<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, 2003, 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 by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the Exchange Act).
YES                                   NO        X
     -------------                         ------------


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 August 11, 2003
           -----                         ------------------------------
        Common Stock                               3,843,223
        No Par Value









<PAGE>



                                     INDEX

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

                    Consolidated Balance Sheets as of June 30, 2003 (unaudited) and December 31, 2002       (Page 3)

                    Consolidated Statements of Income and Other Comprehensive Income (unaudited) for
                    the three and six months ended June 30, 2003 and June 30, 2002                          (Page 4)

                    Consolidated Statements of Changes in Shareholders' Equity (unaudited) for the
                    three months ended June 30, 2003 and June 30, 2002                                      (Page 5)

                    Consolidated Statements of Cash Flows (unaudited) for the six months ended              (Page 6)
                    June 30, 2003 and June 30, 2002

                    Notes to Consolidated Financial Statements (unaudited)                                  (Page 7-9)

Item 2.             Management's Discussion and Analysis of Financial Condition and Results of Operations   (Page 10-14)

Item 3.             Quantitative and Qualitative Disclosures about Market Risk                              (Page 14-15)

Item 4.             Controls and Procedures                                                                 (Page 16)

PART II                                               OTHER INFORMATION

Item 4.             Submission of Matters to a Vote of Security Holders                                     (Page 17)

Item 6.             Exhibits and Reports on Form 8-K                                                        (Page 17-24)



SIGNATURES                                                                                                  (Page 18)


</TABLE>




<PAGE>


                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                 June 30,        December 31,
                                                                                   2003             2002
                                                                                   ----             ----
                                                                                (Unaudited)
<S>                                                                            <C>              <C>
ASSETS
Cash and due from banks                                                        $   5,172,367     $   8,784,826
Federal funds sold                                                                 6,825,000         6,850,000
Other interest bearing deposits                                                    1,761,536         3,634,988
                                                                               -------------     -------------
       Total cash and cash equivalents                                            13,758,903        19,269,814
Securities available for sale                                                     25,232,553        21,345,896
Securities held to maturity (fair value $3,592,976  -
    June 30, 2003; $4,911,696 - December 31, 2002)                                 3,404,808         4,689,025
Federal Home Loan Bank stock, at cost                                              1,668,800         1,647,000
Gross loans receivable                                                           182,655,801       184,448,296
Allowance for loan losses                                                         (2,271,715)       (2,783,234)
                                                                               -------------     -------------
   Net loans receivable                                                          180,384,086       181,665,062
Bank owned life insurance                                                          3,322,481         3,231,374
Premises and equipment, net                                                        3,866,534         3,687,151
Accrued interest receivable and other assets                                       4,128,649         2,715,261
                                                                               -------------     -------------

       Total assets                                                            $ 235,766,814     $ 238,250,583
                                                                               =============     =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
       Deposits
              Noninterest-bearing demand                                       $  21,094,790     $  21,495,410
              Interest-bearing demand                                             29,485,059        29,872,655
              Savings                                                             62,431,221        59,432,935
              Time                                                                53,873,561        55,258,479
                                                                               -------------     -------------
                    Total deposits                                               166,884,631       166,059,479
       Securities sold under agreements to repurchase                             15,162,721        14,266,239
       Other short-term borrowings                                                   441,984           491,840
       Federal Home Loan Bank advances                                            28,420,749        32,807,086
       Accrued expenses and other liabilities                                      1,109,132           921,967
                                                                               -------------     -------------
              Total liabilities                                                  212,019,217       214,546,611

Shareholders' equity
       Common stock and paid-in-capital, no par value:  5,000,000 shares
         authorized; shares issued and outstanding
         June 30, 2003 - 3,825,799 and December 31,
         2002 - 3,801,421                                                         23,548,479        23,255,499
       Retained earnings (deficit)                                                  (298,372)            3,908
       Accumulated other comprehensive income, net of tax                            497,490           444,565
                                                                               -------------     -------------
              Total shareholders' equity                                          23,747,597        23,703,972
                                                                               -------------     -------------

                    Total liabilities and shareholders' equity                 $ 235,766,814     $ 238,250,583
                                                                               =============     =============
</TABLE>






                                                          See accompanying notes
                                        3



<PAGE>


                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


     CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
<TABLE>
<CAPTION>
                                                                          Three Months                    Six Months
                                                                          Ended June 30,                Ended June 30,
                                                                        2003          2002            2003           2002
                                                                        ----          ----            ----           ----
<S>                                                                <C>            <C>              <C>            <C>
Interest and dividend income
    Loans, including fees                                           $ 3,125,574   $ 3,185,954      $ 6,219,668    $ 6,303,430
    Taxable securities                                                  183,544       203,522          363,162        412,468
    Nontaxable securities                                                99,804       118,375          206,804        249,092
    Federal funds sold                                                   27,245        11,492           67,029         40,572
    Federal Home Loan Bank stock dividends                               20,358        21,679           44,358         42,263
    Interest on other deposits                                            6,087         3,447           10,415          8,576
                                                                    -----------   -----------      -----------    -----------
        Total interest and dividend income                            3,462,612     3,544,469        6,911,436      7,056,401

Interest expense
    Deposits                                                            645,281       862,783        1,340,932      1,775,738
    Securities sold under agreements to repurchase                       39,441        37,755           85,436         68,914
    Federal Home Loan Bank advances                                     386,290       378,072          798,353        762,015
    Other                                                                   668         1,103            1,419          3,307
                                                                    -----------   -----------      -----------    -----------
        Total interest expense                                        1,071,680     1,279,713        2,226,140      2,609,974

Net interest income                                                   2,390,932     2,264,756        4,685,296      4,446,427

Provision for loan losses                                             1,230,000       167,000        1,350,000        287,000
                                                                    ------------  -----------      -----------    -----------
Net interest income after provision for loan losses                   1,160,932     2,097,756        3,335,296      4,159,427

Noninterest income
    Service charges and fees                                            117,151       118,120          234,409        224,932
    Net gains on loan sales                                             260,121        38,179          541,131         93,872
    Receivable financing fees                                            43,225        46,647           84,426         83,738
    Net security gains                                                        -         4,168                -         27,565
    Other                                                                15,990       113,260          104,103        203,763
                                                                    -----------   -----------      -----------    -----------
        Total noninterest income                                        436,487       320,374          964,069        633,870

Noninterest expense
    Salaries and employee benefits                                      929,527       805,584        1,833,669      1,625,715
    Occupancy and equipment                                             319,674       223,574          622,493        445,715
    FDIC insurance                                                        6,882         8,178           14,184         16,413
    Printing, postage and supplies                                       66,764        65,064          137,931        138,837
    Professional and outside services                                   104,508        90,154          192,259        194,361
    Other                                                               273,046       256,818          516,315        491,654
                                                                    -----------   -----------      -----------    -----------
        Total noninterest expense                                     1,700,401     1,449,372        3,316,851      2,912,695
                                                                    -----------   -----------      -----------    -----------
Income before income tax expense                                       (102,982)      968,758          982,514      1,880,602
Income tax expense (benefit)                                           (105,400)      291,200          214,000        539,300
                                                                    -----------   -----------      -----------    -----------
Net income                                                          $     2,418   $   677,558      $   768,514    $ 1,341,302
                                                                    ===========   ===========      ===========    ===========
Net change in unrealized gains on securities available for sale     $   103,547   $   188,243      $    80,189    $    89,392
Reclassification adjustment for (gains) recognized in income                 -         (4,168)               -        (27,565)
Tax effects                                                             (35,205)      (62,586)         (27,264)       (21,021)
                                                                    -----------   -----------      -----------    -----------
Total comprehensive income                                          $    70,760   $   799,047      $   821,439    $ 1,382,108
                                                                    ===========   ===========      ===========    ===========

Per share information
    Basic earnings                                                  $         -   $      0.18      $      0.20    $      0.35
    Diluted earnings                                                $         -   $      0.18      $      0.20    $      0.35
    Dividends declared                                              $      0.14   $      0.13      $      0.28    $      0.27
</TABLE>



                                                          See accompanying notes

                                        4


<PAGE>


                    COMMERCIAL NATIONAL FINANCIAL CORPORATION




           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
          Six Months ended June 30, 2003 and June 30, 2002 (Unaudited)
<TABLE>
<CAPTION>
                                                                                                Accumulated
                                                       Shares        Common                        Other
                                                       Issued       Stock and      Retained    Comprehensive      Total
                                                         and         Paid in       Earnings    Income/(Loss),  Shareholders'
                                                     Outstanding     Capital       (Deficit)     Net of Tax       Equity
----------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>          <C>             <C>            <C>          <C>
Balance at January 1, 2002                            3,725,085   $ 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, $.27 per share                                            (1,003,304)                   (1,003,304)

Issued under dividend reinvestment program               43,341        406,127                                      406,127
Issued under stock option plans                           6,939         47,690                                       47,690
Issued under employee benefit plan                        3,880         39,713                                       39,713
Repurchase and retirement of shares                      (4,570)       (51,793)                                     (51,793)
                                                     ----------   ------------    -----------   ----------     ------------
Balance at June 30, 2002                              3,774,675   $ 22,546,647    $   (78,259)  $  416,431     $ 22,884,819
                                                     ==========   ============    ===========   ==========     ============

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

Balance at January 1, 2003                            3,801,421   $ 23,255,499    $     3,908   $  444,565     $ 23,703,972
Comprehensive income:
   Net income                                                                         768,514                       768,514
   Net change in unrealized gains/(losses) on
     securities available for sale                                                                  80,189           80,189
   Tax effects                                                                                     (27,264)         (27,264)
                                                                                                               ------------
     Total comprehensive income                                                                                     821,439

Cash dividends declared, $.28 per share                                            (1,070,794)                   (1,070,794)

Issued under dividend reinvestment program               34,086        409,032                                      409,032
Issued under stock option plans                              48            318                                          318
Issued under employee benefit plan                        3,370         40,956                                       40,956
Repurchase and retirement of shares                     (13,126)      (157,326)                                    (157,326)
                                                     ----------   ------------    -----------   ----------     ------------
Balance at June 30, 2003                              3,825,799   $ 23,548,479    $  (298,372)  $  497,490     $ 23,747,597
                                                     ==========   ============    ===========   ==========     ============
</TABLE>





                                                          See accompanying notes

                                        5


<PAGE>



                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


                CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
                                                                                                 Six Months Ended
                                                                                                      June 30,
                                                                                                2003             2002
                                                                                                ----             ----
<S>                                                                                        <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                                              $    768,514    $  1,341,302
    Adjustments to reconcile net income to net
      cash from operating activities
          Provision for loan losses                                                            1,350,000         287,000
          Net gains on loan sales                                                               (541,131)        (93,872)
          Originations of loans held for sale                                                (22,696,920)     (4,401,919)
          Proceeds from sales of loans held for sale                                          23,238,051       4,495,791
          Gain on sales of securities available for sale                                               -         (27,565)
          Depreciation, amortization and accretion                                               343,188         252,216
          Net change in accrued interest receivable and other assets                            (113,237)      1,336,476
          Net change in accrued expenses and other liabilities                                   182,651         (39,105)
                                                                                            ------------    ------------
               Net cash from operating activities                                              2,531,116       3,150,324

CASH FLOWS FROM INVESTING ACTIVITIES
          Purchases of securities available for sale                                         (14,425,946)     (1,533,829)
          Purchases of FHLB stock                                                                (21,800)              -
          Proceeds from maturities of securities available for sale                           10,517,199       3,000,000
          Proceeds from maturities of securities held to maturity                              1,280,000       2,578,900
          Net change in loans                                                                 (1,492,050)    (13,275,506)
          Purchases of premises and equipment                                                   (411,571)       (390,860)
                                                                                            ------------    ------------
               Net cash from investing activities                                             (4,554,168)     (9,621,295)

CASH FLOW FROM FINANCING ACTIVITIES
          Net change in deposits                                                                 825,152      (1,549,218)
          Net change in securities sold under agreements to repurchase                           896,482       3,988,463
          Net change in U.S. Treasury demand notes                                               (49,856)        431,735
          Proceeds from Federal Home Loan Bank advances                                                -       5,000,000
          Repayment of Federal Home Loan Bank advances                                        (4,386,337)     (4,209,995)
          Repurchase and retirement of shares of common stock                                    (63,028)        (51,793)
          Dividends paid and fractional shares                                                (1,066,280)       (996,407)
          Proceeds from sale of common stock                                                     356,008         493,530
                                                                                            ------------    ------------
               Net cash from financing activities                                             (3,487,859)      3,106,315
                                                                                            ------------    ------------

Net change in cash and cash equivalents                                                       (5,510,911)     (3,364,656)

Cash and cash equivalents, at beginning of period                                             19,269,814      14,347,325
                                                                                            ------------    ------------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD                                                 $ 13,758,903    $ 10,982,669
                                                                                            ============    ============
Cash paid during the period for
          Interest                                                                          $  2,250,080    $  2,676,056
          Federal income taxes                                                                   684,000         610,000
</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, 2003 and
December 31, 2002 and the results of its operations for the three and six months
ending June 30, 2003 and June 30, 2002. The results for the three and six months
ended June 30, 2003 are not necessarily indicative of the results expected for
the full year.

Principles 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 nine offices located in
Gratiot, Isabella 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. The allowance for loan losses and fair values of securities and other
financial instruments are particularly subject to change.

STOCK COMPENSATION Employee compensation expense under stock options is reported
using the intrinsic value method. No stock-based compensation cost is reflected
in net income as all options granted had an exercise price equal to or greater
than the market price of the underlying common stock at date of grant. The
following table illustrates the effect on net income and earnings per share if
expense was measured using the fair value recognition provisions of SFAS No.
123, Accounting for Stock-Based Compensation Expense.







                                        7

<PAGE>

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION

<TABLE>
<CAPTION>
                                                Quarter to Date                       Year to Date
                                         June 30, 2003   June 30, 2002      June 30, 2003   June 30, 2002
---------------------------------------------------------------------------------------------------------
<S>                                     <C>               <C>              <C>               <C>
Net income as reported                  $     2,418       $   677,558      $   768,514       $ 1,341,302
Stock-based compensation expense            (28,470)          (15,943)         (53,361)          (28,922)
--------------------------------------------------------------------------------------------------------
Proforma net income                     $   (26,052)      $   661,615      $   715,153       $ 1,312,380
========================================================================================================

Basic earnings per share as reported    $       .00       $       .18      $       .20       $       .35
Proforma basic earnings per share       $      (.01)      $       .18      $       .19       $       .35
Diluted earnings per share as reported  $       .00       $       .18      $       .20       $       .35
Proforma diluted earnings per share     $      (.01)      $       .17      $       .18       $       .34
</TABLE>


The pro forma effects are computed using option pricing models, using the
following weighted-average assumptions as of the grant date.
<TABLE>
<CAPTION>
                                                Quarter to Date                      Year to Date
                                         June 30, 2003   June 30, 2002      June 30, 2003   June 30, 2002
---------------------------------------------------------------------------------------------------------
<S>                                         <C>             <C>                <C>             <C>
Risk-free interest rate                       3.57%           4.08%              3.57%           4.08%
Expected option life                         10.00            9.45              10.00            9.45
Expected stock price volatility              21.10           40.83              21.10           40.83
Dividend yield                                4.31%           4.70%              4.31%           4.70%
</TABLE>


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.

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.

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.

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

Newly Issued But Not Yet Effective Accounting Standards
New accounting standards on asset retirement obligations, restructuring
activities and exit costs, operating leases, and early extinguishment of debt
were issued in 2002. The new accounting standards were adopted in 2003, and did
not have a material impact on Commercial'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 periods ended is
presented below. Stock options representing 147,981 and 129,360 shares of common
stock were not considered in computing diluted earnings per share for the three
and six month periods in 2002 and 2003 because they were antidilutive.







                                        8


<PAGE>


                    COMMERCIAL NATIONAL FINANCIAL CORPORATION
<TABLE>
<CAPTION>
                                                                      Three months ended             Six Months ended
                                                                   JUNE 30,        June 30,        JUNE 30,       June 30,
                                                                     2003             2002           2003           2002
-------------------------------------------------------------------------------------------------------------------------

<S>                                                            <C>             <C>            <C>           <C>
BASIC EARNINGS PER SHARE:
Net income available to common shareholders                     $       2,418    $   677,558    $   768,514  $  1,341,302

Weighted-average common shares outstanding for
    basic earnings per share                                        3,825,228      3,767,524      3,825,228     3,737,524
-------------------------------------------------------------------------------------------------------------------------

BASIC EARNINGS PER SHARE                                        $         .00    $       .18    $       .20  $        .35
=========================================================================================================================


DILUTED EARNINGS PER SHARE:
Net income available to common shareholders                     $       2,418    $   677,558    $   768,514  $  1,341,302

Weighted-average common shares outstanding for basic
    earnings per share                                              3,825,228      3,767,524      3,825,228     3,767,524

Add:
Dilutive effect of assumed exercise of stock options                   41,058         38,646         41,058        38,646
-------------------------------------------------------------------------------------------------------------------------

Weighted-average common and dilutive additional potential
    common shares outstanding                                       3,866,286      3,806,170      3,866,286     3,806,170
=========================================================================================================================

DILUTED EARNINGS PER SHARE                                      $         .00    $       .18    $       .20  $        .35
=========================================================================================================================
</TABLE>




















                                        9


<PAGE>


                    COMMERCIAL NATIONAL FINANCIAL CORPORATION



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


FINANCIAL CONDITION
Summary
The historically low interest rate environment continued to provide incentive
for residential real estate customers to refinance their residential mortgage.
The Bank originated and sold $22,697,000 in loans during the first six months of
2003 compared to $4,402,000 during the same period in 2002. A weak local economy
has also negatively affected the demand for business loans, which have decreased
$7.1 million since December 31, 2002.

Savings account balances increased $3.0 million and repurchase agreement
balances increased $.9 million compared to December 31, 2002 balances. The
effect of increased mortgage loan sales, lower business loan totals, and
increased short term deposits contributed to increased liquidity. Management has
attempted to reduce liquidity through the scheduled repayment of FHLB advances,
and by reducing dependence on network and jumbo certificate of deposits. FHLB
totals decreased $4,386,000 and certificate of deposits decreased $1,385,000.
The combined effect of the factors listed above was to reduce total assets from
$238,251,000 at December 31, 2002 to $235,767,000 at June 30, 2003.

Accrued interest receivable and other assets increased by $1,413,000 compared to
December 31, 2002 balance primarily caused by the transfer of $1,500,000 in
loans to foreclosed assets. This asset was associated with a loan identified as
a non-accrual loan at December 31, 2002.

During the quarter ending June 30, 2003 CNFC opened a full service office in Mt.
Pleasant, Michigan. The office location is leased under an operating lease.
Therefore, the office opening has had minimal impact on the balance sheet.

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.

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: $8,319,000 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.

Asset Quality
At June 30, 2003 CNFC has identified $2,589,000 of loans as non-performing. This
compares to $6,025,000 at December 31, 2002. The $2,589,000 in non-accrual loans
represents four business relationships and their related entities. All
non-accrual loans are considered impaired and the allowance for loan loss
allocated to these loans is $1,385,000. Of the $3,436,000 decrease in
non-performing loans, $1,500,000 was transferred to repossessed assets and other
real estate during the first quarter and an additional $1,666,000 was charged
off during the second quarter. The remaining $270,000 decrease was the result of
principal reduction either because of loan payments, or improved financial
condition.









                                       10
<PAGE>


                    COMMERCIAL NATIONAL FINANCIAL CORPORATION

<TABLE>
<CAPTION>

                                                         June 30, 2003          December 31, 2002
                                                         -------------          -----------------
<S>                                                     <C>                     <C>
Total loans                                             $   182,655,801         $     184,448,296

Non-accrual loans                                       $     2,589,399         $       5,676,390
Accruing loans past due 90 days or more                               -                         -
Restructured Loans (non accrual)                                      -                   348,520
-------------------------------------------------------------------------------------------------
     Total non-performing loans                               2,589,399                 6,024,910

Repossessed assets and other real estate                      1,548,948                   120,970
-------------------------------------------------------------------------------------------------
     Total non-performing assets                        $     4,138,347         $       6,145,880
=================================================================================================

Total non-performing loans as a
     percentage of total loans                                    1.42%                     3.33%
=================================================================================================

Allowance for loan loss as a percentage of
     non-performing loans                                        87.73%                    46.20%
=================================================================================================

Total non-performing assets as a percentage of
     total assets                                                 1.76%                     2.58%
=================================================================================================
</TABLE>

<TABLE>
<CAPTION>
Allowance for Loan Loss
-----------------------
                                   Three Months Ended    Three Months Ended       Six Months Ended     Six Months Ended
                                     June 30, 2003         June 30, 2002           June 30, 2003         June 30, 2002
------------------------------------------------------------------------------------------------------------------------

<S>                              <C>                 <C>                    <C>                       <C>
Beginning balance                    $    2,909,709        $     2,718,824         $     2,783,234        $    2,586,025

Loan charge-offs                         (1,874,357)                (3,225)             (1,945,362)              (11,222)
Loan recoveries                               6,363                 14,394                  83,843                35,190
------------------------------------------------------------------------------------------------------------------------
Net loan recoveries/(charge-offs)        (1,867,994)                11,169              (1,861,519)               23,968
Provision for loan losses                 1,230,000                167,000               1,350,000               287,000
------------------------------------------------------------------------------------------------------------------------
Ending balance                       $    2,271,715        $     2,896,993         $     2,271,715        $    2,896,993
========================================================================================================================

Average loan balance                 $  181,690,000        $   179,285,000         $   181,230,000        $  175,173,000

Percentage of net charge-offs
  as a percentage of average loans          (1.02)%                  0.00%                 (1.03)%                  .00%
</TABLE>

The allowance for loan losses was 1.24% of total loans at June 30, 2003 and
1.51% at December 31, 2002. Management systematically evaluates the adequacy of
the allowance such that the balance is commensurate with the performance of the
loan portfolio.

For purposes of evaluating the adequacy of the allowance, the performance of the
loan portfolio is divided into four classifications: non-classified, watch,
substandard-not impaired, and substandard-impaired. Management has subdivided
the classifications of non-classified and watch into the following categories of
loans: residential, consumer and business loans.

Non-classified loans are loans that are viewed as homogeneous categories. These
loans are generally current and performing as agreed. Commercial establishes a
reserve on these categories of non-classified loans using the last three year
historical charge-off experience.

Watch credits are loans that management has identified as having some change
that requires additional loan officer monitoring. These loans are generally
paying as agreed, however, the ability to meet debt obligations, while adequate,
has deteriorated. These loans are not considered impaired within the definition
of FAS 114 and 118 and are viewed as homogeneous categories.





                                       11

<PAGE>

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


Substandard-impaired and substandard-not impaired loans are business loans that
management reviews for impairment under FAS 114 and 118. Management reviews
these loans individually for impairment using either the present value of
expected cash flow or the value of collateral. Loans not considered impaired are
grouped as a homogenous category. A reserve is established on this category
using historical loss experience. A specific reserve is calculated for each loan
identified as impaired, however, the total allowance is available for any loan.

The residential real estate loan portfolio has experienced net recoveries during
the last three calendar years of $45,000. The consumer loan portfolio has
experienced net recoveries of $8,000 during the last three calendar years.
Despite a slowing economy, the consumer and residential real estate portfolios
continue to perform at levels consistent with prior years.

However, the business portfolio has not performed as well. During the quarter,
management identified additional collateral deficiency for a loan relationship
previously identified as impaired. In addition, management charged-off
$1,868,000 during the quarter. Approximately $1,735,000 was related to one
borrower also previously identified as impaired, however, the amount charged-off
exceeded the previously identified exposure related to this loan. These two
events, incorporated into management's allowance for loan loss methodology
resulted in a $1,230,000 provision for loan loss during the quarter.


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         Minimum Required
                             June 30,       December 31,      Prompt Corrective Action          for Capital
                               2003            2002                Regulations               Adequacy Purposes
--------------------------------------------------------------------------------------------------------------
<S>                         <C>           <C>              <C>                             <C>
Total capital to
  risk weighted assets         14.5%           14.2%                   10.0%                       8.0%
Tier 1 capital to
  risk weighted assets         13.3%           13.0%                    6.0%                       4.0%
Tier 1 capital to
  average assets                9.7%           10.0%                    5.0%                       4.0%
</TABLE>


RESULTS OF OPERATIONS
Summary
Net income for the quarter ended June 30, 2003 was $2,000, a decrease of
$675,000 compared to the same period in 2002. There are three primary factors
that affected the decrease in net income: a $1,063,000 increase in the provision
for loan loss, a $116,000 or 36.2% increase in non-interest income caused by
continued strong level of sales of residential real estate loans to the
secondary market, and a $251,000 or 17.3% increase in non-interest expense
caused by the additional overhead to support our new facilities in Greenville
and Mt. Pleasant, Michigan and the addition of staff in our business loan
processing department.


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, 2003 and 2002.







                                       12
<PAGE>


                    COMMERCIAL NATIONAL FINANCIAL CORPORATION
<TABLE>
<CAPTION>

                                          Three Months Ending June 30,              Six Months Ending June 30,
                                            2003                2002                2003                  2002
                                            ----                ----                ----                  ----
<S>                                     <C>                 <C>                 <C>                   <C>
Interest Income (tax equivalent)        $  3,574,006        $   3,677,418       $   7,136,836         $   7,316,630
Interest Expense                           1,071,678            1,279,713           2,226,139             2,609,974
                                        ------------        -------------       -------------         -------------
Net Interest Income                     $  2,502,328        $   2,397,705       $   4,910,697         $   4,706,656
                                        ============        =============       =============         =============

Average Balances
Interest-earning Assets                 $224,495,461        $ 210,289,753       $ 225,288,866         $ 208,938,575
Interest-bearing Liabilities             193,030,080          178,026,591         193,547,969           177,402,209
                                        ------------        -------------       -------------         -------------
Net Differential                        $ 31,465,381        $  32,263,162       $  31,740,897         $  31,536,366
                                        ============        =============       =============         =============

Average Yields/Rates (annualized)
Yield on Earning Assets                        6.39%                7.01%               6.39%                 7.06%
Rate Paid on Liabilities                       2.23%                2.88%               2.32%                 2.97%
                                               -----                -----               -----                 -----

Interest Spread                                4.16%                4.13%               4.07%                 4.09%
                                               =====                =====               =====                 =====

Net Interest Margin                            4.47%                4.57%               4.40%                 4.54%
                                               =====                =====               =====                 =====

</TABLE>




The change in tax equivalent net interest income is attributable to the
following:
<TABLE>
<CAPTION>
                                        Three Months Ending                              Six Months Ending
                                           June 30, 2003                                   June 30, 2003
                               Balance          Rate        Inc/(Dec)          Balance          Rate          Inc/(Dec)
                               -------          ----        ---------          -------          ----          ---------
<S>                           <C>           <C>            <C>                <C>           <C>              <C>
Interest Earning
Assets                        $ 90,910      $ (194,322)    $ (103,412)        $ 275,168      $ (454,962)     $ (179,794)
Interest Bearing
Liabilities                     48,861        (256,898)      (208,037)          125,934        (509,769)       (383,835)
                              --------      ----------     ----------         ---------      ----------      ----------
Net Interest Income           $ 42,049      $   62,576      $ 104,625         $ 149,234      $   54,807      $   204,041
                              ========      ==========     ==========         =========      ==========      ===========
</TABLE>

The $105,000 increase in tax-equivalent net interest income for the three months
ending June 30, 2003 resulted from a 10 basis point decrease in margin offset by
a $14,206,000 increase in average earning assets.

Since June 30, 2002 the Federal Reserve lowered the Federal funds target rate by
50 basis points in November of 2002 and 25 basis points in June of 2003. The
decrease in short term interest rates negatively impacted margin in the short
run. Also negatively impacting margin is the interest not earned and collected
on non-accrual loans.

The factors affecting the $ 204,000 increase in net interest income for the six
months ending June 30, 2003 are similar to those described above for the three
months ending June 30, 2003.

Noninterest Income
Noninterest income for the three months ending June 30, 2003 was $436,000. This
represents a $116,000 or 36.2% increase over the same period in 2002.

Net gain on loan sales increased from $38,000 to $260,000. The Bank continued to
experience significant refinancing activity. For the three months ending June
30, 2003, the Bank originated and sold $22,697,000 in residential real estate
loans. This compares to $4,402,000 for the three months ended June 30, 2002.

At the end of each quarter, management values the value of mortgage servicing
rights. The low interest rate environment has allowed home owners to refinance
residential real estate loans several times during the last two years. The
resulted in a deterioration in the value of mortgage servicing rights booked at
the time of loan sales to the secondary market. At June 30, 2003, CNFC recorded
a $148,000 valuation to recognize that the market value for mortgage servicing
rights was less than the unamortized cost.





                                       13

<PAGE>

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


The factors affecting the $330,000 increase in noninterest income for the six
months ending June 30, 2003 are similar to those described above for the three
months ending June 30, 2003.

Noninterest Expense
Noninterest expense for the three months ending June 30, 2003 totaled
$1,700,000. This represents a $251,000 or 17.3% increase over the same period in
2002.

Salary and benefit expense for the three months ending June 30, 2003 totaled
$930,000 compared to $806,000 for the same period in 2002, an increase of
$124,000 or 15.4%. Increased staffing for the new Greenville and Mt. Pleasant
offices and the business loan processing department are the primary reason for
the increase. Full time equivalent employees increased from 74 at June 30, 2002
to 85 at June 30, 2003.

Occupancy and equipment increased $96,100 or 43.0% compared to the same period
in 2002. Costs associated with operating the new Greenville and Mt. Pleasant
offices contributed to the increase expense.

Professional fees for the quarter ending June 30, 2003 increased $14,000 or
15.9% compared to the same period in 2002. Search fees for lending staff for our
Mt. Pleasant office contributed to the increase.

The factors affecting the $404,000 increase in noninterest expense for the six
months ending June 30, 2003 are similar to those described above for the three
months ending June 30, 2003.


ITEM 3:  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 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 threat to earnings and capital. Accordingly,
effective risk management that maintains IRR at prudent levels is essential to
Commercial's safety and soundness. 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's Asset/Liability Committee ("Committee") is responsible for managing
this process.

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.

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 lower rates. Prepayment of
assets carrying higher rates reduces interest income and overall asset yields.

Fluctuating interest rates and prepayment risk provide a challenge in managing
the net interest income of the Bank. For example: the Bank may fund a 15 year
fixed rate residential real estate loan with a long term amortizing Federal Home
Loan Bank Advance. In a stable interest rate environment, the Bank can
reasonably predict the net interest income earned. However, if rates fall
significantly, the residential mortgage customer may refinance their mortgage at
a lower rate. The Bank continues to pay the higher rate on the Federal Home Loan
Bank advance, thus eroding net interest income. In an alternative scenario, the
Bank funds the same 15 year fixed rate residential real estate loan with 1 year
certificates of deposits. If rates rise at the end of one year, the Bank will
pay more interest to continue to fund the residential mortgage loan with 1 year
certificates of deposit. The net interest income will be lower in year two than
it was in the first year of the mortgage loan.








                                       14


<PAGE>

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


An additional challenge management faces in managing net interest income is the
fact that what would maximize net interest income to the Bank may be in conflict
with the customers request for products and services. In the current low
interest rate environment, management has greater concern that interest rates
will rise significantly over time rather than fall. Management would prefer to
offer variable rate loan products that would reprice upward as interest rates
rise. However, our loan customers are generally requesting long term fixed rate
loans. On the funding side, management would like to extend the maturities of
its liabilities to match the loan customers request for longer term fixed rate
loans. However, our deposit customers are reluctant to commit to long term
certificate of deposits.

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. One common scenario performed by the Committee 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. The model, using
data and assumptions determined by management, reprice assets and liabilities at
new market rates. The objective of this testing is to determine how the Bank's
net interest income and the economic value of equity are affected by extreme
changes in interest rates. These results are recorded and compared to previous
results. Management performs this calculation quarterly.

The limitation to this methodology is that the interest rate curve rarely shifts
200 basis points immediate and parallel. In addition, a downward 200 basis point
shift in today's interest rate environment is not likely. Management is in the
process of evaluating software that would allow for comparison of alternative
interest rate scenarios, and provide management with better information to
assess alternative funding and investing strategies.

The Table below summarizes the effect a 200 basis point immediate and parallel
shift of the yield curve has on net income. Net income may decrease in both a
falling and rising interest rate environment. In a falling interest rate
environment, management does not have the ability to lower deposit rates 200
basis points to offset a decrease in rates on earning assets. Therefore, if
rates decreased 200 basis points, margin would likely compress resulting in
lower net interest income. In a rising interest rate environment, the duration
of earning assets would most likely extend and money currently invested in short
term liabilities would benefit from the increase in rates. It is possible that
in this scenario, net interest income would also decrease. Though the interest
rate risk associated with a rising interest rate environment has increased,
management believes the risk is still acceptable.


                    Projected Percentage Change in Net Income

                       June 30, 2003       December 31, 2002      June 30, 2002
--------------------------------------------------------------------------------

-200 basis points          (6.98)%              (3.50)%               (0.03)%
0 basis points              0.00                 0.00                  0.00
+200 basis points         (14.58)              (12.22)                (4.79)






                                       15


<PAGE>


                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


ITEM 4. CONTROLS AND PROCEDURES

(a)      Evaluation of disclosure controls and procedures--Jeffrey S. Barker,
         the Corporation's Principal Executive Officer, and Patrick G. Duffy,
         the Corporation's Principal Financial Officer, have reviewed and
         evaluated the effectiveness of the Corporation's disclosure controls
         and procedures (as defined in Rules 240.13a-15(e) and 15d-15(e) under
         the Securities Exchange Act of 1934 (the "Exchange Act)) as of a date
         within ninety days before the filing date of this quarterly report.
         Based on their evaluation, they have concluded that the Corporation's
         disclosure controls and procedures are effective, providing them with
         material information relating to the Corporation as required to be
         disclosed in the reports the Corporation files or submits under the
         Exchange Act on a timely basis.

(b)      Changes in internal controls--There were no significant changes in the
         Corporation's internal controls or in other factors that could
         significantly affect the Corporation's disclosure controls and
         procedures subsequent to the date of the evaluation, nor were there any
         significant deficiencies or material weaknesses in the Corporation's
         internal controls.


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.





















                                       16

<PAGE>



                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


PART II.                           OTHER INFORMATION


Item 4            Submission of Matters to a Vote of Security Holders

Commercial National Financial Corporation held its annual meeting of
shareholders on April 22, 2003. A total of 3,316,147 shares were represented in
person or by proxy, or more than 86.9% of the total shares outstanding.

Proposal:         Shareholders elected 10 Director nominees named in the Proxy
                  Statement.

Name                                  For                    Against
--------------------------------------------------------------------
Richard F. Abbott                   3,308,931                 72,160
Jefferson P. Arnold                 3,308,931                 72,160
Jeffrey S. Barker                   3,308,931                 72,160
Don J. Dewey                        3,308,931                 72,160
Patrick G. Duffy                    3,308,931                 72,160
David A. Ferguson                   3,308,931                 72,160
Paul B. Luneack                     3,308,931                 72,160
Kim C. Newson                       3,308,407                 72,684
Howard D. Poindexter                3,308,931                 72,160
Scott E. Sheldon                    3,305,107                 75,984

ITEM 6            EXHIBITS AND REPORTS ON FORM 8-K
                  (a)      Exhibits:
                           31.1 Certification of Chief Executive Officer
                           31.2 Certification of Chief Financial Officer
                           32 Certification of Chief Executive Officer and Chief
                           Financial Officer pursuant to Section 906 of the
                           Sarbanes-Oxley Act of 2002

                  (b)      Report on Form 8-K
                           Current report on Form 8-K dated May 30, 2003 filed
                           with the Security and Exchange Commission on June 3,
                           2003












                                       17


<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, 2003               /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

























                                       18





<PAGE>


                               10-Q EXHIBIT INDEX


EXHIBIT NO.    DESCRIPTION

EX-31.1        Certification of Chief Executive Officer pursuant to Section 302

EX-31.2        Certification of Chief Financial Officer pursuant to Section 302

EX-32          Certification pursuant to 18 U.S.C. Section 1350, as adopted
               pursuant to Section 906 of the Sarbanes-Oxley Act of 2002