SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 1995. Commission file number 0-15366
CORTLAND FIRST FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
New York 16-1276885
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
65 Main Street, Cortland, New York 13045
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (607) 756-2831
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
The number of shares outstanding of the registrant's common stock on
March 31, 1995: Common Stock, $5.00 Par Value --- 672,000 shares
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CORTLAND FIRST FINANCIAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(000'S OMITTED)
<TABLE>
<CAPTION>
March 31, 1995 December 31,1994
(Unaudited) (Note)
ASSETS
<S> <C> <C>
Cash and Due From Banks $ 11,123 $ 8,817
Federal Funds Sold 3,200 3,900
Investment Securities - Held to Maturity 26,591 23,297
Available for Sale 46,979 47,083
(Market Value 73,771 & 70,182)
Loans (Net of Unearned Discount of 3,523 & 3,344) 110,426 109,909
Reserve for Possible Loan Losses (1,274) (1,226)
Net Loans 109,152 108,683
Premises and Equipment 3,288 3,203
Other Real Estate 14 0
Other Assets 4,173 4,248
TOTAL ASSETS $204,520 $199,231
LIABILITIES
Non-Interest Bearing Deposits $ 21,228 $ 24,323
Interest Bearing Deposits 160,352 153,116
Total Deposits 181,580 177,439
Accrued Int, Taxes, & Other Liabilities 817 662
Accrued Post-Retirement Benefits 721 706
TOTAL LIABILITIES 183,118 178,807
SHAREHOLDERS' EQUITY
Common Stock (Par Value 5.00) 3,360 3,360
Outstanding 672,000 shares
Surplus 3,360 3,360
Undivided Profits 15,064 14,579
Net Unrealized Gains/(Losses) Securities (382) (875)
TOTAL SHAREHOLDERS' EQUITY 21,402 20,424
TOTAL LIABILITIES & SHAREHOLDERS EQUITY $204,520 $199,231
</TABLE>
Note: The balance sheet at December 31, 1994 has been derived from the
audited financial statements at that date. See notes to condensed
consolidated financial statements.
Cortland First Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. The foregoing financial statements are unaudited, however, in the
opinion of Management, all adjustments ( consisting of normal
recurring accruals) necessary for a fair presentation of the
financial statements have been included. A summary of the
Corporation's significant accounting policies is set forth in Note 1
to the Consolidated Financial Statements in the Corporation's
Annual Report to Shareholders on Form 10-K, for the year ended
December 31, 1994.
B. Investment Securities
<TABLE>
<CAPTION>
March 31, 1995
(000's omitted)
Available for Sale Held to Maturity
<S> <C> <C>
U.S. Treasury securities and obligations
of US government corporations and agencies $ 37,712 $ 4,980
Securities issued by State & Political
subdivisions in the U.S. 6,140 16,527
Other securities (includes F.R. stock) 208 432
Mortgage backed securities 2,919 4,652
TOTAL INVESTMENT SECURITIES $ 46,979 $ 26,591
</TABLE>
<TABLE>
<CAPTION>
December 31, 1994
(000's omitted)
Available for Sale Held to Maturity
<S> <C> <C>
U.S. Treasury securities and obligations
of US government corporations and agencies $ 37,972 $ 4,257
Securities issued by State & Political
subdivisions in the U.S. 5,963 16,112
Other securities (includes F.R. stock) 208 433
Mortgage backed securities 2,940 2,495
TOTAL INVESTMENT SECURITIES $ 47,083 $ 23,297
</TABLE>
<TABLE>
<CAPTION>
C. Provision for Loan Loss
March 31, 1995 March 31, 1994
<S> <C> <C>
Balance at January 1 $ 1,226 $ 1,079
Provision for the year 75 75
Recoveries on loans 23 23
Total 1,324 1,187
Less loans charged off 50 86
Balance at March 31, $ 1,274 $ 1,092
</TABLE>
The appropriateness of allowance for possible loan losses is determined by
quarterly detailed review of the loan portfolio. Effective January 1,
1995, the Company adopted Financial Accounting Standard #114 "Accounting by
Creditors for Impairment of a Loan". The adoption of this pronouncement had
no significant effect on the Company's financial statements for the three
months ended March 31, 1995. As of March 31, 1995, the Company had one
loan with a total recorded investment of $370,000 for which a specific
allowance of $138,000 has been provided.
PART II. OTHER INFORMATION
ITEMS 1-6. Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORTLAND FIRST FINANCIAL
CORPORATION
DATE May 11, 1995 David R. Alvord
President
DATE May 11, 1995 Bob Derksen
Treasurer
PART I.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
(000's Omitted)
Cortland First Financial Corporation is a one-bank holding company formed
in 1986. Its only subsidiary and operating entity is First National Bank of
Cortland, chartered in 1869. First National Bank of Cortland is an
independent bank delivering financial services from its seven offices in
Cortland, Cortlandville, Marathon, McGraw, Cincinnatus and Tully, to its
customers in Cortland County and the surrounding area and includes our
newest branch location in Whitney Point which opened last year expanding
our service area into Broome County. The primary regulator of Cortland
First Financial Corporation is the Federal Reserve Bank of New York, while
its subsidiary, First National Bank of Cortland, is regulated by the Office
of the Comptroller of the Currency in Washington, D.C.
Total assets of $204,520 increased by $5,289 or 2.7% from $199,231 at
year-end 1994. Total investment securities of $73,570 increased by $3,190
or 4.5% from 70,380 at year-end 1994. Net loans increased also by $469
from December 31, 1994 to the current $109,152.
On the liability side, our deposits increased by $4,141 or 2.3% from
$177,439 at year-end 1994 to $181,580 on March 31, 1995. Capital of
$21,402 at March 31, 1995 compared to $20,424 at year-end 1994, an increase
of $978 which included $493 in a favorable unrealized loss variance during
the first quarter of 1995.
Cortland First Financial's return on average assets (ROA) of 1.30% compared
to 1.33% a year ago, while our return on equity (ROE) of 12.60% this year
compared to 12.76% for 1994 to date. Other key ratios, based on averages,
were: loans to total deposits 60.92% in 1995 versus 60.90% in 1994; loans
to earning assets 57.91% in 1994 and 57.88% in 1994; loss reserve to loans
of 1.15% this year compared to 1.03% a year ago; loss provision to net
loans of 0.27% in 1995 and 0.28% for 1994; and finally net loan loss
chargeoffs to net loans at 0.10 this year compared to 0.24 in 1994.
Earning assets yield on a fully taxable equivalent basis of 8.25% this year
to date compared to 7.93% a year ago, an increase of 32 basis points. Our
interest paying liability cost of 3.65% this year to date compared to 3.05%
a year ago for the same period, an increase of 60 basis points. Interest
margin of 5.26% this year compared to 5.42% a year ago, a decrease of 16
basis points due to the large increase in the interest paying liabilities
cost. Net interest income of $2,319 for 1995 to date compared to $2,327 a
year ago for the same period, a decrease of $8. This decrease was due to a
volume increase of $31 and a decrease of $38 due to rate. Other income of
$341 compared to $329 for the same period, an increase of $12 or 3.6%.
Total non-interest expenses of $1,669 this year to date compared to $1,659
a year ago, an increase of $10 or 1.6%. Accounting for this are variances
in the timing of some payments in 1995 as compared to the same period for
1994. The bulk of the increase is due to an increase in salary and
benefits expense. Net income of $653 this year compared to $630 a year ago,
an increase of $23 or 3.7%.
Consolidated Statement of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1994
OPERATING ACTIVITIES
<S> <C> <C>
Net Income $ 653 $ 630
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 75 75
Provision for depreciation 87 104
Provision for deferred income taxes (109) 110
Amortization of investment security premiums(discounts),net 98 132
(Increase) Decrease in interest receivable 16 (174)
(Increase) Decrease in other assets (178) (786)
Increase (Decrease) in interest payable (10) (8)
Increase (Decrease) in other liabilities 179 410
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 811 $ 493
INVESTING ACTIVITIES
Proceeds from sales/maturities of investment securities $ 3,830 $ 4,091
Purchase of investment securities (6,279) (2,124)
Net (increase) decrease in credit card/short term loans 113 (139)
Longer-term loans sold 0 209
Net longer term loans originated (672) (17)
Purchases of premises and equipment, net (171) (76)
NET CASH USED BY INVESTING ACTIVITIES $(3,179) $ 1,944
FINANCING ACTIVITIES
Net increase (decrease) in demand deposits, NOW & savings $ 903 $10,384
Net proceeds from sales of certificates of deposit 3,239 (58)
Net increase (decrease) in short term borrowings 0 (212)
Cash dividends (168) (201)
NET CASH PROVIDED BY FINANCING ACTIVITIES $ 3,974 $ 9,913
INCREASE (DECREASE)IN CASH
AND CASH EQUIVALENTS $ 1,606 $12,350
Cash and cash equivalents at beginning of year $12,717 $10,787
CASH AND CASH EQUIVALENTS AT END OF PERIOD $14,323 $23,137
</TABLE>
<TABLE>
Supplemental disclosures of cash flow information:
<CAPTION>
Cash paid during the year for :
<S> <C> <C>
Interest on deposits and short term borrowings: $ 1,426 $ 1,133
Income taxes: 181 101
Non Cash Investing Activities: (839) 1,011
</TABLE>
CORTLAND FIRST FINANCIAL CORPORATION
<TABLE>
Condensed Consolidated Statements of Income
(000's) omitted
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1995 1994
Interest Income:
<S> <C> <C>
Interest & fees on loans $ 2,543 $ 2,378
Interest on investment securities 1,071 990
Interest on Federal Funds sold 121 84
TOTAL INTEREST INCOME $ 3,735 $ 3,452
Interest Expense:
Interest on deposits 1,416 1,125
NET INTEREST INCOME $ 2,319 $ 2,327
Provision for loan losses 75 75
INTEREST INCOME AFTER
PROV FOR LOSSES $ 2,244 $ 2,252
Other Income: 341 329
TOTAL OPERATING INCOME $ 2,585 $ 2,581
Non-interest expenses 1,669 1,659
INCOME BEFORE INC TAXES $ 916 $ 922
Income Taxes: 263 292
NET INCOME $ 653 $ 630
Net Income per Common Share $ .97 $ .94
(672,000 shares outstanding)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 11123
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 73570
<INVESTMENTS-MARKET> 73771
<LOANS> 110426
<ALLOWANCE> 1274
<TOTAL-ASSETS> 204520
<DEPOSITS> 181580
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1538
<LONG-TERM> 0
<COMMON> 3360
0
0
<OTHER-SE> 18042
<TOTAL-LIABILITIES-AND-EQUITY> 204520
<INTEREST-LOAN> 2543
<INTEREST-INVEST> 1071
<INTEREST-OTHER> 121
<INTEREST-TOTAL> 3735
<INTEREST-DEPOSIT> 1416
<INTEREST-EXPENSE> 1416
<INTEREST-INCOME-NET> 2319
<LOAN-LOSSES> 75
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1669
<INCOME-PRETAX> 916
<INCOME-PRE-EXTRAORDINARY> 916
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 653
<EPS-PRIMARY> .97
<EPS-DILUTED> .97
<YIELD-ACTUAL> 8.25
<LOANS-NON> 769
<LOANS-PAST> 100
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 6621
<ALLOWANCE-OPEN> 1226
<CHARGE-OFFS> 50
<RECOVERIES> 23
<ALLOWANCE-CLOSE> 1274
<ALLOWANCE-DOMESTIC> 1274
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
