Cortland Bancorp Reports 3Q Net Income of $617,000
CORTLAND, Ohio -- Cortland Bancorp, holding company of Cortland Banks, reports third-quarter net income of $617,000, or 14 cents per share, and net income for the first nine months of $2.25 million, or 50 cents a share.
Third-quarter net income compares to $799,000, or 18 cents per share, for the second quarter, and $1.27 million, or 28 cents per share the third quarter of 2012.
Net income for the first nine months of 2012 was $3.38 million, or 75 cents per share.
Said the president and CEO, James Gasior, in a prepared statement, “The increase in mortgage interest rates that occurred in the third quarter had a dramatic effect on mortgage volume.” Mortgage volume application fell to $42.9 million compared to $123.9 million the same quarter a year ago, the bank reported. As recently as the first and second quarters, the bank’s mortgage banking revenues were $688,000 and $638,000 respectively on application volumes of $89.2 million and $94.2 million.
Gasior continued, “In response to this sudden drop in volume and revenues, the company significantly curtailed its residential mortgage operations as of Sept. 13 by exiting the wholesale arena and limiting residential mortgage lending to the retail banking footprint [of Trumbull, Mahoning, Geauga and Ashtabula counties].”
Third-quarter expenses, the company noted, include $249,000 in costs to exit portions of the mortgage business, including severance and facility-related write-offs. “By right-sizing the residential mortgage lending operations,” Gasior said, “the remaining infrastructure is now commensurate with the expected in-market volume.”
“Exclusive of mortgage banking results,” the company said, “the core bank, as measured by net interest income, performed consistently with prior periods.”
Key performance measures for the quarters ended Sept. 30, June 30, and Sept. 30, 2012:
- Return on average equity, 5.11%, 6.33%, 10.32%.
- Return on average assets, 0.46%, 0.59%, 0.96%.
- Net interest margin, 3.42%, 3.34%, 3.51%.
- Efficiency ratio, 86.78%, 76.80%, 64.07%.
Net interest income for the third quarter was $4.11 million compared to $4.12 million the same quarter a year ago.
Average loans grew to $304.35 million compared to $289.79 million the same period a year ago.
Nonperforming loans (those 90 days past due) fell to $2.3 million during the quarter, or 0.72% of all loans, versus $3.0 million, or 0.94% at Dec. 31, and 1.28% the third quarter a year ago.
The provision for loan losses is 173% of nonperforming loans compared to 129% at Dec. 31 and 1.28% a year ago.
Net charge-offs for the quarter were $352,000, or 0.46% of total loans, compared to $21,000, or 0.03% a year ago.
Noninterest income (excluding investment gains and losses) was $897,000 for the quarter compared to $1.69 million a year ago.
Noninterest expense (wages and benefits, rents, Federal Deposit Insurance Corp. premiums, advertising) was $4.51 million compared to $4.30 million the second quarter and $3.85 million the third quarter of 2012.
Assets at Sept. 30 stood at $536.58 million compared to $554.51 million a year ago. Deposits stood at $427.47 million compared to $438.88 million a year ago.
Cortland Banks is a community bank that engages in commercial, retail and mortgage banking at its 13 full-service offices in northeastern Ohio.
Published by The Business Journal, Youngstown, Ohio.
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