Cortland Bank 3Q Income Rises, Driven by Mortgages

CORTLAND, Ohio – Cortland Bancorp, the parent company of Cortland Bank, reports third-quarter net income of $2.2 million, or 51 cents per share, up from $1.9 million, or 45 cents per share, in the same period a year ago.

“Considering the substantial reduction in interest rates nationally and the ongoing provisioning for COVID-related conditions, we are pleased with the achieved performance level through the first nine months of the year,” said James Gasior, president and CEO, in a statement. “In this pandemic environment, in lieu of layoffs or furloughs, we were able to realize staff reductions through retirements and by not filling vacated positions, thus realizing savings in salaries and benefits. Additional operational cost savings were recognized through prudent cost containment measures.

“Although the ultimate impact to business is unknown at the current time, a continued increase in credit provisioning is warranted given the economic disruption and uncertainty associated with the COVID-19 pandemic,” he continued.

Mortgage loans accounted for much of the revenue growth, with the bank’s mortgage department approaching record production, with sales up nearly $800,000 for the quarter over the same period of 2019.

Cortland Bancorp remains well capitalized with a risk-based capital to risk-weighted assets ratio of 14.39% and a tangible equity to tangible assets ratio of 9.62%.

Total loans are up 9% year-over-year, driven largely by the Paycheck Protection Program. Cortland Bank has 419 PPP loans worth $56.4 million.

Other third quarter highlights include:

• Net interest income dropped $19,000 due to a reduce net interest margin. However, benefiting from the lower rate environment, the mortgage banking operation recognized gains of $1.3 million on loan originations of $35.8 million for the third quarter of 2020 versus gains of $492,000 on loan originations of $16.6 million for the same period in 2019. Gains on mortgage originations accounted for 15% of all revenues for the third quarter compared to 6% of all revenues in the same quarter of 2019
• The efficiency ratio was 59.72%, compared to 67.4% for the third quarter of 2019.
• The return on average equity ratio was 11.22%, compared to 10.71% in the year-ago quarter.

Total assets were $812 million at the close of the third quarter, up from $701 million in the third quarter of 2019 and $780 million at the end of the second quarter this year.

Total deposits are $681 million, up from $587 million in the third quarter of 2019.

“Stimulus payments provided by the government, as well as the PPP funds for our borrowers, have significantly contributed to deposit growth,” Gasior said. “In addition, in this stay-at-home environment, depositors have increased their rate of saving.”

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