Banking & Finance

Cortland Bank Meets or Exceeds Goals in 3-Year Plan

WARREN, Ohio – Cortland Bancorp is meeting or exceeding most of the goals in the three-year strategic plan its management laid out last year, its president and CEO told shareholders Tuesday, and the future of Cortland Bank looks bright.

The CEO, James Gasior, presided over a quiet routine annual meeting at the Trumbull branch of the Butler Institute of American Art in Howland Township.

Senior management had to call many of the 1,600 shareholders last week to encourage them to vote, Gasior said, because one item on the agenda required that more than half of all shares outstanding be cast for the measure, not just a majority of the shares voted. More than 77% of all shares were voted.

The item, to allow the members of the board of directors to serve one term beyond their 70th birthday before mandatory retirement, passed with just more than 53% of all 4.42 million shares voted yes. With passage, directors’ mandatory retirement age could be as high as 75, Gasior noted.

Three directors are immediately affected:

  • Martin Erbaugh, 68, president of JM Erbaugh Co., a private investment firm, whose term expires next year.
  • Thomas P. Perciak, 69, mayor of Strongsville and a former banker, whose term also expires next year.
  • Richard B, Thompson, 68, owner of Therm-O-Link Inc., whose term expires in 2019.

Re-elected to three-year terms as directors with more than 95% of the shares voted were:

  • David C. Cole, president of Cole Valley Motor Co.
  • Timothy Carney, executive vice president and chief operating officer of Cortland Bancorp and Cortland Bank.
  • Neil J. Kaback, a CPA and vice president of Cohen & Co. in its Youngstown office. He received the highest total.
  • Anthony R. Vross, co-owner of Simon Roofing Co.

S.R. Snodgrass PC was retained as outside independent auditor by some 98% of the shares voted.

In reviewing 2016 and the strong start this year, Gasior said the bank, celebrating its 125th anniversary, had one of its best years ever and the most profitable since 2013. Revenues from all sources came to $26 million and net income was $4.9 million. First-quarter 2017 net income was $1 million, or 23 cents a share.

By all measures — loan growth, deposit growth, asset quality, geographic expansion, stock price, risk-based capital, recruiting and retaining good bankers — Cortland is a very healthy company, Gasior said.

At the end of 2016, Cortland Bank had met or surpassed all first-year goals of its strategic plan except one, loan to deposit ratio, the target being at least 80% and reaching 78.55%.

2016 saw record deposit growth, the CEO said, up 9% from 2015 at nearly $540 million.

Cortland Bancorp’s return on assets met the goal of 0.80% and exceeded the 8.00% goal for return on equity by 27 basis points.

Its leverage was 10.46%, well above the 7% goal and Tier 1 risk-based capital was 14.04%, well above the 10% goal and total risk-based capital was 15.10%, again above the 12% goal.

Branch profitability in 2016 was $33,910 on average, well above the 2016 target of $30,000 despite opening the Canfield office a year and a half ago. It takes an office between three and five years to recover the investment of opening it, Gasior told a shareholder. The 14th and newest office, which opened last January in Hudson, will likely affect 2017 statistics, Gasior suggested.

Noninterest income is gaining as a percent of all income, a welcome trend, the CEO said, as such income grew 9% to $4.2 million in 2015.

The challenges Cortland faces are the ones the financial services industry faces, Gasior said. Technology has reduced customers’ need to visit a branch as often – if ever. Those in need of a bank can open their accounts online and manage them at home from a PC or nearly anywhere by using their smartphones.

Getting to know customers personally is crucial to developing and sustaining loyalty, Gasior said, and something all bankers are concerned about. Still, Community banks such as Cortland could have an advantage over large regional banks and those spread across the United States.

Pictured: CEO James Gasior addresses shareholders at the Trumbull branch of the Butler Institute of American Art.

Published by The Business Journal, Youngstown, Ohio.