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Stonegate Capital Partners Updates Coverage on Cortland Bancorp (NASDAQ:CLDB)

DALLAS, TX / ACCESSWIRE / June 12, 2020 / Cortland Bancorp (CLDB): The full report can be accessed by clicking on the following link: http://stonegateinc.com/reports/CLDB%20Q1FY20.pdf


Cortland Bancorp (the Company or Cortland) was incorporated in Ohio in 1984 and is the bank holding company of The Cortland Savings and Banking Company (the Cortland Bank); the Company owns all outstanding shares of the Cortland Bank. The Cortland Bank is a full-service Ohio-chartered commercial bank engaging in commercial and retail banking and also offers investment services under its Cortland Private Wealth Management brand. Cortland Bank was originally founded in 1892. Cortland currently has 13 branch locations and 1 loan production office and last reported ~162 employees. The branch locations cover five Ohio counties in three NE Ohio markets, which include the Mahoning Valley, Cleveland, and Akron-Canton.


Cortland Bank has a long history of providing superior customer service, being deeply rooted in the communities that it serves while offering a full suite of banking and investment options to these NE Ohio markets. The seasoned management team has developed a sound business model and a stable geographic base from which to continue its disciplined growth strategy. Given the Company's track record of successful branch additions, combined with expanding profitability, strong credit metrics, and operational efficiency, we anticipate continued growth going forward.

• Solid Profit Despite Covid-19 -In Q1 2020 Cortland reported Net Income of $1.4 million or $0.32/sh compared to $2.1 million or $0.49/sh in Q1 2019. The decrease was largely due to a $600,000 charge to earnings for the provision for credit losses directly attributable to COVID-19 as well as $41 million in loan prepayments and a reduction in net interest income resulting from interest rate reductions by the FOMC in the prior 3 quarters.

• Long history of building the brand - Cortland has built a solid brand name in the Ohio markets that it serves, currently being the 6th largest bank with ~ $713M in assets and a history that goes back to 1892; CLDB has always had a focus on asset quality with minimal losses reported over the years.

• Community-focused - The Company has recruited directors with ties to communities in which they serve and a commitment to the bank through stock ownership and development efforts. Cortland also hires experienced team members at each location with a focus on supporting the local customer and business owner with a level of service beyond that of the competition, and many with industry-specific backgrounds that can cater to certain customer concentrations. Importantly, decisions are made locally, enabling the bank to remain nimble for its customers.

• Full-service offerings - Beyond the basics of banking, Cortland has a full-service suite of offerings for its clients, including treasury management, "private" banking and wealth management services, among others, which cater to the small- to medium-sized business owners often driving the local economy.

• Successful growth strategy - The Company has continued to expand its branch operations into targeted growth markets of NE Ohio over the years with great success; furthermore, Cortland has increased its asset base by gaining additional business with its current clientele, which it is able to do given the variety of banking and investment options that each branch can deliver.

• Valuation - Given the COVID 19 disruptions to a wide variety of businesses we have reduced our expected P/E range of 10x to 14x with a mid-point of 12x; We believe given the company should now trade in a range of 10x to 14x with a midpoint at 12x. Using this range on our FY20 EPS estimate results in a valuation range of $15.70 to $21.98 with a mid-point of $18.84. Further details are on page 7.

About Stonegate Capital Partners

Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.

Stonegate Capital Partners
Shane Martin, CFA
(214) 987-4121

SOURCE: Stonegate Capital Partners

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