Cortland Bank Reports 1Q Income of $1.4M

CORTLAND, Ohio – Cortland Bancorp, parent company of Cortland Bank, has announced net income of $1.4 million, or 32 cents per share, in the first quarter. 

That figure is a decline from the first quarter of 2019, when income was $2.1 million, or 49 cents per share.

“The decrease in earnings was precipitated by a $600,000 charge to earnings for the provision for credit losses directly attributable to the current COVID-19 pandemic. Specifically, increases in the allowance for credit losses were recognized in the qualitative factor allocations for specific concentrations of credit in various loan portfolio segments as a result of current economic conditions,” said President and CEO James M. Gasior. “Although the ultimate impact to businesses is unknown at the current time, an increase in credit provisioning is warranted given the economic disruption and uncertainty associated with the COVID-19 pandemic.”

As of April 30, Cortland Bank approved 406 Paycheck Protection Program loans totaling $456.2 million, an average of $138,400 per loan. 

“The year began with a keen focus on continued growth in loans, deposits and overall profitability; however, due to the pandemic, we abruptly shifted our focus to risk assessment and risk mitigation,” said Gasior. “Over the last six weeks, a majority of the efforts of our employees has been dedicated to accommodating our current customer requests for payment relief, as well as originating and submitting PPP loans for customers and noncustomers alike. Community banks have been instrumental in securing PPP loans for small businesses and in saving jobs.”

In addition, $41 million of loan prepayments in the fourth quarter of 2019 and interest rate reductions by the Federal Open Market Committee over the last three quarters contributed to a contraction in the company’s net interest margin for the quarter ended March 31. The margin contracted to 3.56% from 3.74% in the previous quarter and from 3.90% in the first quarter 2019.

First-quarter highlights included in the earnings report are an efficiency ratio of 68.54%, up from 63.69% in the year-ago quarter; return on average equity of 6.89%, down from 12.75% last year; and mortgage banking gains of $596,000 on loan originations of $15.7 million, up from $337,000 on originations of $11 million in the first quarter of 2019.

Average assets were $714 million as of March 31, up from $713 million at the end of the fourth quarter and $692 million in the year-ago quarter. Cortland Bank maintained a loan-to-deposit ratio near 81%.

“Maintaining this ratio below 90% has been instrumental in our controlling deposit costs and liquidity, thereby maximizing the bank’s flexibility,” Gasior said.

Among the bank’s loan portfolio, totaling $1.16 billion, 62% are commercial real estate loans – of which 15% are owner-occupied by businesses – 15% commercial loans and 17% residential loans.

Total average deposits were $593 million, up $10 million from the first quarter of 2019.

Key performance indicators for the quarters ended March 31, December 31 and March 31, 2019, include:

• Return on average equity: 6.89%, 10.23%, 12.75%.
• Return on average assets: 0.77%, 1.07%, 1.22%.
• Efficiency ratio: 68.54%, 65.5%, 63.69%.

SOURCE: Cortland Bancorp.

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