. Barker
                                  President and Chief Executive Officer


                                  /s/ Patrick G. Duffy
                                  Patrick G. Duffy
                                  Executive Vice President and Chief Financial
                                  Officer





                                       17
<PAGE>   18


                                 Exhibit Index
                                 -------------

Exhibit No.                   Description
-----------                   -----------

   23                         Consent of Independent Accountants

   27                         Financial Data Schedule