Cortland Bancorp posts $894,000 in net income for 1st quarter

Staff report

cortland

Cortland Bancorp posted improved earnings in the first quarter, despite continued impairment in the bank’s security portfolio, the company announced Wednesday.

Cortland Bancorp reported a net income of $894,000 for the first quarter of 2010, up from the bank’s $1.4 million loss in the first quarter of 2009.

The primary reason for the improvement was a lower level of securities impairment in the first three months of 2010, compared with the same period a year earlier, the company said in a statement.

The impairment costs, which are driven by the bank’s ability to pay its obligations on collateralized debt obligation securities, went down to $544,000 in the first quarter, compared to $3.7 million in the first quarter of 2009.

“As the recession eases and a seemingly slow recovery process begins, the company has experienced a lesser degree of impairment since its peak in the second quarter of 2009,” chief executive James Gasior said in a statement.

The bank slightly increased its provision for loan losses to $175,000 in the first quarter, up from $151,000 a year earlier.

Cortland Bancorp has not experienced a significant deterioration in credit quality, the company said.

The bank benefits from a low-delinquency loan portfolio, with nonperforming loans representing only 0.96 percent of total loans.

“As we look to the remainder of 2010, we remain cautiously optimistic that the economy is improving,” Gasior said.

“That said, economic conditions remain fragile, and we expect high unemployment to continue, creating an ongoing challenge on consumer spending and growth.”