Cortland Bancorp CEO ‘Really Optimistic’ about 2016

VIENNA TOWNSHIP, Ohio – Cortland Bancorp performed well in 2015 and expects to execute even better this year, its president and CEO, James M. Gasior, told shareholders Tuesday.

“We’re really optimistic about our future,” Gasior said, speaking for himself, chief financial officer David J. Lucido and board Chairman Timothy K. Woofter, who also addressed the annual meeting at the Avalon Golf and Country Club-Squaw Creek.

By all measures, Cortland Banks, the main subsidiary of Cortland Bancorp, has performed increasingly well since the end of the Great Recession.

Its 4.4 million shares are trading at 117% of book value, Gasior noted, and its shares have traded as high as 130% of book value in the last year. The holding company has paid almost $2.5 million in cash dividends paid since 2009. The recession officially ended June 30, 2008.

Shares of Cortland closed at $15.75, up 32 cents from Monday’s close.

The company raised its dividend to 6 cents a share from 5 cents in 2015 and has a dividend payout ratio of 24.74%, less than the 50% pre-recession payout, but as Gasior noted, the regulatory environment has changed and the economy remains in a low-interest-rate environment.

The bank, which enjoyed 9% growth last year compared to 2014, looks to lend even more this year, especially in residential mortgages and commercial loans. Deposits have increased $39.6 million in 2015 to nearly $400 million, and those increased deposits will be lent out, not invested in lower-paying securities.

Loans grew $34.1 million last year to $394.3 million. The commercial and industrial portfolio grew  21% and the residential mortgage portfolio “increased volumes by 146%, led primarily by new construction and purchase financing.” The bank continues to refinance mortgages but at nowhere near the rate when interest rates began to drop.

The cost of deposits has dropped “as low as they can go,” Lucido noted, from 1.00% in 2011 and dropping every year since to 0.47% in 2015. “Our primary focus is lending out these new deposits,” the chief financial officer said. The bank can earn more than 3% on loans while “with securities, you can’t get 3%.”

The net interest margin, 3.65%, was just two basis points less than in 2014 but 14 basis points above the 3.41% posted for 2013. Net interest income last year was $18.51 million, up from $17.78 million the year before and $16.66 million in 2013.

Credit quality remains strong as reflected by the ratio of written-off loans to total loans, less than 0.25% over the last five years, Lucido said, except one year when “a large credit” skewed the ratio. This year, the bank is working with two commercial customers to repay their loans, he said, and the schedule that should be worked out, resulting in repayment.

Excluding performing restructured loans, which constituted 2.02% of total assets at Dec. 31, nonperforming assets were only 0.93% of total assets, Gasior told shareholders. At year-end, total assets stood at $612.44 million. Up from $568.93 million Dec. 31, 2014, and $556.92 million Dec. 31, 2013.

While Cortland has expanded into the Akron and Cleveland markets, “Our home base remains Trumbull, Mahoning and Portage counties,” Gasior said. “We enjoyed more loan growth in Mahoning County than Trumbull.”

This was helped in part by Cortland Banks opening its newest branch in Canfield at Tippecanoe Road and U.S. Route 224, then relocating its mortgage and wealth management functions in Mahoning County to that office.

Also helping Cortland Banks progress was the expansion and rebranding of its wealth management operations to Cortland Private Wealth Management Group the first of this year and naming Timothy Clepper to lead its eight employees. Clepper remains head of Ellsworth Private Wealth Management in Hudson.

Gasior addressed the need to recruit and retain the talent needed to run the bank and its affiliates.

“We’ve been aggressive in hiring the top talent in the market,” he said, introducing the “new faces with a lot of talent” to the shareholders. “We like to give younger people the opportunity to advance in the corporation,” he said, the chance to prove themselves and reward them when they do so.

Shareholders re-elected Gasior, Richard B. Thompson and Joseph P. Langhenry to three-year terms as directors and Thomas P. Perciak to his first term. All were elected with more than 90% of the votes cast.

Shareholders also ratified S.R. Snodgrass P.C. as outside auditor through Dec. 31 by more than 99% of the 3.2 million votes cast and to approve, on an advisory basis, the executive compensation packages of Gasior, Lucido and Timothy Carney, executive vice president and chief operating officer. The yes votes in the advisory vote exceeded 98%.

Pictured: CEO Jim Gasior addresses shareholders at Tuesday’s annual meeting.

Copyright 2022 The Business Journal, Youngstown, Ohio.