Cortland Bancorp Earnings Revision

March 15, 2013
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CORTLAND BANCORP (the “Company,” OTCQB: CLDB) is announcing revised earnings for the fourth quarter and year ended December 31, 2012.  After the Company’s earnings release on January 31, 2013, the Company determined that an additional provision for loan losses of $1.9 million will be required as a result of further information obtained by the Company about one of its commercial loan customers.

During the first quarter of 2013, the Company became aware that one of its commercial loan customers had recognized material losses and that the borrower is insolvent and contemplating a bankruptcy filing. We do not believe that we will recover the amount owed from the collateral.   

Given the doubtful realization of this loan principal represented by funds advanced under the line of credit as of year-end, the Company is charging off the balance of the loan amounts advanced under the line of credit as of December 31, 2012 in the amount of $1.9 million. The Company will continue to work with this borrower in an attempt to recover part of the charge-off.  Any amounts recovered in subsequent periods will be reported as recoveries through its Allowance for Loan Losses.  

An additional provision for loan losses equivalent to the charge-off of $1.9 million will be recognized in the Statement of Consolidated Income for the year ended December 31, 2012.

With the recognition of the additional provision, net of the income tax effect, the Company’s previously announced net income of $4.2 million for the year ended December 31, 2012, or $.92 per common share, is now revised to $2.9 million, or $.64 per common share.  Return on assets and return on equity is revised from .79% and 8.60% to .55% and 5.99%, respectively.  Net charge-offs for the year are revised to $2.25 million, or .78% of average total loans.  The allowance for loan losses is now 1.21% of total loans and 67.5% of nonperforming loans.  The Company’s regulatory capital ratios remain above the amounts necessary for the Company to be deemed well-capitalized at December 31, 2012, as follows:

                                                                                  Company Ratio        Well-Capitalized
Tier I capital to risk weighted assets                         13.15%                     6.00%
Total risk-based capital to risk weighted assets        14.10%                    10.00%
Tier I capital to average assets                                  10.24%                     5.00%

Likewise, for the fourth quarter ended December 31, 2012, the Company’s previously announced net income of $803,000, or $.17 per share, is now revised to a net loss of $464,000 or $(.11) per share.

The Company will file its annual report on Form 10-K by March 29, 2013.

To view the entire press release and selected financial data please download the attachment.

For additional information, please contact:
David J. Lucido, CPA
SVP & Chief Financial Officer
Cortland Banks
194 W. Main St.
Cortland, OH 44410
330.637.8040, Ext 1164
Member FDIC
Equal Housing Lender
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