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February 6, 2008

Cortland Bancorp Reports 3.8% Increase in Quarterly Earnings; Asset Quality Improves; Growth in Net Loans Tops 9% in 2007

 Cortland Bancorp reported, today, that it earned $1.116 million or $0.25 per share for the fourth quarter ending December 31, 2007 compared with earnings of $1.075 million or $0.24 per share for the quarter ended September 30, 2007 and $1.182 million or $0.26 per share in the same quarter last year.  Lawrence A. Fantauzzi, President and Chief Executive Officer, also announced that the Company’s annual earnings were $4.350 million or $0.97 per share, as compared with $4.576 million or $1.01 per share in 2006.

 Mr. Fantauzzi stated that the Federal Reserve’s monetary policy efforts directed at containing inflation continued to have an adverse effect on the Company’s net interest margin.  The Company’s net interest margin ratio narrowed from 3.7% reported at year end 2006 to 3.5% at year end 2007.  He also indicated that the financial results also reflect an increase in expenses associated with the Company’s Strategic Growth Plan.  These expenses include costs for professional consulting, information system software licensing and maintenance, personnel and educational training programs for the Company’s employees.  While these strategic outlays can be expected to contribute to performance over the long-term, they represent a net drag on current period profitability.

Mr. Fantauzzi indicated that, contrary to general financial industry trends, the Company has experienced improvement in its asset quality.  There has been a reduction in problem loans which are accounted for on a non accrual basis, whereby such loans no longer produce current income.  These non accrual loans totaled $2.285 million at December 31, 2007 as compared to $3.923 million at December 31, 2006.  Mr. Fantauzzi also noted that despite apparent signs of a weakening housing market in the region, the Company has noted no significant deterioration in its residential real estate portfolio which can be attributed, in part, to stringent underwriting policies and procedures designed to control credit and pricing risks.

 The improvement in asset quality has had a direct and positive impact on the Company’s net income.  A provision for loan loss of $40,000 was charged to operations during 2007, as compared to a $225,000 loan loss provision charged to operations in 2006.

 Also on a positive note, the Company reported an increase of approximately 9% in its loan portfolio, a direct result of strategic initiatives designed to increase the Company’s market share.  Residential real estate, commercial real estate and consumer loans all reflect increases in portfolio balances.  The most significant loan growth came in the area of commercial real estate originations which increased by approximately 14% from the previous year.  

 The Company’s total assets at December 31, 2007 were $492.7 million compared to $471.8 million at the same time in 2006.  At year end, net loans were $221.5 million compared to $203.0 million at year end 2006.  

 Cortland Bancorp is a financial holding company headquartered in Cortland, Ohio.  Founded in 1892, the Company’s bank subsidiary conducts business through thirteen full service community banking offices located in the counties of Trumbull, Mahoning, Portage and Ashtabula in northeastern Ohio.  In 2008, the Company will expand into Geauga County with the opening of a full service banking office in Middlefield.

 Shares of the Company’s common stock trade in the “over-the-counter market” on the NASDAQ OTC BB under the symbol CLDB.

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  November 28, 2007

Chairman K. Ray Mahan announced that at the November 27, 2007 meeting of the Board of Directors of Cortland Bancorp (the “Company”) a regular quarterly dividend of $0.22 per share and a 1% stock dividend were declared. Both dividends are payable to shareholders of record as of December 14, 2007.  Payment and distribution to shareholders will occur on January 1, 2008 and January 2, 2008 for the stock dividend and cash dividend, respectively.

 At the same meeting, Chairman Mahan stated that the Company’s Board of Directors voted to increase by 100,000 shares the repurchase authorization of its current stock buyback program.  The program will now terminate upon the earlier to occur of the purchase of a total of 300,000 shares of the Company’s common stock or February 28, 2009.   

October 23, 2007

Lawrence A. Fantauzzi, President and Chief Executive Officer of Cortland Bancorp, reported that for the nine month period ended September 30, 2007, the Company's earnings were $3.234 million.  The Company earned $3.394 million during the same nine month period a year ago.  For the quarter ended September 30, 2007, the Company earned $1.075 million as compared to $1.057 million for the previous quarter, and $1.143 million for the same quarter of the previous year.  Earnings per share were steady, registering $0.24 both for the quarters ended  September 30, 2007 and the preceding quarter ended June 30, 2007.  Earnings per share for the quarter ended September 30, 2006 were $0.26.  Dividends per share for the quarter were $0.22, the same as the preceding quarter and the same as the quarter ended September 30, 2006.

Core earnings, which exclude the gains on loans sold, investment securities sold or called and certain other non recurring items, registered a decrease of less than 2% during the nine month period ended September 30, 2007 when compared to the same nine month period of 2006.  Core earnings for the nine month period ending September 30, 2007 were $3.161 million compared to $3.217 million reported a year ago.  Core earning’s per share for the nine months ended September 30, 2007 were $0.71 in 2007 and $0.72 in 2006.

Mr. Fantauzzi stated that the Company’s earnings reflect start-up costs associated with the Company’s new strategic growth plan and continued pressure on the Company’s net interest margin ( the difference between what the Company earns on its loans and investments and the interest it pays on its deposits and borrowings ) arising from the Federal Reserve’s monetary policy efforts directed at containing inflation.  The Company’s net interest margin registered 3.4% both for the quarter and the nine-month period ended September 30, 2007.  For the same quarter and nine-month period of 2006, the net interest margin registered  3.7%.

Mr. Fantauzzi indicated that, contrary to general financial industry trends, the Company has experienced some improvement in asset quality.  There has been a reduction in certain problem loans which are accounted for on a non accrual basis.  These non accrual loans totaled $2.818 million at September 30, 2007, as compared to $3.831 million at September 30, 2006.  Mr. Fantauzzi stated that a loan is placed on a non accrual basis whenever a borrower is ninety days past due on payments, or when sufficient information is received that causes management to question the collectibility of the loan, or any time legal proceedings are initiated to enforce collection of a loan.

This improvement in asset quality has had a direct and positive impact on the Company’s net income.  A provision for loan loss of $175,000 was charged to operations during the first nine months of 2006.  The favorable trend in asset quality, as noted herein, has negated the need for any additional provision for loan loss through the first nine months of 2007.

Also on a positive note, the Company has reported an increase of better than 11% in its loan portfolios, a direct result of strategic initiatives designed to increase the Company’s market share for commercial and small business loans secured by real estate and business assets.  Net loans stood at $218.9 million at September 30, 2007, as compared to net loans of $196.6 million a year ago.  The Company’s total assets at September 30, 2007 measured $498.7 million, representing a nearly 7% increase from the asset total of $466.6 million recorded a year ago.

The Company is a financial holding company headquartered in Cortland, Ohio.  Founded in 1892, the Company’s bank subsidiary conducts business through thirteen community banking offices located in Trumbull, Mahoning, Portage and Ashtabula counties in northeastern Ohio.

The stock trades in the “over-the-counter market” on the NASDAQ OTC BB under the symbol CLDB.

June 1, 2007

Chairman K. Ray Mahan announced that at the May 22, 2007 meeting of the Board of Directors of Cortland Bancorp (the “Company”) a regular dividend of $0.22 per share was declared.  The dividend is payable to shareholders of record as of June 15, 2007.  Payment and distribution to shareholders will occur on July 2, 2007.

February 28, 2007

Chairman K. Ray Mahan announced that at the February 27, 2007 meeting of the Board of Directors of Cortland Bancorp (the “Company”) a regular quarterly dividend of $0.22 per share was declared. The dividend is payable to shareholders of record as of March 16, 2007.  Payment and distribution to shareholders will occur on April 2, 2007.

February 14, 2007

Cortland Bancorp reported, today, that it earned $1.182 million, or $0.26 per share, in the fourth quarter ended December 31, 2006, as compared to earnings of $1.093 million, or $0.25 per share, in the similar quarter of last year.   Lawrence A. Fantauzzi, President and Chief Executive Officer, also announced that the Company earned $4.576 million, or $1.02 per share, for all of 2006 as compared with $4.334 million, or $0.98 per share, in 2005.

The Company’s total assets at  December 31, 2006 were $471.8 million compared to $459.7 million at the same time in 2005.  At year end 2006, net loans were $203.0 million compared to $186.0 million at the end of 2005, a growth rate of 9.1%, with residential mortgage loans, commercial mortgage loans and consumer loans all reflecting increases in portfolio balances.  The most significant loan growth came in the area of commercial mortgage originations, which increased by approximately 16.7% from the previous year.  Mr. Fantauzzi attributed this increase to a specific marketing campaign developed to improve market share for commercial and small business real estate secured loans.

Mr. Fantauzzi noted that the Company’s net interest margin ratio narrowed from 3.8% to 3.7% during 2006, as the cost of interest bearing liabilities rose more quickly than the yield on the Company’s earning assets.    He indicated that financial results were, however, favorably impacted by the collection of $185,000 in interest income and loan fees on the successful resolution of three loans which had previously been in various stages of workout.  Overall, credit quality strengthened during 2006, with loans 30 days or more beyond their contractual due date declining to 2.26% of total loans from 2.95% the year before.  As a result of the improving credit quality, the Company recorded a  provision for loan loss in 2006 of $225,000, as compared to the $545,000 provision recorded during 2005.

Non interest expenses continued to be well controlled, with the ratio of non interest expenses to average assets declining to 2.61% from 2.74% the year before.  Net non interest expenses (non interest expense less non interest income from all sources including gains on investment securities) increased by just 1.1% over 2005 levels.

Mr. Fantauzzi noted that 2006 results also benefited from a $145,000 one-time change in the Company’s tax accrual estimate, which was recorded during the first quarter of 2006.  Excluding such non recurring items, the Company’s core earnings were $4.382 million in 2006 as compared to $4.234 million in 2005, a year-over-year improvement of 3.5%.  The Company’s 2006 core earnings per share were $0.98 compared to $0.96 per share in 2005.

Core earnings for the fourth quarter of 2006 were $1.166 million, an 8.5% increase over the fourth quarter core earnings of $1.075 million registered in 2005.  Core earnings per share were $0.26 in the fourth quarter of 2006, as compared to $0.24 in the same period of 2005.

Cortland Bancorp is a financial holding company headquartered in Cortland, Ohio.  Founded in 1892, the Company’s bank subsidiary conducts business through thirteen full service community banking offices located in the counties of Trumbull, Mahoning, Portage and Ashtabula in northeastern Ohio.

Shares of the Company’s common stock trade in the “over-the-counter market” on the NASDAQ OTC BB under the symbol CLDB.

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