<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 September 30, 2001, 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 October 30, 2001
           -----                                             -------------------------------
<S>                                                          <C>
        Common Stock                                                    3,383,509
        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 September 30, 2001 (unaudited) and December 31, 2000    (Page 3)

                    Consolidated Statements of Income and Other Comprehensive Income (unaudited) for the      (Page 4)
                    three and nine months ended September 30, 2001 and September 30, 2000

                    Consolidated Statements of Changes in Shareholders' Equity (unaudited) for the nine       (Page 5)
                    months ended September 30, 2001 and September 30, 2000

                    Consolidated Statements of Cash Flows (unaudited) for the nine months ended September     (Page 6)
                    30, 2001 and September 30, 2000

                    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)


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

Item 6.             Exhibits and Reports on Form 8-K

                    b)           Reports on Form 8-K                                                         (Page 17)

SIGNATURES                                                                                                   (Page 18)
</TABLE>






                                        2

<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                September 30,            December 31,
                                                                                    2001                     2000
                                                                                    ----                     ----
                                                                                 (Unaudited)
<S>                                                                             <C>                    <C>
ASSETS
Cash and due from banks                                                          $   6,290,137         $   7,112,021
Federal funds sold                                                                  10,075,000               350,000
                                                                                 -------------         -------------
       Total cash and cash equivalents                                              16,365,137             7,462,021
Securities available for sale                                                       19,962,705            19,406,526
Securities held to maturity (fair value $7,903,303
    September 30, 2001; $8,724,848 - December 31, 2000)                              7,599,229             8,525,623
Federal Home Loan Bank stock, at cost                                                1,391,300             1,391,300
Gross loans receivable                                                             172,092,329           176,833,244
Allowance for loan losses                                                           (2,865,922)           (2,545,363)
                                                                                 -------------         -------------
   Net loans receivable                                                            169,226,407           174,287,881
Premises and equipment, net                                                          2,236,180             2,465,176
Accrued interest receivable and other assets                                         5,210,741             2,347,162
                                                                                 -------------         -------------

       Total assets                                                              $ 221,991,699         $ 215,885,689
                                                                                 =============         =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
       Deposits
              Noninterest-bearing demand                                         $  19,725,874         $  19,786,361
              Interest-bearing demand                                               28,206,452            26,264,930
              Savings                                                               47,707,320            39,439,255
              Time                                                                  68,022,188            72,303,355
                                                                                 -------------         -------------
                    Total deposits                                                 163,661,834           157,793,901
       Securities sold under agreements to repurchase                                9,487,067             8,023,767
       Other short-term borrowings                                                   1,508,757             1,770,195
       Federal Home Loan Bank advances                                              24,092,551            26,500,000
       Accrued expenses and other liabilities                                        1,548,478             1,687,744
                                                                                 -------------         -------------
              Total liabilities                                                    200,298,687           195,775,607

Shareholders' equity
       Common stock and paid-in-capital, no par value:  5,000,000 shares
         authorized; shares issued and outstanding
         September 30, 2001 - 3,367,361 and December 31,
         2000 - 3,327,225                                                           22,010,135            21,617,080
       Accumulated deficit                                                            (783,416)           (1,714,089)
       Accumulated other comprehensive income, net of tax                              466,293               207,091
                                                                                 -------------         -------------
              Total shareholders' equity                                            21,693,012            20,110,082
                                                                                 -------------         -------------

                    Total liabilities and shareholders' equity                   $ 221,991,699         $ 215,885,689
                                                                                 =============         =============
</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 Nine Months
                                                                           Ended September 30,             Ended September 30,
                                                                          2001            2000            2001            2000
                                                                          ----            ----            ----            ----
<S>                                                                   <C>             <C>             <C>             <C>
Interest and dividend income
    Loans, including fees                                             $  3,514,301    $  3,760,498    $ 10,967,337    $ 10,576,943
    Taxable securities                                                     227,060         237,506         662,688         701,437
    Nontaxable securities                                                  135,531         146,952         411,761         436,897
    Federal funds sold                                                      62,202           7,489         173,679          81,452
    Federal Home Loan Bank stock dividends                                  25,424          29,727          79,752          85,075
    Interest on other deposits                                               8,892          14,109          21,079          32,904
                                                                      ------------    ------------    ------------    ------------
        Total interest and dividend income                               3,973,410       4,196,281      12,316,296      11,914,708

Interest expense
    Deposits                                                             1,296,603       1,477,359       4,224,618       4,046,611
    Securities sold under agreements to repurchase                          82,600         114,989         268,813         276,334
    Federal Home Loan Bank advances                                        349,656         335,417       1,078,991         863,432
    Other                                                                    4,532          13,302          19,468          35,648
                                                                      ------------    ------------    ------------    ------------
        Total interest expense                                           1,733,391       1,941,067       5,591,890       5,222,025

Net interest income                                                      2,240,019       2,255,214       6,724,406       6,692,683

Provision for loan losses                                                   90,000          90,000         270,000         270,000
                                                                      ------------    ------------    ------------    ------------
Net interest income after provision for loan losses                      2,150,019       2,165,214       6,454,406       6,422,683

Noninterest income
    Service charges and fees                                               116,476         114,176         339,128         329,615
    Net gains on loan sales                                                 93,471          23,626         282,774          55,047
    Receivable financing fees                                               34,256          37,395         191,885         193,273
    Security gains                                                          53,032              --         209,915              --
    Other                                                                   84,390          72,584         193,090         199,436
                                                                      ------------    ------------    ------------    ------------
        Total noninterest income                                           381,625         247,781       1,216,792         777,371

Noninterest expense
    Salaries and employee benefits                                         797,316         736,936       2,391,130       2,191,102
    Occupancy and equipment                                                258,482         250,887         750,675         748,454
    FDIC insurance                                                           7,602           7,716          22,470          22,764
    Printing, postage and supplies                                          57,048          68,302         199,847         196,643
    Professional and outside services                                       73,390          63,028         263,665         232,287
    Other                                                                  257,559         256,144         715,807         735,606
                                                                      ------------    ------------    ------------    ------------
        Total noninterest expense                                        1,451,397       1,383,013       4,343,594       4,126,856
                                                                      ------------    ------------    ------------    ------------
Income before income tax expense                                         1,080,247       1,029,982       3,327,604       3,073,198
Income tax expense                                                         313,500         298,000         988,500         899,000
                                                                      ------------    ------------    ------------    ------------
Net income                                                            $    766,747    $    731,982    $  2,339,104    $  2,174,198
                                                                      ============    ============    ============    ============
Net change in unrealized gains/(losses) on securities available
   for sale                                                           $    223,596    $    252,216    $    602,645    $    248,741
Reclassification adjustment for (gains) recognized in income               (53,032)             --        (209,915)             --
Tax effects                                                                (57,992)        (85,754)       (133,528)        (84,572)
                                                                      ------------    ------------    ------------    ------------
Total Other Comprehensive Income                                      $    879,319    $    898,444    $  2,598,306    $  2,338,367
                                                                      ============    ============    ============    ============

Per share information
    Basic earnings                                                    $       0.23    $       0.21    $       0.70    $       0.62
    Diluted earnings                                                  $       0.23    $       0.21    $       0.69    $       0.62
    Dividends declared                                                $       0.14    $       0.12    $       0.42    $       0.38
</TABLE>


                                                          See accompanying notes



                                       4
<PAGE>

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
         Nine Months ended September 30, 2001 and September 30, 2000 (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, 2000                         3,348,476      $19,946,643      $ (830,339)     $(151,771)       $18,964,533

Comprehensive income:
   Net income                                                                        2,174,198                        2,174,198
   Net change in unrealized gains/(losses) on
     securities available for sale                                                                   248,741            248,741
   Tax effects                                                                                       (84,572)           (84,572)
                                                                                                                    -----------
     Total comprehensive income                                                                                       2,338,367

Cash dividends declared, $.38 per share                                             (1,339,299)                      (1,339,299)

Issued under dividend reinvestment program            34,190          437,970                                           437,970
Issued under stock option plan                         4,100           41,099                                            41,099
Issued under employee benefit plan                     4,775           63,126                                            63,126
Repurchase and retirement of shares                  (71,633)        (943,052)                                         (943,052)
                                                  ----------      -----------      -----------     ---------        -----------
Balance at September 30, 2000                      3,319,908      $19,545,786      $     4,560     $  12,398        $19,562,744
                                                  ==========      ===========      ===========     =========        ===========

-----------------------------------------------------------------------------------------------------------------------------------

Balance at January 1, 2001                         3,327,225      $21,617,080      $(1,714,089)    $ 207,091        $20,110,082
Comprehensive income:
   Net income                                                                        2,339,104                        2,339,104
   Net change in unrealized gains/(losses) on
     securities available for sale                                                                   602,645            602,645
   Reclassification adjustment for (gains)
     recognized in income                                                                           (209,915)          (209,915)
   Tax effects                                                                                      (133,528)          (133,528)
                                                                                                                    -----------
     Total comprehensive income                                                                                       2,598,306

Cash dividends declared, $.42 per share                                             (1,408,431)                      (1,408,431)

Issued under dividend reinvestment program            49,311          483,135                                           483,135
Issued under stock option plan                           429            3,227                                             3,227
Issued under employee benefit plan                     2,399           22,887                                            22,887
Repurchase and retirement of shares                  (12,003)        (116,194)                                         (116,194)
                                                  ----------       -----------     -----------     ---------        -----------
Balance at September 30, 2001                      3,367,361      $22,010,135      $ (783,416)     $ 466,293        $21,693,012
                                                  ==========      ===========      ===========     =========        ===========

</TABLE>

                                                          See accompanying notes




                                       5
<PAGE>

                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


                CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)




<TABLE>
<CAPTION>
                                                                                     For Nine Months Ended
                                                                                          September 30,
                                                                                   2001                    2000
                                                                                   ----                    ----
<S>                                                                             <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                                  $  2,339,104          $  2,174,198
    Adjustments to reconcile net income to net
      cash from operating activities
          Provision for loan losses                                                  270,000               270,000
          Net gains on loan sales                                                   (282,774)              (55,047)
          Originations of loans held for sale                                    (18,383,350)           (2,394,473)
          Proceeds from sales of loans held for sale                              18,666,124             2,586,520
          Gain on sales of securities available for sale                            (209,915)                    -
          Depreciation, amortization and accretion                                   380,617               420,943
          Net change in accrued interest receivable and other assets                 (38,684)             (349,649)
          Net change in accrued expenses and other liabilities                      (139,266)              211,171
                                                                                ------------          ------------
               Net cash from operating activities                                  2,601,856             2,863,663

CASH FLOWS FROM INVESTING ACTIVITIES
          Purchases of securities available for sale                              (9,216,118)           (5,071,911)
          Proceeds from maturities of securities available for sale                6,670,000             3,955,000
          Proceeds from sales of securities available for sale                     2,523,549                     -
          Proceeds from maturities of securities held to maturity                  1,010,000                     -
          Net change in loans                                                      4,829,900           (19,961,159)
          Purchases of bank owned life insurance                                  (3,000,000)
          Purchases of premises and equipment, net                                  (163,041)             (221,199)
                                                                                ------------          ------------
               Net cash from investing activities                                  2,654,290           (21,299,269)

CASH FLOW FROM FINANCING ACTIVITIES
          Net change in deposits                                                   5,867,933            10,318,745
          Net change in securities sold under agreements to repurchase             1,463,300             2,700,218
          Net change in U.S. Treasury demand notes                                  (261,438)           (1,453,809)
          Federal Home Loan Bank advances                                         15,000,000            26,000,000
          Proceeds from Repayment of Federal Home Loan Bank                      (17,407,449)          (19,000,000)
          Repurchase of common stock shares                                         (116,194)             (943,052)
          Dividends paid                                                          (1,408,431)           (1,339,299)
          Proceeds from sale of common stock                                         509,249               542,195
                                                                                ------------          ------------
               Net cash from financing activities                                  3,646,970            16,824,998
                                                                                ------------          ------------

Net change in cash and cash equivalents                                            8,903,116            (1,610,608)

Cash and cash equivalents, at beginning of year                                    7,462,021             8,669,093
                                                                                ------------          ------------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD                                     $ 16,365,137          $  7,058,485
                                                                                ============          ============
Cash paid during the period for
          Interest                                                              $  5,746,710          $  5,118,758
          Federal income taxes                                                     1,203,081               771,640
</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
generally accepted accounting principles 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 September 30, 2001 and December 31, 2000 and the
results of its operations for the three and nine months ending September 30,
2001 and September 30, 2000. The results for the three and nine months ended
September 30, 2001 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 generally accepted accounting
principles, management makes estimates and assumptions based on available
information. These estimates and assumptions affect the amounts reported in the
financial statements and the disclosures provided. 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 securities for trading at
any time during 2001 or 2000.

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.

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

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

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
Beginning January 1, 2001, a new accounting standard requires all derivatives to
be recorded at fair value. Unless designated as hedges, changes in these fair
value are recorded in the income statement. Fair value changes involving hedges
are generally recorded by offsetting gains and losses on the hedge and on the
hedged item, even if the fair value of the hedged item is not otherwise
recorded.

The adoption of this standard on January 1, 2001 did not have a material effect
on CNFC's 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 nine months ended
                                                          September 30,    September 30,    September 30,    September 30,
                                                               2001              2000           2001             2000
---------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>              <C>              <C>              <C>
BASIC EARNINGS PER SHARE:
Net income available to common shareholders                  $  766,747      $  731,982      $2,339,104      $2,174,198
===========================================================================================================================
Weighted-average common shares outstanding for
    basic earnings per share                                  3,356,864       3,511,114       3,356,864       3,511,114
===========================================================================================================================
BASIC EARNINGS PER SHARE                                     $      .23      $      .21      $      .70      $      .62

===========================================================================================================================
DILUTED EARNINGS PER SHARE:
Net income available to common shareholders                  $  766,747      $  731,982      $2,339,104      $2,174,198
===========================================================================================================================
Weighted-average common shares outstanding for basic
    earnings per share                                        3,356,864       3,511,114       3,356,864       3,511,114

Add:
Dilutive effect of assumed exercise of stock options              8,937          19,072           8,937          19,072
---------------------------------------------------------------------------------------------------------------------------
Weighted-average common and dilutive additional potential
    common shares outstanding                                 3,365,801       3,530,186       3,365,801       3,530,186
===========================================================================================================================
DILUTED EARNINGS PER SHARE                                   $      .23      $      .21      $      .69      $      .62
===========================================================================================================================
</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 September 30, 2001 increased to $221,992,000 from the
$215,886,000 at December 31, 2000. Federal funds sold increased $9,725,000 and
gross loans decreased $4,741,000 compared to December 31, 2000. Loan demand
continues to remain weak. The events of September 11, 2001 and the subsequent
decreases in interest rates, has reduced the array of viable investment options
available to the Bank. In the short-term, we have elected to "shrink" the
balance sheet where possible. This, however, has been difficult, as the events
of September 11, 2001 appear to have caused investors to temporarily shift
assets to safety. We have experienced an $8,268,000 increase in savings account
balances since December 31, 2000.

Commercial loan payoffs resulted in the majority of the decrease in total loans.
As a result, September 30, 2001 loan totals decreased $4,741,000 compared to
December 31, 2000. Total loans were $172,092,000 as of September 30, 2001.

In response to the loan payoffs, management has the following practical
alternatives: reinvest funds into loans, invest excess funds in short to medium
term securities until suitable loan opportunities can be identified, or "shrink"
the balance sheet by paying off various deposit and other borrowings. Management
elected to offer below market rates on rate sensitive deposits, in effect
encouraging certain depositors to leave the Bank. Management has also repayed,
without penalty, short-term variable rate FHLB advances.

The Bank also continues to use various products offered by the Federal Home Loan
Bank of Indianapolis. At September 30, 2001 the Bank had $24,092,000 in
outstanding balances, compared to $26,500,000 at December 31, 2000.

Other assets increased $2,864,000. During the third quarter, management invested
$3,000,000 in Bank Owned Life Insurance commonly known as BOLI. This investment
is recorded in accrued interest receivable and other assets category of 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.

The loan to deposit ratio at September 30, 2001 was 105.2% compared to 112.1% at
December 31, 2000. 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: $10,000,000 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. At December 31, 2000, CNFC had an outstanding balance
of $700,000. This balance has subsequently been paid off.




                                       11
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION

Asset Quality
At September 30, 2001 CNFC has identified $391,000 of loans as non-performing.
This compares to $354,000 at December 31, 2000. In addition, management has
identified $11,312,000 of loans at September 30, 2001 where the borrower is
experiencing some financial difficulty.
<TABLE>
<CAPTION>
                                                        September 30, 2001      December 31, 2000

<S>                                                  <C>                        <C>
Total loans                                          $      172,092,329         $     176,833,244

Non-accrual loans                                    $          344,562         $         354,214
Accruing loans past due 90 days or more                          46,000                         -
Restructured loans                                                    -                         -
-------------------------------------------------------------------------------------------------
     Total non-performing loans                      $          390,562         $         354,214
=================================================================================================

Other real estate                                                     -                         -
-------------------------------------------------------------------------------------------------
     Total non-performing assets                     $          390,562         $         354,214
=================================================================================================

Total non-performing loans as a
     percentage of total loans                                      .23%                      .20%
=================================================================================================

Allowance for loan loss as a percentage of
     non-performing loans                                        733.79%                   718.59%
=================================================================================================
</TABLE>

Allowance for Loan Loss
The allowance for loan losses was 1.67% of total loans at September 30, 2001 and
1.44% at December 31, 2000. Year to date net recoveries totaled $51,000. Year
2000 net charge-offs totaled $607,000. Approximately $649,000 relates to one
business loan relationship. Excluding this charge-off, CNFC recorded net
recoveries of $42,000 during 2000.

Year to date, CNFC expensed a provision of $270,000, which was the same as the
amount expensed for the nine months ended September 30, 2000. Management
continues to systematically evaluate the adequacy of the allowance such that the
balance is commensurate with the performance of the loan portfolio, loan growth,
general market conditions and other relevant factors. Included in the
calculation of the appropriate level for the allowance for loan loss is the risk
associated with approximately $11,312,000 of loans that management has
identified as experiencing some financial difficulty.

<TABLE>
<CAPTION>
                                  Nine Months Ended       Year Ended          Nine Months Ended
                                  September 30, 2001   December 31, 2000      September 30, 2000
<S>                               <C>                  <C>                    <C>
Beginning balance                  $    2,545,363      $       2,792,293      $      2,792,293

Loan charge-offs                          (19,084)              (689,892)             (593,230)
Loan recoveries                            69,643                 82,962                38,725
----------------------------------------------------------------------------------------------
Net loan recoveries/(charge-offs)          50,559               (606,930)             (554,505)
Provision for loan losses                 270,000                360,000               270,000
----------------------------------------------------------------------------------------------
Ending balance                     $    2,865,922      $       2,545,363      $      2,507,788
==============================================================================================
</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
                                           September 30,     December 31,         Corrective Action
                                                2001             2000                Regulations
                                                ----             ----                -----------
<S>                                        <C>               <C>             <C>
Total capital to risk weighted assets          14.4%            13.1%                   10.0%
                                               ====             ====                    ====
Tier 1 capital to risk weighted assets         13.2%            11.9%                    6.0%
                                               ====             ====                    ====
Tier 1 capital to average assets                9.9%             9.4%                    5.0%
                                               ====             ====                    ====
</TABLE>


RESULTS OF OPERATIONS
Summary
Net income for the quarter ended September 30, 2001 was $767,000, an increase of
$35,000, or 4.8% compared to the same period in 2000. A $134,000 or 54.0%
increase in noninterest income, generated by gains on sales of residential
mortgage loans and security sales, is the primary contributing factor to the
increase in net income. CNFC's net interest income decreased by $15,000,
primarily as a result of a decrease in margin during the quarter. Non-interest
expense for the quarter increased $68,000 or 4.9% compared to the same period in
2000. Increased salary and benefit costs account for $60,000 or 88.2% of the
overall increase in non-interest expense.

Year to date net income totaled $2,339,000, a $165,000 or 7.6% increase compared
to the same period in 2000. The major items affecting the third quarter of 2001
also impacted year to date income.

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 nine months ending September 30, 2001 and
2000.

<TABLE>
<CAPTION>
                                       Three Months Ending September 30,       Nine Months Ending September 30,
                                          2001               2000                 2001              2000
                                          ----               ----                 ----              ----
<S>                                  <C>                  <C>                  <C>               <C>
Interest Income (tax equivalent)     $  4,094,321         $  4,326,405         $ 12,776,059      $ 12,382,186
Interest Expense                        1,733,391            1,941,067            5,591,890         5,222,025
                                     ------------         ------------         ------------      ------------
Net Interest Income                  $  2,360,930         $  2,385,338         $  7,184,169      $  7,160,161
                                     ============         ============         ============      ============

Average Balances
----------------
Interest-earning Assets              $206,898,615         $198,763,637         $207,529,703      $193,091,714
Interest-bearing Liabilities          171,685,068          165,861,771          172,622,694       160,635,109
                                     ------------         ------------         ------------      ------------
Net Differential                     $ 35,213,547         $ 32,901,866         $ 34,907,009      $ 32,456,605
                                     ============         ============         ============      ============

Average Yields/Rates (annualized)
---------------------------------
Yield on Earning Assets                      7.85%                8.64%                8.23%             8.54%
Rate Paid on Liabilities                     4.01%                4.64%                4.33%             4.33%
                                     ------------         ------------         ------------      ------------

Interest Spread                              3.84%                4.00%                3.90%             4.21%
                                     ============         ============         ============      ============

Net Interest Margin                          4.53%                4.76%                4.63%             4.94%
                                     ============         ============         ============      ============
</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                              Nine Months Ending
                                               September 30, 2001                              September 30, 2001
                                      Balance          Rate        Inc/(Dec)           Balance        Rate          Inc/(Dec)
                                      -------          ----        ---------           -------        ----          ---------
<S>                                   <C>            <C>           <C>               <C>            <C>             <C>
Interest Earning Assets               $  77,407      $(309,491)    $(232,084)        $ 791,261      $(397,388)      $ 393,873
Interest Bearing Liabilities             42,305       (249,981)     (207,676)          484,558       (114,693)        369,865
                                      ---------      ---------     ---------         ---------      ---------       ---------
Net Interest Income                   $  35,102      $ (59,510)    $ (24,408)        $ 306,703      $(282,695)      $  24,008
                                      =========      =========     =========         =========      =========       =========
</TABLE>


The $24,000 decrease in tax-equivalent net interest income for the three months
ending September 30, 2001 resulted from a decrease in margin offset by a
$2,312,000 in net earning assets. Net interest margin for the three months
ending September 30, 2001 decreased to 4.53% compared to 4.76% for the three
months ending September 30, 2000.

The Federal Reserve lowered the federal funds rate by 150 basis points in the
first quarter, 125 basis points in the second quarter and 75 basis points in the
third quarter of 2001. In response to the September 11, 2001 terrorist attacks,
the Federal Reserve decreased the federal funds rate by an additional 50 basis
points during October 2001. These changes in prime result in an almost immediate
decrease in the Bank's prime lending rate. In addition to lowering the target
federal funds rate, the Federal Reserve also provided additional liquidity to
the market place. During the week following the September 11, 2001 attack,
Commercial Bank earned between .375% and 1.0% on overnight federal funds sales.

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 it's prime
lending rate accordingly, 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. In
addition, many customers are refinancing higher yielding, fixed rate, long-term
loans at lower rates.

Noninterest Income
Noninterest income for the three months ending September 30, 2001 was $382,000.
This represents a $134,000 or 54.0% increase over the same period in 2000.

The general decrease in interest rates during 2001 has spurred residential real
estate refinancing activity. Year to date, the Bank has originated $18,383,000
of residential mortgages subsequently sold to the secondary market. This
compares to $2,394,000 for the same period in 2000. Management has elected to
sell most 15 and 30 year fixed rate residential real estate mortgage loans
originated during the period. As a result, gains on loan sales have increased by
$228,000 or 414.5% compared to the three months ending September 30, 2000.

Also, CNFC elected to liquidate an equity investment held as available for sale
by the holding company. This resulted in $210,000 in securities gains.

Noninterest income for the nine months ending September 30, 2001 was $1,217,000,
a $440,000 or 56.6% increase. Factors affecting this increase were similar to
those described in the paragraphs above.

Noninterest Expense
Noninterest expense for the three months ending September 30, 2001 totaled
$1,451,000. This represents a $68,000 or 4.9% increase over the same period in
2000.


                                       14
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION



Salary and benefit expense for the three months ending September 30, 2001
totaled $797,000 compared to $737,000 for the same period in 2000, an increase
of $60,000 or 8.1%. The increase reflects normal salary increases, combined with
an approximately 16% increase in the cost of medical insurance. Bank staffing
levels have not significantly changed compared to the same period in 2000.

Professional fees for the three months ended September 30, 2001 increased
$10,000 or 15.8% compared to the same period in 2000. Increased accounting and
legal fees related to the formation of a mortgage subsidiary was the primary
reason for increased professional fees.

Noninterest expense for the six months ending September 30, 2001 totaled
$4,344,000. This represents a $217,000 or 5.3% increase over the same period in
2000. The primary factors affecting this increase are similar to those discussed
in the paragraphs above.



                                       15
<PAGE>
                    COMMERCIAL NATIONAL FINANCIAL CORPORATION


ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

CNFC's primary market risk exposure is interest rate risk and, to a lesser
extent, liquidity risk. All of the CNFC's transactions are denominated in U.S.
dollars with no specific foreign exchange exposure. CNFC 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 the CNFC's earnings and capital
base. Accordingly, effective risk management that maintains IRR at prudent
levels is essential to the CNFC's safety and soundness.

Evaluating a financial institution's exposure to changes in interest rates
includes assessing both the adequacy of the management process used to control
IRR and the organization's quantitative level of exposure. When assessing the
IRR management process, management 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 management to assess the
existing and potential future effects of changes in interest rates on its
consolidated financial condition, including capital adequacy, earnings,
liquidity, and, where appropriate, asset quality.


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 6 (b)                                              Reports on Form 8-K

NONE



                                       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: November 13, 2001


                                    Jeffrey S. Barker
                                    President and Chief Executive Officer



                                    Patrick G. Duffy
                                    Executive Vice President and Chief Financial
                                    Officer




                                       18