Cortland Bancorp (NASDAQ: CLDB) announced its
first quarter 2021 financial results. Net income for the
three months ending March 31, 2021 was $2.8 million, or $0.66 per
share, which was twice the income level of $1.4 million, or $0.32
per share, for the first quarter of 2020 and equal to the $2.8
million, or $0.67 per share, for the fourth quarter of 2020.
The return on average assets ratio was 1.38% for the Company for
this first quarter, while the return on average equity ratio was
13.56%. These returns were supported by 8% year-over-year
loan growth and 15% deposit growth. James Gasior, President
and CEO stated, “The Bank’s participation in the first round of the
Paycheck Protection Program (PPP) as part of the government’s CARES
Act contributed to our financial performance but, more importantly,
helped more than 400 customers and saved nearly 8,000 local
jobs. We are now participating in the second round of PPP
loans and expect to assist more than 200 customers. At the same
time, the Bank’s commercial loan pipeline is healthier than in
recent quarters. With this volume of loan growth forthcoming,
profitability enhancement is promising.”
The Bank’s performance was also aided by the continued high
volume of mortgage originations and sales, adding gains of $800,000
to non-interest income. “The Company has benefited from the
substantial reduction in interest rates nationally and the ongoing
improvement in COVID-related conditions,” continued Gasior.
“With interest rates at all-time lows, the reduction in the cost of
funds has outweighed the lower yield on assets.”
Gasior noted, “Cost savings in marketing, as well as a reduction
in travel, education and training expenses were part of our prudent
cost containment measures that contributed to our
profitability.”Cortland Bancorp remained well capitalized with
total risk-based capital to risk-weighted assets of 15.85% and
tangible equity to tangible assets of 10.24%.
Performance was also aided year over year due to the increase in
the provision for credit losses directly attributable to the
COVID-19 pandemic in the first quarter 2020. Specifically,
increases in the allowance for credit losses were recognized
throughout 2020 in the qualitative factor allocations for specific
concentrations of credit in various loan portfolio segments as a
result of economic conditions. Elevated provisions occurred
in each of the first three quarters of 2020 commensurate with
COVID-related loan modifications. With substantially all of
those loans now in full payment status, coupled with a reduction in
nonperforming loans, no provision was necessary in the fourth
quarter of 2020 or in this current quarter.
“Thanks to additional government programs launched recently,
businesses are able to tap those resources to make it through what
is hopefully the tail end of this pandemic-stressed economy,” said
Gasior.
Outlook
Gasior characterized the balance of 2021 as having slow, but
steady, progress flowing from anticipated improving economic and
pandemic recoveries. “Asset quality is stabilizing and
natural expense inflation is being contained against a backdrop of
current Federal Reserve guidance,” said Gasior. “In addition,
stimulus payments provided by the government, as well as the PPP
funds for our borrowers, have significantly contributed to deposit
growth. Plus, in this pandemic-laden environment, depositors have
increased their rates of saving.”
As a result of the Company’s continuing strong performance, its
Board has authorized a dividend of $0.15 per share, an increase of
7% over the prior quarterly dividend. Gasior noted that the Board
remains focused on its continuing strong total shareholder return
track record in building long-term shareholder value.
First Quarter 2021 Highlights (at or for the period
ended March 31, 2021)
Net income of $2.8 million, or $.66 per share, for the first
quarter of 2021 represented more than a 100% improvement on the
$1.4 million, or $.32 per share, reported for the first quarter of
2020, and is equivalent to income for the fourth quarter of 2020.
Likewise, pre-tax, pre-provision income for the first quarter
2021 was 49% higher than in the same quarter of 2020 and
approximates the results of the previous quarter.
Even with interest margin under pressure, the Company managed a
notable increase of $693,000 in net interest income for the first
quarter ended March 31, 2021 versus the first quarter of 2020, as
the cost of funds declined more than asset yields. Asset yields in
the quarter were enhanced by PPP loan fee recognition of more than
$400,000, as the ongoing forgiveness process accelerated the
recognition of these fees. Also benefiting from the lower
rate environment, the mortgage banking operation recognized gains
of $800,000 on loan originations of $28.2 million for the first
quarter of 2021 versus gains of $596,000 on loan originations of
$15.7 million for the same period in 2020. Gains on mortgage
originations accounted for 9% of all revenues for the first quarter
compared to 7% of all revenues in the same quarter of 2020. The
originations were comprised of both refinances of existing mortgage
loans and new purchases of homes.
The efficiency ratio for the Company was 59.80% for the quarter
versus 68.54% for the same period in 2020.
The return on average equity ratio for the Company was 13.56%
for the quarter versus 6.89% for the same quarter in 2020.
Balance Sheet
Total assets were $792 million at March 31, 2021, compared to
$821 million at December 31, 2020 and $713 million at March 31,
2020.
Total loans increased 8% year over year, with loans granted
under the PPP accounting for a substantial portion of loan
growth. Cortland assisted 419 customers in obtaining funds
under this government program, providing payroll and operating
expense relief worth $56.4 million in 2020. With nearly half
of these loans forgiven by the Small Business Administration, the
Company has begun issuing PPP loans in the second-round
process.
Total deposits grew by $87 million, or 15%, to $680 million for
the first quarter of 2021 from $593 million in the first quarter of
2020. Noninterest-bearing deposits accounted for 32% of total
deposits, while certificates of deposits were 12% of the deposit
mix.
Asset Quality
No provision for loan losses was recorded for the three months
ended March 31, 2021 versus $600,000 a year ago. The decrease is
attributable to substantial provisions throughout 2020, giving
recognition to economic disruption and uncertainty associated with
COVID-19.
Nonperforming loans were $7.9 million, compared to $8.2 million
a year earlier and $7.6 million at December 31, 2020. The ratio of
nonperforming assets to total assets at quarter end was .99%. This
reflects an improvement from the 1.15% reported a year ago. The
Company’s ratio of allowance for loan losses to nonperforming loans
was 76.43% at March 31, 2021. With the loan portfolio of
predominantly commercial real estate at low loan-to-value ratios,
collateral coverage weighs in as a significant risk mitigation
factor in evaluating credit exposure.
Performing restructured loans that are included in nonperforming
loans at the end of the quarter were $5.6 million, compared to $6.1
million a year ago and $5.7 million on a linked quarter basis.
The Bank had received requests to modify 127 loans aggregating
$123.7 million through April of 2020. Most of the requests involved
the deferral of principal and interest payments and/or the
extension of the maturity dates. As of March 31, 2021, only 6 loans
aggregating $15.6 million remain in deferral.
Capital
Cortland Bancorp continues to remain well capitalized under all
regulatory measures, with capital ratios exceeding the statutory
well-capitalized thresholds by an ample margin. For the
quarter ended March 31, 2021, capital ratios were as follows:
Ratio |
Cortland Bancorp |
Bank |
Well-capitalized Minimum |
Tier 1 leverage ratio |
10.45% |
9.41% |
5.00% |
Tier 1 risk-based capital
ratio |
14.77% |
13.31% |
8.00% |
Total risk-based capital
ratio |
15.85% |
15.48% |
10.00% |
CERTAIN NON-GAAP MEASURES
Certain financial information has been determined by methods
other than Generally Accepted Accounting Standards (“GAAP”).
Specifically, certain financial measures are based on core earnings
rather than net income. Pre-tax, pre-provision income excludes the
provision for loan losses and the income tax provision. Such
information may be useful to both investors and management and can
aid them in understanding the Company’s current performance trends
and financial condition. Pre-tax, pre-provision income is a
supplemental tool for analysis and not a substitute for
GAAP net income. Reconciliation from GAAP net income to
the non-GAAP measure of pre-tax, pre-provision income is
referenced as part of management’s discussion and analysis of
quarterly and year-to-date financial results of operations.
The following is a reconciliation between pre-tax, pre-provision
income and earnings under GAAP:
IN 000s |
THREE MONTHS ENDED |
|
Mar 31, 2021 |
Mar 31, 2020 |
Dec 31, 2020 |
GAAP net income |
$ |
2,766 |
$ |
1,371 |
$ |
2,798 |
Provision for loan losses |
- |
600 |
- |
Federal income tax
expense |
481 |
206 |
536 |
Pre-tax, pre-provision
income |
$ |
3,247 |
$ |
2,177 |
$ |
3,334 |
About Cortland Bancorp
Cortland Bancorp is a financial holding company headquartered in
Cortland, Ohio. Founded in 1892, the bank subsidiary, The
Cortland Savings and Banking Company conducts business through 13
full-service community banking offices located in the counties of
Trumbull, Mahoning, Portage, Summit, and Cuyahoga in Northeastern
Ohio and a financial service center in Fairlawn, Ohio. For
additional information about Cortland Bank visit
http://www.cortlandbank.com.
Forward Looking Statement
This release may contain “forward-looking
statements” that are subject to risks and uncertainties. Readers
should not place undue reliance on forward-looking statements,
which reflect management’s views only as of the date hereof. All
statements, other than statements of historical fact, regarding our
financial position, business strategy and management’s plans and
objectives for future operations are forward-looking statements.
When used in this report, the words “anticipate,” “believe,”
“estimate,” “expect,” and “intend” and words or phrases of similar
meaning, as they relate to Cortland Bancorp or management, are
intended to help identify forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Although we believe that management’s expectations as reflected in
forward-looking statements are reasonable, we cannot assure readers
that those expectations will prove to be correct. Forward-looking
statements are subject to various risks and uncertainties that may
cause our actual results to differ materially and adversely from
our expectations as indicated in the forward-looking statements.
These risks and uncertainties include our ability to maintain or
expand our market share or net interest margins, and to implement
our marketing and growth strategies. Further, actual results may be
affected by our ability to compete on price and other factors with
other financial institutions; customer acceptance of new products
and services; the regulatory environment in which we operate; and
general trends in the local, regional and national banking industry
and economy, as those factors relate to our cost of funds and
return on assets. In addition, there are risks inherent in the
banking industry relating to collectability of loans and changes in
interest rates. Many of these risks, as well as other risks that
may have a material adverse impact on our operations and business,
are identified in our other filings with the SEC. However, you
should be aware that these factors are not an exhaustive list, and
you should not assume these are the only factors that may cause our
actual results to differ from our expectations.
Source: Cortland Bancorp
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SELECTED
FINANCIAL DATA |
(In thousands of
dollars, except for ratios and per share amounts) |
Unaudited |
|
Three Months Ended |
|
Mar. 31,2021 |
|
Mar. 31,2020 |
|
Var % |
|
Dec. 31,2020 |
|
Var % |
SUMMARY OF OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
$ |
6,932 |
|
|
$ |
6,930 |
|
|
— |
% |
|
$ |
6,873 |
|
|
1 |
% |
Interest expense |
(534 |
) |
|
(1,225 |
) |
|
(56 |
) |
|
(712 |
) |
|
(25 |
) |
Net interest income |
6,398 |
|
|
5,705 |
|
|
12 |
|
|
6,161 |
|
|
4 |
|
Provision for loan losses |
— |
|
|
(600 |
) |
|
(100 |
) |
|
— |
|
|
— |
|
NII after loss provision |
6,398 |
|
|
5,105 |
|
|
25 |
|
|
6,161 |
|
|
4 |
|
Investment security gains |
71 |
|
|
— |
|
|
— |
|
|
122 |
|
|
(42 |
) |
Non-interest income |
1,713 |
|
|
1,452 |
|
|
18 |
|
|
2,246 |
|
|
(24 |
) |
Non-interest expense |
(4,935 |
) |
|
(4,980 |
) |
|
(1 |
) |
|
(5,195 |
) |
|
(5 |
) |
Income before tax |
3,247 |
|
|
1,577 |
|
|
106 |
|
|
3,334 |
|
|
(3 |
) |
Federal income tax expense |
481 |
|
|
206 |
|
|
133 |
|
|
536 |
|
|
(10 |
) |
Net income |
$ |
2,766 |
|
|
$ |
1,371 |
|
|
102 |
% |
|
$ |
2,798 |
|
|
(1 |
)% |
|
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PER COMMON SHARE DATA |
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|
|
Number of shares outstanding (000s) |
4,213 |
|
|
4,228 |
|
|
— |
% |
|
4,223 |
|
|
— |
% |
Earnings per share, basic and diluted |
$ |
0.66 |
|
|
$ |
0.32 |
|
|
106 |
|
|
$ |
0.67 |
|
|
(1 |
) |
Dividends per share |
0.19 |
|
|
0.19 |
|
|
— |
|
|
0.14 |
|
|
36 |
|
Market value |
22.08 |
|
|
13.50 |
|
|
64 |
|
|
18.61 |
|
|
19 |
|
Book value |
19.25 |
|
|
17.32 |
|
|
11 |
|
|
19.18 |
|
|
0 |
|
Market value to book value |
114.70 |
% |
|
77.94 |
% |
|
47 |
|
|
97.02 |
% |
|
18 |
|
|
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BALANCE SHEET DATA |
|
|
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|
|
|
|
Assets |
$ |
791,705 |
|
|
$ |
712,650 |
|
|
11 |
% |
|
$ |
821,305 |
|
|
(4 |
)% |
Investments securities |
170,174 |
|
|
133,638 |
|
|
27 |
|
|
170,906 |
|
|
— |
|
Total loans |
518,618 |
|
|
482,239 |
|
|
8 |
|
|
556,760 |
|
|
(7 |
) |
Total deposits |
680,311 |
|
|
593,256 |
|
|
15 |
|
|
700,510 |
|
|
(3 |
) |
Borrowings |
16,948 |
|
|
30,830 |
|
|
(45 |
) |
|
24,643 |
|
|
(31 |
) |
Shareholders’ equity |
81,096 |
|
|
73,209 |
|
|
11 |
|
|
81,005 |
|
|
0 |
|
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AVERAGE BALANCE SHEET
DATA |
|
|
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|
|
|
Average assets |
$ |
799,967 |
|
|
$ |
713,808 |
|
|
12 |
% |
|
$ |
801,923 |
|
|
— |
% |
Average total loans |
535,597 |
|
|
502,398 |
|
|
7 |
|
|
541,319 |
|
|
(1 |
) |
Average total deposits |
679,887 |
|
|
593,163 |
|
|
15 |
|
|
678,781 |
|
|
— |
|
Average shareholders' equity |
81,596 |
|
|
79,593 |
|
|
3 |
|
|
78,733 |
|
|
4 |
|
|
|
|
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ASSET QUALITY RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
# |
|
Net recoveries (charge-offs) |
$ |
1 |
|
|
$ |
22 |
|
|
(95 |
)% |
|
$ |
(26 |
) |
|
(104 |
)% |
Net recoveries (charge-offs) to average loans |
— |
% |
|
0.02 |
% |
|
(100 |
) |
|
(0.02 |
)% |
|
(100 |
) |
Non-performing loans as a % of loans |
1.52 |
|
|
1.71 |
|
|
(11 |
) |
|
1.37 |
|
|
11 |
|
Non-performing assets as a % of assets |
0.99 |
|
|
1.15 |
|
|
(14 |
) |
|
0.93 |
|
|
7 |
|
Allowance for loan losses as a % of total loans |
1.16 |
|
|
1.05 |
|
|
10 |
|
|
1.08 |
|
|
6 |
|
Allowance for loan losses as a % of non-performing loans |
76.43 |
|
|
61.81 |
|
|
24 |
|
|
78.91 |
|
|
(3 |
) |
|
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FINANCIAL
RATIOSSTATISTICS |
|
|
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|
|
|
Net interest margin |
3.58 |
% |
|
3.56 |
% |
|
1 |
% |
|
3.40 |
% |
|
5 |
% |
Return on average equity - Company |
13.56 |
|
|
6.89 |
|
|
97 |
|
|
14.22 |
|
|
(5 |
) |
- Bank |
14.70 |
|
|
8.68 |
|
|
69 |
|
|
15.97 |
|
|
(8 |
) |
Return on average assets - Company |
1.38 |
|
|
0.77 |
|
|
80 |
|
|
1.40 |
|
|
(1 |
) |
- Bank |
1.44 |
|
|
0.93 |
|
|
55 |
|
|
1.50 |
|
|
(4 |
) |
Efficiency ratio - Company |
59.80 |
|
|
68.54 |
|
|
(13 |
) |
|
60.79 |
|
|
(2 |
) |
- Bank |
57.89 |
|
|
63.66 |
|
|
(9 |
) |
|
57.75 |
|
|
— |
|
|
|
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|
CAPITAL RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage ratio - Company |
10.45 |
% |
|
10.65 |
% |
|
(2 |
)% |
|
10.20 |
% |
|
2 |
% |
- Bank |
9.41 |
|
|
9.49 |
|
|
(1 |
) |
|
9.18 |
|
|
3 |
|
Common equity tier 1 ratio - Company |
13.88 |
|
|
12.31 |
|
|
13 |
|
|
13.15 |
|
|
6 |
|
- Bank |
13.31 |
|
|
11.75 |
|
|
13 |
|
|
12.62 |
|
|
5 |
|
Tier 1 risk-based capital ratio - Company |
14.77 |
|
|
13.18 |
|
|
12 |
|
|
14.01 |
|
|
5 |
|
- Bank |
13.31 |
|
|
11.75 |
|
|
13 |
|
|
12.62 |
|
|
5 |
|
Total risk-based capital ratio - Company |
15.85 |
|
|
14.08 |
|
|
13 |
|
|
15.07 |
|
|
5 |
|
- Bank |
15.48 |
|
|
13.70 |
|
|
13 |
|
|
14.72 |
|
|
5 |
|
|
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CONTACT:James M. Gasior President &
CEO(330) 282-4111
Cortland Bancorp (NASDAQ:CLDB)
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