Cortland Bancorp Reports 2Q Net Income of $918,000

CORTLAND, Ohio – Cortland Bancorp, holding company of Cortland Savings and Banking Co., Friday reported second-quarter net income of $918,000, or 21 cents per share, and first half net income of $2.1 million, or 46 cents per share.

First-quarter net income was $1.1 million, or 25 cents a share. Second-quarter 2014 net income was $1.0 million, or 23 cents per share, and first-half net income in 2014 was $2.4 million, or 52 cents a share.

In a prepared statement, the president and CEO of Cortland Bancorp, James Gasior, said, “After a great start to the year, we delivered solid financial results the second quarter, driven again by robust loan growth, strong fee income and a solid net interest margin. Contributions from our mortgage banking business and our wealth management line continued to boost revenues, reflecting an improving local economy. Investments we made in our highly experienced lending teams are showing positive results with total loans growing 13% year-over-year and 4% for the quarter. We continue to position Cortland for future growth by strengthening our balance sheet and capital base while continuing to explore new opportunities.”

Second-quarter highlights Cortland cited:

• Net interest income rose to $4.58 million, $6,000 higher than the first quarter and $198,000 more than the year-ago quarter. Year-to-date, net interest income was $9.14 million versus $8.87 million the first half of 2014.
• Total loans at June 30 were $357.87 million more than $41 million higher than at June 30, 2014 and nearly $14 million higher than at March 31.
• Total deposits grew to $447.37 million at June 30 compared to $439.47 million at March 31 and $$425.07 million at June 30, 2014.
• Nonperforming assets, which include nonperforming loans, as a percentage of total assets were down 6% to 1.71% from the preceding quarter.

Key performance ratios for the quarters ended June 30, March 31 and June 30, 2014:

• Return on average equity, 6.49%, 7.81%, 8.15%.
• Return on average assets, 0.65%, 0.77%, 0.82%.
• Net interest margin, 3.66%, 3.68%, 3.66%.
• Efficiency, 74.01%, 70.14%, 68.29%.

“The increase in the efficiency ratio was primarily due to the additional loan-origination offices expansion into the Fairlawn and Beachwood markets,” said the chief financial officer, David Lucido.

Cortland opened a commercial loan production office in Beachwood, in suburban Cleveland, and a mortgage origination office in Fairlawn, near Akron.

Excluding gains and losses on investments, total noninterest income – which includes fees and service charges – was $896,000, 11% higher than the $806,000 reported the year-ago quarter but 14% less than the $1 million reported in the first quarter. For the first six months, noninterest income was $1.9 million where it was $1.5 million the first half of 2014.

Fee income was $117,000 for the quarter and $307,000 for the half, Cortland said.

Noninterest expense – wages and benefits, rents, data processing, marketing, Federal Deposit Insurance Corp. premiums – was $4.2 million for the quarter compared to $4.0 million the preceding quarter and $3.9 million the year-ago quarter. The bank attributed the higher operating expense during the first half to “increased compensation expense s relative to staff retention and recruitment and incentive program accruals.”

The bank continues to have a full-time employee equivalence in the neighborhood of 150: 152 in the second quarter, 153 the preceding quarter and 149 the quarter ended June 30, 2014.

Total assets rose to $568.82 million during the quarter, up from $556 million at March 31 and $534.42 million at June 30, 2014.

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