Cortland Bancorp Reports Net Income of $1.23M

CORTLAND, Ohio – Cortland Bancorp, holding company of Cortland Banks, Tuesday reported third-quarter net income of $1.23 million, or 27 cents a share, a 27% increase over third-quarter 2014 earnings and 34% higher than second-quarter earnings.

In the second quarter, Cortland reported net income of $916,000, or 21 cents a share, and $955,000, or 21 cents a share, for the quarter ended Sept. 30, 2014.

The company board of directors declared a cash dividend of six cents a share payable Dec. 1 to shareholders of record Nov. 10.

Said the president and CEO, James Gasior, in a prepared statement, ”We continue to achieve important strategic and operational goals with another solid quarter of profitability. The company continues to maintain a favorable net interest margin [3.67%], fueled by loan growth, particularly in commercial real estate loans, resulting in composite portfolio growth of 9% year-over-year. Contributions from our mortgage banking business and other sources of noninterest income also continue to enhance revenues. At the same time, we have made deliberate efforts to manage our expenses, bringing our efficiency ratio down below 70% for both the quarter and year-to-date periods.”

Among the highlights Cortland cited:

• Net interest income increased 6% to $4.65 million compared to $4.38 million the year-ago quarter and was 2% above the $4.58 million reported the second quarter.
• Noninterest income (such as fees, service charges and commissions) – Cortland excluded gains on securities it holds – grew 29% to $999,000 from $776,000 the year-ago quarter and was 11% higher than the $896,000 reported for the second quarter. “Contributions from wealth management fees have added appreciably to our noninterest income both year-over-year and on a linked-quarter basis,” Gasior said.
• Total loans rose $29.66 million (rounded), or 9%, year-over-year to $359.84 million from $330.19 million.

Key performance ratios for the quarters ended Sept. 30, June 30 and Sept. 30, 2014:

• Return on average equity, 8.67%, 6.49%, 7.00%.
• Return on average assets, 0.86%, 0.65%, 0.71%.
• Net interest margin, 3.67%, 3.66%, 3.64%.
• Efficiency ratio, 67.42%, 74.01%, 70.89%.

The efficiency ratio for the first nine months was 69.86% compared to 68.77% the same period in 2014.

Net interest income was $4.65 million compared to $4.58 million the preceding quarter and $4.38 million the year-ago quarter.

Noninterest expense (such as salaries and employee benefits, rents, data processing, marketing, Federal Deposit Insurance Corp. premiums) came to $3.99 million, less than the $4.19 million recorded for the second quarter but slightly higher than the $3.85 million in the quarter ended Sept. 30, 20-14.

Assets rose to $570.25 million, up slightly from the $568.82 recorded at June 30 but 4% higher than the $549.30 million reported Sept. 30, 2014.

Total loans (see above) of $359.83 million were up nearly $2 million from the previous quarter, $$357.87 million, but 9% above the $330.19 million reported for Sept. 30, 2014.

In the category of asset quality, Cortland reported it charged off $378,000 in loans during the quarter compared to $416,000 the second quarter and 55% higher than the $244,000 written off the third period a year ago.

Nonperforming loans (those 90 days past due) as a percent of loans was reported as 2.36%, down from 2.48% the second quarter but up from 2.26% the year-ago quarter.

Nonperforming assets as a percent of assets was 1.63%, same as the second quarter, but up from 1.50% a year ago.

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