<PAGE>
                       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 June 30, 2002, 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: (989) 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.

<TABLE>
<CAPTION>
   Class                                         Outstanding at July 31, 2002
   -----                                         ----------------------------
<S>                                              <C>
Common Stock                                              3,596,009
No Par Value
</TABLE>






<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION




                                      INDEX

<TABLE>
<CAPTION>
PART I                                         FINANCIAL INFORMATION
------                                         ---------------------
<S>                 <C>                                                                                     <C>
Item 1.             Financial Statements

                    Consolidated Balance Sheets as of June 30, 2002 (unaudited) and December 31, 2001       (Page 3)

                    Consolidated Statements of Income and Other Comprehensive
                    Income (unaudited) for the three and six months
                    ended June 30, 2002 and June 30, 2001                                                   (Page 4)

                    Consolidated Statements of Changes in Shareholders' Equity
                    (unaudited) for the six months ended June 30, 2002
                    and June 30, 2001                                                                       (Page 5)

                    Consolidated Statements of Cash Flows (unaudited) for the six months ended              (Page 6)
                    June 30, 2002 and June 30, 2001

                    Notes to Consolidated Financial Statements (unaudited)                                  (Page 7-10)

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

Item 3.             Quantitative and Qualitative Disclosures about Market Risk                              (Page 16-17)


PART II                                          OTHER INFORMATION
-------                                          -----------------

Item 4.             Submission of Matters to A Vote of Security Holders                                     (Page 19)

Item 6.             Exhibits and Reports on Form 8-K                                                        (Page 21-22)

SIGNATURES                                                                                                  (Page 20)

</TABLE>

                                       2
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                 June 30,              December 31,
                                                                                                   2002                    2001
                                                                                                   ----                    ----
                                                                                                (Unaudited)
<S>                                                                                            <C>                    <C>
ASSETS
Cash and due from banks                                                                        $   4,439,736          $   7,282,523
Federal funds sold                                                                                 5,000,000              5,000,000
Other interest bearing deposits                                                                    1,542,933              2,064,802
                                                                                               -------------          -------------
       Total cash and cash equivalents                                                            10,982,669             14,347,325
Securities available for sale                                                                     19,030,230             20,471,202
Securities held to maturity (fair value $  5,171,154  -
    June 30, 2002; $7,730,608 - December 31, 2001)                                                 4,939,276              7,496,656
Federal Home Loan Bank stock, at cost                                                              1,391,300              1,391,300
Gross loans receivable                                                                           181,310,538            168,012,689
Allowance for loan losses                                                                         (2,896,993)            (2,586,025)
                                                                                               -------------          -------------
   Net loans receivable                                                                          178,413,545            165,426,664
Bank owned life insurance                                                                          3,140,376              3,050,296
Premises and equipment, net                                                                        2,782,647              2,599,704
Accrued interest receivable and other assets                                                       2,167,155              3,614,733
                                                                                               -------------          -------------

       Total assets                                                                            $ 222,847,198          $ 218,397,880
                                                                                               =============          =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
       Deposits
              Noninterest-bearing demand                                                       $  18,548,814          $  22,199,334
              Interest-bearing demand                                                             26,896,098             29,033,317
              Savings                                                                             56,910,538             50,116,477
              Time                                                                                58,673,943             61,229,483
                                                                                               -------------          -------------
                    Total deposits                                                               161,029,393            162,578,611
       Securities sold under agreements to repurchase                                             10,226,048              6,237,585
       Other short-term borrowings                                                                   568,284                136,549
       Federal Home Loan Bank advances                                                            26,882,556             26,092,551
       Accrued expenses and other liabilities                                                      1,256,098              1,288,306
                                                                                               -------------          -------------
              Total liabilities                                                                  199,962,379            196,333,602

Shareholders' equity
       Common stock and paid-in-capital, no par value:  5,000,000 shares
         authorized; shares issued and outstanding
         June 30, 2002 - 3,594,929 and December 31,
         2001 - 3,547,700                                                                         22,546,647             22,104,910
       Accumulated deficit                                                                           (78,259)              (416,257)
       Accumulated other comprehensive income, net of tax                                            416,431                375,625
                                                                                               -------------          -------------
              Total shareholders' equity                                                          22,884,819             22,064,278
                                                                                               -------------          -------------

                    Total liabilities and shareholders' equity                                 $ 222,847,198          $ 218,397,880
                                                                                               =============          =============
</TABLE>
                                                          See accompanying notes


                                       3
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


  CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME (Unaudited)
<TABLE>
<CAPTION>
                                                                                For Three Months              For Six Months
                                                                                  Ended June 30,              Ended June 30,
                                                                              2002           2001           2002          2001
                                                                              ----           ----           ----          ----
<S>                                                                       <C>            <C>            <C>           <C>
Interest and dividend income
    Loans, including fees                                                 $ 3,185,954    $ 3,672,834    $ 6,303,430   $ 7,453,036
    Taxable securities                                                        203,522        211,834        412,468       435,628
    Nontaxable securities                                                     118,375        136,329        249,092       276,230
    Federal funds sold                                                         11,492         59,478         40,572       111,477
    Federal Home Loan Bank stock dividends                                     21,679         26,883         42,263        54,328
    Interest on other deposits                                                  3,447          5,972          8,576        12,187
                                                                          -----------    -----------    -----------   -----------
        Total interest and dividend income                                  3,544,469      4,113,330      7,056,401     8,342,886

Interest expense
    Deposits                                                                  862,783      1,417,776      1,775,738     2,928,015
    Securities sold under agreements to repurchase                             37,755         83,184         68,914       186,213
    Federal Home Loan Bank advances                                           378,072        342,861        762,015       729,335
    Other                                                                       1,103          5,233          3,307        14,936
                                                                          -----------    -----------    -----------   -----------
        Total interest expense                                              1,279,713      1,849,054      2,609,974     3,858,499

Net interest income                                                         2,264,756      2,264,276      4,446,427     4,484,387

Provision for loan losses                                                     167,000         90,000        287,000       180,000
                                                                          -----------    -----------    -----------   -----------
Net interest income after provision for loan losses                         2,097,756      2,174,276      4,159,427     4,304,387

Noninterest income
    Service charges and fees                                                  118,120        113,512        224,932       222,652
    Net gains on loan sales                                                    38,179        115,517         93,872       189,303
    Receivable financing fees                                                  46,647         70,950         83,738       157,629
    Security gains                                                              4,168         62,399         27,565       156,883
    Other                                                                     113,260         61,945        203,763       108,700
                                                                          -----------    -----------    -----------   -----------
        Total noninterest income                                              320,374        424,323        633,870       835,167

Noninterest expense
    Salaries and employee benefits                                            805,584        787,419      1,625,715     1,593,814
    Occupancy and equipment                                                   223,574        242,234        445,715       492,193
    FDIC insurance                                                              8,178          7,314         16,413        14,868
    Printing, postage and supplies                                             65,064         68,107        138,837       142,799
    Professional and outside services                                          90,154         91,872        194,361       190,275
    Other                                                                     256,818        239,328        491,654       458,248
                                                                          -----------    -----------    -----------   -----------
        Total noninterest expense                                           1,449,372      1,436,274      2,912,695     2,892,197
                                                                          -----------    -----------    -----------   -----------
Income before income tax expense                                              968,758      1,162,325      1,880,602     2,247,357
Income tax expense                                                            291,200        352,500        539,300       675,000
                                                                          -----------    -----------    -----------   -----------
Net income                                                                $   677,558    $   809,825    $ 1,341,302   $ 1,572,357
                                                                          ===========    ===========    ===========   ===========
Net change in unrealized gains/(losses) on securities available for sale  $   188,243    $    85,926    $    89,392   $   379,049
Reclassification adjustment for (gains) recognized in income                   (4,168)       (62,399)       (27,565)     (156,883)
Tax effects                                                                   (62,586)        (7,999)       (21,021)      (75,536)
                                                                          -----------    -----------    -----------   -----------
Total Comprehensive Income                                                $   799,047    $   825,353    $ 1,382,108   $ 1,718,987
                                                                          ===========    ===========    ===========   ===========

Per share information
    Basic earnings                                                        $      0.19    $      0.23    $      0.37   $      0.45
    Diluted earnings                                                      $      0.19    $      0.23    $      0.37   $      0.45
    Dividends declared                                                    $      0.14    $      0.13    $      0.28   $      0.26
</TABLE>

                                                          See accompanying notes


                                       4
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
          Six Months ended June 30, 2002 and June 30, 2001 (Unaudited)
<TABLE>
<CAPTION>
                                                                                                Accumulated
                                                  Shares            Common                         Other
                                                  Issued           Stock and                   Comprehensive      Total
                                                    and             Paid in      Accumulated   Income/(Loss),  Shareholders'
                                                Outstanding         Capital        Deficit       Net of Tax       Equity
-----------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>              <C>             <C>           <C>             <C>
Balance at January 1, 2001                       3,493,586       $ 21,617,080    $ (1,714,089)   $  207,091    $ 20,110,082

Comprehensive income:
   Net income                                                                       1,572,357                     1,572,357
   Net change in unrealized gains/(losses) on
     securities available for sale                                                                  379,049         379,049
   Reclassification adjustment for gains
      recognized in income                                                                         (156,883)       (156,883)
   Tax effects                                                                                      (75,536)        (75,536)
                                                                                                               ------------
     Total comprehensive income                                                                                   1,718,987

Cash dividends declared, $.26 per share                                              (937,006)                     (937,006)

Issued under dividend reinvestment program          29,412            290,797                                       290,797
Issued under stock option plan                         450              3,227                                         3,227
Issued under employee benefit plan                   2,332             21,167                                        21,167
Repurchase and retirement of shares                 (8,610)           (80,066)                                      (80,066)
                                                ----------       ------------    ------------    ----------    ------------
Balance at June 30, 2001                         3,517,170       $ 21,852,205    $ (1,078,738)   $  353,721    $ 21,127,188
                                                ==========       ============    ============    ==========    ============

=============================================================================================================================

Balance at January 1, 2002                       3,547,700       $ 22,104,910    $   (416,257)   $  375,625    $ 22,064,278
Comprehensive income:
   Net income                                                                       1,341,302                     1,341,302
   Net change in unrealized gains/(losses) on
     securities available for sale                                                                   89,392          89,392
   Reclassification adjustment for gains
     recognized in income                                                                           (27,565)        (27,565)
   Tax effects                                                                                      (21,021)        (21,021)
                                                                                                               ------------
     Total comprehensive income                                                                                   1,382,108

Cash dividends declared, $.28 per share                                            (1,003,304)                   (1,003,304)

Issued under dividend reinvestment program          41,277            406,127                                       406,127
Issued under stock option plan                       6,609             47,690                                        47,690
Issued under employee benefit plan                   3,695             39,713                                        39,713
Repurchase and retirement of shares                 (4,352)           (51,793)                                      (51,793)
                                                ----------       ------------    ------------    ----------    ------------
Balance at June 30, 2002                         3,594,929       $ 22,546,647    $    (78,259)   $  416,431    $ 22,884,819
                                                ==========       ============    ============    ==========    ============
</TABLE>
                                                          See accompanying notes


                                       5
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
                                                                                 For Six Months Ended
                                                                                       June 30,
                                                                                2002             2001
                                                                                ----             ----
<S>                                                                        <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                             $  1,341,302      $  1,572,357
    Adjustments to reconcile net income to net
      cash from operating activities
          Provision for loan losses                                             287,000           180,000
          Net gains on loan sales                                               (93,872)         (189,303)
          Originations of loans held for sale                                (4,401,919)      (11,893,950)
          Proceeds from sales of loans held for sale                          4,495,791        12,083,253
          Gain on sales of securities available for sale                        (27,565)         (156,883)
          Depreciation, amortization and accretion                              252,216           252,598
          Net change in accrued interest receivable and other assets          1,336,476           208,292
          Net change in accrued expenses and other liabilities                  (39,105)         (529,380)
                                                                           ------------      ------------
               Net cash from operating activities                             3,150,324         1,526,984

CASH FLOWS FROM INVESTING ACTIVITIES
          Purchases of securities available for sale                         (1,533,829)       (7,127,556)
          Proceeds from maturities of securities available for sale           3,000,000         5,600,000
          Proceeds from sales of securities available for sale                       --         2,429,442
          Proceeds from maturities of securities held to maturity             2,578,900           975,000
          Net change in loans                                               (13,275,506)       10,506,909
          Purchases of premises and equipment, net                             (390,860)         (103,121)
                                                                           ------------      ------------
               Net cash from investing activities                            (9,621,295)       12,280,674

CASH FLOW FROM FINANCING ACTIVITIES
          Net change in deposits                                             (1,549,218)       (1,941,486)
          Net change in securities sold under agreements to repurchase        3,988,463           665,392
          Net change in U.S. Treasury demand notes                              431,735          (344,226)
          Proceeds from Federal Home Loan Bank advances                       5,000,000        13,000,000
          Repayment of Federal Home Loan Bank advances                       (4,209,995)      (17,230,031)
          Repurchase and retirement of shares of common stock                   (51,793)          (80,066)
          Dividends paid and fractional shares                                 (996,407)         (933,305)
          Proceeds from sale of common stock                                    493,530           315,191
                                                                           ------------      ------------
               Net cash from financing activities                             3,106,315        (6,548,531)
                                                                           ------------      ------------

Net change in cash and cash equivalents                                      (3,364,656)        7,259,127

Cash and cash equivalents, at beginning of year                              14,347,325         7,462,021
                                                                           ------------      ------------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD                                $ 10,982,669      $ 14,721,148
                                                                           ============      ============
Cash paid during the period for
          Interest                                                         $  2,676,056      $  3,981,266
          Federal income taxes                                                  610,000           774,999

</TABLE>

                                                          See accompanying notes

                                       6
<PAGE>
                    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
accounting principles generally accepted in the United States of America for
complete presentation of financial statements. In management's opinion, 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 June 30, 2002 and
December 31, 2001 and the results of its operations for the three and six months
ending June 30, 2002 and June 30, 2001. The results for the three and six months
ended June 30, 2002 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. and CNFC Mortgage Corporation, both wholly owned
subsidiaries of the Bank. All material intercompany accounts and transactions
have been eliminated in consolidation.

Nature of Operations, Industry Segments and Concentrations of Credit Risk
CNFC 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 CNFC's chief
decision-makers monitor the revenue stream of various products and services,
operations are managed and financial performance is evaluated on a
corporation-wide basis. Accordingly, management considers all of the CNFC's
banking operations 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 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 accounting principles
generally accepted in the United States of America, 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. 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 (loss), 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 any securities for trading
at any time during 2002 or 2001.

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.


                                       7
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


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
Loans that management has the intent and the ability to hold for the foreseeable
future or until maturity or payoff 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 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
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 individually 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.

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.

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.


                                       8
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


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

Stock Compensation
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.

Stock Dividends
Dividends issued in stock are reported by transferring the market value of the
stock issued from retained earnings to common stock, to the extent of available
retained earnings. Any excess of fair value over available retained earnings is
considered a return of capital and thus is transferred from 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
(loss). Other comprehensive income (loss) 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
Financial instruments include off-balance sheet credit instruments, such as
commitments to make loans and standby letters of credit issued to meet customer
needs. The face amount for these items represents the exposure to loss before
considering customer collateral or ability to repay. Such financial instruments
are recorded when they are funded.

Fair Values of Financial Instruments
Fair values of financial instruments are estimated using relevant market
information and other assumptions. 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 do 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.

Recent Accounting Pronouncements
Effective January 1, 2002, CNFC adopted a new standard issued by the FASB on
impairment and disposal of long-lived assets. The effect of this on the
financial position and results of operations of the CNFC was not material.

A new accounting standard dealing with asset retirement obligations will apply
for 2003. The CNFC does not believe this standard will have a material affect on
its financial position or results of operations.


                                       9
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


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 periods ended is
presented below:

<TABLE>
<CAPTION>
                                                               For three months ended               For six months ended
                                                          JUNE 30, 2002      JUNE 30, 2001     JUNE 30, 2002     JUNE 30,2001
------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>               <C>                <C>               <C>
BASIC EARNINGS PER SHARE:
Net income available to common shareholders               $     677,558     $      809,825     $   1,341,302     $   1,572,357

Weighted-average common shares outstanding for
    basic earnings per share                                  3,588,118          3,515,302         3,588,118         3,515,302
------------------------------------------------------------------------------------------------------------------------------

BASIC EARNINGS PER SHARE                                  $         .19     $          .23     $         .37     $         .45
==============================================================================================================================


DILUTED EARNINGS PER SHARE:
Net income available to common shareholders               $     677,558     $      809,825     $   1,341,302     $   1,572,357

Weighted-average common shares outstanding for basic
    earnings per share                                        3,588,118          3,515,302         3,588,118         3,515,302

Add:
Dilutive effect of assumed exercise of stock options             36,806              9,127            36,806             9,127
------------------------------------------------------------------------------------------------------------------------------

Weighted-average common and dilutive additional potential
    common shares outstanding                                 3,624,924          3,524,429         3,624,924         3,524,429
==============================================================================================================================

DILUTED EARNINGS PER SHARE                                $         .19     $          .23     $         .37     $         .45
==============================================================================================================================
</TABLE>


                                       10
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


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

FINANCIAL CONDITION
Summary
Total assets at June 30, 2002 increased to $222,847,000 from the $218,398,000 at
December 31, 2001. Loan totals increased $13,298,000 or 7.9% compared to
December 31, 2001. The increase in loans is a result of increased in residential
real estate balances and commercial loan balances. Funding for the loan growth
came primarily from two sources: maturing securities held to maturity and a
$3,988,000 increase in repurchase agreements. Other assets decreased $1,335,000.
One million of repossessed assets included in other assets were sold at book
value during the first quarter.

Deposit decreased $1,549,000 as compared to December 31, 2001. The Bank
continues to experience a shift of certificate of deposit money into short-term
savings products. In particular, the Bank offers a high rate money market
account that has been popular with customers seeking safety and liquidity. It
continues to be difficult to attract long-term certificate of deposits without
offering excessively high interest rates.

The Bank is constructing a new office located in Greenville Michigan. As a
result, premises and equipment will continue to increase. Management anticipates
that this office will be fully operational in the fourth quarter of 2002.

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, with minimal losses.

The loan to deposit ratio at June 30, 2002 was 112.6% compared to 103.3% at
December 31, 2001. Management believes 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 provides adequate short and
medium term sources of liquidity. At a minimum the Bank has the following
available to meet short-term liquidity needs: $9,319,000 in available FHLB
advances and $9,000,000 in short term federal funds 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.


                                       11
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


Asset Quality
At June 30, 2002 CNFC has identified $7,201,000 of loans as non-performing. This
compares to $462,000 at December 31, 2001. The $7,201,000 in non-accrual loans
represents three business relationships and their related entities. All
non-accrual loans are considered impaired and the allowance for loan loss
allocated to these loans is $2,180,872. Excluding these non-performing loans,
the Bank had only $287,000 in loans past due greater than 30 days at June 30,
2002.

<TABLE>
<CAPTION>
                                                        June 30, 2002           December 31, 2001
<S>                                                  <C>                        <C>
Total loans                                          $      181,310,538         $     168,012,689

Non-accrual loans                                    $        7,200,911         $         387,822
Accruing loans past due 90 days or more                               -                    74,664
-------------------------------------------------------------------------------------------------
     Total non-performing loans                               7,200,911                   462,486

Repossessed assets and other real estate                              -                 1,000,000
-------------------------------------------------------------------------------------------------
     Total non-performing assets                     $        7,200,911         $       1,462,486
=================================================================================================

Total non-performing loans as a
     percentage of total loans                                     3.97%                      .28%
==================================================================================================

Allowance for loan loss as a percentage of
     non-performing loans                                         40.23%                   559.16%
==================================================================================================

Total non-performing assets as a percentage of
     total assets                                                  3.23%                      .67%
==================================================================================================
</TABLE>

Allowance for Loan Loss
The allowance for loan losses was 1.60% of total loans at June 30, 2002 and
1.54% at December 31, 2001. Year to date net recoveries totaled $24,000. Year
2001 net charge-offs totaled $334,000. Approximately $390,000 relates to one
business loan relationship. Excluding this charge-off, CNFC recorded net
recoveries of $56,000 during 2001.

Management systematically evaluates 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. The loan portfolio has
increased $13,298,000 or 7.91% year to date primarily caused by an increase in
business lending. Business lending is inherently riskier than consumer or
residential real estate. In addition, loan quality has decreased as evidenced by
the increase in non-performing assets. For these reasons, management increased
the quarterly provision to $167,000, which was $77,000 more than the amount
expensed for the three months ended June 30, 2001. Year to date management has
increased the provision from $180,000 to $287,000.

<TABLE>
<CAPTION>
                                 Six Months Ended         Year Ended         Six Months Ended
                                  June 30, 2002        December 31, 2001       June 30, 2001
----------------------------------------------------------------------------------------------
<S>                              <C>                   <C>                   <C>
Beginning balance                  $    2,586,025      $       2,545,363      $      2,545,363

Loan charge-offs                          (11,222)              (415,904)               (8,894)
Loan recoveries                            35,190                 81,566                56,899
----------------------------------------------------------------------------------------------
Net loan recoveries/(charge-offs)          23,968               (334,338)               48,005
Provision for loan losses                 287,000                375,000               180,000
----------------------------------------------------------------------------------------------
Ending balance                     $    2,896,993      $       2,586,025      $      2,773,368
==============================================================================================
</TABLE>


                                       12
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


Capital Resources
CNFC's capital ratios continue to exceed regulatory guidelines for a "well
capitalized" institution. It is management's intent to maintain capital ratios
in excess of the minimum required to be well capitalized. A summary of CNFC's
capital ratios follows:
<TABLE>
<CAPTION>
                                                                                   Minimum Required to be
                                                                                   Well Capitalized Under
                                                                                  Prompt Corrective Action
                                             June 30, 2002     December 31, 2001         Regulations
---------------------------------------------------------------------------------------------------------
<S>                                          <C>               <C>                <C>
Total capital to risk weighted assets            14.1%                 14.4%                10.0%
Tier 1 capital to risk weighted assets           12.9%                 13.1%                 6.0%
Tier 1 capital to average assets                 10.2%                  9.7%                 5.0%
</TABLE>

RESULTS OF OPERATIONS
Summary
Net income for the quarter ended June 30, 2002 was $799,000, a decrease of
$26,000, or 3.2% compared to the same period in 2001. Management increased the
provision for loan losses by $77,000 compared to the same period in 2001. A
$104,000 or 24.5% decrease in noninterest income also contributed to the
decrease in net income. CNFC's net interest income remained virtually unchanged.
Non-interest expense for the quarter increased $13,000 or .91% compared to the
same period in 2001. Return on average equity decreased from 15.30% to 11.68%.

Net income for the six months ending June 30, 2002 was $1,382,108 compared to
$1,718,987 for the same period in 2001. The causes of the decreased net income
are similar to those described for the three months ending June 30, 2002. As a
result of lower net income and an increased equity base, return on average
equity decreased from 15.19% to 11.98%.

Net Interest Income
The following table illustrates the effect that changes in rates and balances of
interest-earning assets and interest-bearing liabilities had on tax-equivalent
net interest income for the three and six months ending June 30, 2002 and 2001.

<TABLE>
<CAPTION>
                                        Three Months Ending June 30,         Six Months Ending June 30,
                                          2002               2001              2002              2001
                                          ----               ----              ----              ----
<S>                                   <C>               <C>               <C>               <C>
Interest Income (tax equivalent)      $  3,677,418      $  4,273,196      $  7,316,630      $  8,681,738
Interest Expense                         1,279,713         1,849,054         2,609,974         3,858,499
                                      ------------      ------------      ------------      ------------
Net Interest Income                   $  2,397,705      $  2,424,142      $  4,706,656      $  4,823,239
                                      ============      ============      ============      ============

Average Balances
Interest-earning Assets               $210,289,753      $206,343,557      $208,938,575      $207,850,476
Interest-bearing Liabilities           178,026,591       173,428,527       177,402,209       175,471,247
                                      ------------      ------------      ------------      ------------
Net Differential                      $ 32,263,162      $ 32,915,030      $ 31,536,366      $ 32,379,229
                                      ============      ============      ============      ============

Average Yields/Rates (annualized)
Yield on Earning Assets                       7.01%             8.31%             7.06%             8.42%
Rate Paid on Liabilities                      2.88%             4.28%             2.97%             4.43%
                                      ------------      ------------      ------------      ------------

Interest Spread                               4.13%             4.03%             4.09%             3.99%
                                      ============      ============      ============      ============

Net Interest Margin                           4.57%             4.71%             4.54%             4.68%
                                      ============      ============      ============      ============
</TABLE>






                                       13
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


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

<TABLE>
<CAPTION>
                                               Three Months Ending                                 Six Months Ending
                                                  June 30, 2002                                      June 30, 2002
                                    Balance           Rate          Inc/(Dec)         Balance            Rate          Inc/(Dec)
                                    -------           ----          ---------         -------            ----          ---------
<S>                              <C>              <C>              <C>              <C>              <C>              <C>
Interest Earning Assets          $   107,397      $  (703,175)     $  (595,778)     $    18,396      $(1,383,504)     $(1,365,108)
Interest Bearing Liabilities          (9,721)        (559,620)        (569,341)         (85,906)      (1,162,619)      (1,248,525)
                                 -----------      -----------      -----------      -----------      -----------      -----------
Net Interest Income              $   117,118      $  (143,555)     $   (26,437)     $   104,302      $  (220,885)     $  (116,583)
                                 ===========      ===========      ===========      ===========      ===========      ===========
</TABLE>

The $26,000 decrease in tax-equivalent net interest income for the three months
ending June 30, 2002 resulted from a 14 basis point decrease in margin offset by
an increase in average earning assets.

In response to the September 11th attacks and a slowing national economy, the
Federal Reserve Open Market Committee lowered the discount rate 475 basis points
during 2001. These decreases in the discount rate result in an almost immediate
decrease 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. As the Bank adjusts its prime
lending rate, the Bank experiences an almost immediate decrease in net interest
income. In response, management has lowered retail deposit rates, however, it is
unable to lower the cost of retail deposits as quickly and to the same extent as
the Federal Reserve has lowered the federal funds target rate. Also, management
has elected, over time, to fund loans with FHLB amortizing advances, generally
for periods of 5 to 7 years. The amortizing advances are used to offset future
interest rate risk in a rising rate environment. The cost of FHLB advances has
not decreased as quickly as the general decrease in rates. The effect of these
various items has resulted in a decrease in margin from 4.71% for the three
months ended June 30, 2001 to 4.57% for the same period in 2002.

Margin for the six months ending June 30, 2002 decreased 14 basis points for
similar reasons as discussed above.

Noninterest Income
Noninterest income for the three months ending June 30, 2002 was $320,000. This
represents a $104,000 or 24.5% decrease over the same period in 2001.

Net gain on loan sales decreased from $116,000 to $38,000. Residential real
estate interest rates were historically low during the fourth quarter of 2001.
As a result, the Bank experienced significant refinancing activity. Though
current residential mortgage loan rates remain historically low, current
interest rates are higher than those experienced in the fourth quarter of 2001.
Therefore, refinancing activity has decreased. The gains on loan sales are now
primarily the result of lending money for the purchase of residential real
estate.

Receivable financing decreased from $71,000 to $47,000 as the result of lower
volume of receivables financed with fewer customers.

In 2001, CNFC elected to liquidate several investments held as available for
sale by the holding company. This resulted in $62,000 in securities gains during
the second quarter of 2001. During the second quarter of 2002 the Bank recorded
a gain of $4,000 resulting from municipal securities called at a premium.

The majority of the $51,000 increase in other income reflects the income
recorded on the Bank's investment in bank owned life insurance (BOLI).



                                       14
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


Non-interest income for the six months ending June 30, 2002 decreased $201,000
or 24.07%. The contributing factors to the decrease are similar to those
discussed above.

Noninterest Expense
Noninterest expense for the three months ending June 30, 2002 totaled
$1,449,000. This represents a $13,000 or .91% increase over the same period in
2001. Management has focused on controlling expense during the first six months
of 2002. However, during the next six months, management anticipates that
various expense categories will increase as the new Greenville office is
completed and becomes operational.

Salary and benefit expense for the three months ending June 30, 2002 totaled
$806,000 compared to $787,000 for the same period in 2001, an increase of
$19,000 or 2.4%. Bank staffing levels have not significantly changed compared to
the same period in 2001. During the third quarter of 2002, medical insurance
policies expire. Anecdotal evidence suggests that CNFC can anticipate double
digit increases as part of the renewal process. Also, staffing levels will
increase in order to staff the new office located in Greenville.

Non-interest expense for the six months ending June 30, 2002 totaled $2,913,000,
a $21,000 or .73% increase compared to the six months ending June 30, 2001.
Factors affecting the increase are similar to those discussed above.




                                       15
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Asset liability management involves developing, implementing and monitoring
strategies to maintain sufficient liquidity, maximize net interest income and
minimize the impact that significant fluctuations in market interest rates would
have on earnings. Commercial's Asset/Liability Committee (ALCO) is responsible
for managing this process.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Commercial's primary market risk exposure is interest rate risk and, to a lesser
extent, liquidity risk. Commercial's transactions are denominated in U.S.
dollars with no specific foreign exchange exposure. Also, Commercial 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 stockholder value; however, excessive
levels of IRR could pose a significant threat to earnings and capital.
Accordingly, effective risk management that maintains IRR at prudent levels is
essential to Commercial's safety and soundness.

Evaluating exposure to changes in interest rates includes assessing both the
adequacy of management's process used to control IRR and the organization's
quantitative level of exposure. When assessing the IRR management process,
Commercial 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 assessment of 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.

Commercial derives the majority of income from the excess of interest collected
over interest paid. The rates of interest earned on its assets and owed on its
liabilities generally are established contractually for a period of time. Since
market interest rates change over time, Commercial is exposed to lower profit
margins (or losses) if it cannot adapt to interest rate changes.

For example, assume that an institution's assets carry long-term fixed rates and
that those assets are funded with short-term liabilities. If market interest
rates rise by the time the short-term liabilities must be refinanced, the
increase in the institution's interest expense may exceed the interest earned on
its long-term assets. Accordingly, an institution's profits could decrease.

Commercial is also subject to repayment risk when interest rates fall. For
example, mortgage loans and other financial assets may be prepaid by a debtor so
that the debtor may refinance their obligations at new, lower rates. Prepayments
of assets carrying higher rates reduces interest income and overall asset
yields.

Several ways an institution can manage IRR include: selling existing assets or
repaying certain liabilities; matching repricing periods for new assets and
liabilities, for example, by shortening terms of new loans or investments and
hedging existing assets, liabilities, or anticipated transactions. An
institution might also invest in more complex financial instruments intended to
hedge or otherwise change IRR. Interest rate swaps, futures contracts, options
on futures, and other such derivative financial instruments are often used for
this purpose. Because these instruments are sensitive to interest rate changes,
they require management's expertise to be effective. Commercial has not
purchased derivative financial instruments in the past and does not presently
intend to purchase such instruments.

ALCO uses various techniques to monitor IRR. Commercial's primary tool in
measuring interest rate risk is to perform a simulation analysis. This analysis
forecasts the effect of various interest rate changes on the balance sheet,
economic value of equity, net interest income and net income.



                                       16
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


ALCO monitors the effect on the balance sheet and income statement of various
interest rate scenarios. One common scenario performed by ALCO is to "shock" the
balance sheet by assuming that Commercial has just experienced an immediate and
parallel shift in the yield curve up or down 200 basis points. These results are
recorded and compared to previous results. Management performs this calculation
quarterly.

The results of this calculation combined with a review of market interest rates,
economic conditions, loan demand, local deposit interest rates and other
factors, allows ALCO to structure the balance sheet with the goal of maximizing
net interest income and minimizing interest rate risk. ALCO applies the
percentage change anticipated in net interest income to the net interest income
actually earned to determine if the change is within acceptable limits. ALCO has
concluded from these results that Commercial has an acceptable level of interest
rate risk.



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.



                                       17
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION

PART II.                        OTHER INFORMATION

Item 4   Submission of Matter to A Vote of Security Holders


Item 6   Exhibits and Reports on Form 8-K
         (a)      Exhibits:
                  99.1 Certification of Chief Executive Officer and Chief
                  Financial Officer

         (b)      Report on Form 8-K
                  None filed during the quarter ending June 30, 2002






                                       18
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS

Commercial National Financial Corporation held its annual meeting of
Shareholders on April 23, 2002. A total of 3,147,275 shares were represented in
person or by proxy, or more than 88% of total shares outstanding.

Proposal: Shareholders elected ten Director nominees named in the Proxy
Statement.

<TABLE>
<CAPTION>
Name                                For                       Against
---------------------------------------------------------------------
<S>                                <C>                        <C>
Richard F. Abbott                  3,143,766                      3,509
Jefferson P. Arnold                3,141,708                      5,567
Jeffrey S. Barker                  3,143,766                      3,509
Don J. Dewey                       3,141,232                      6,043
Patrick G. Duffy                   3,143,766                      3,509
David A. Ferguson                  3,143,766                      3,509
Paul B. Luneack                    3,143,766                      3,509
Kim C. Newson                      3,141,708                      5,567
Howard D. Poindexter               3,143,766                      3,509
Scott E. Sheldon                   3,137,116                     10,159
</TABLE>













                                       19
<PAGE>
                    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: August 13, 2002             /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




                                       20
<PAGE>
                                 EXHIBIT INDEX


Exhibit No.                       Description

  99.1                  Certification of Chief Executive Officer and Chief
                        Financial Officer








                                       21