The Board of Directors of Cortland Bancorp Inc. and The Cortland Savings & Banking Company appointed, effective November 2, 2009, James M. Gasior as President and Chief Executive Officer of the Company and the Bank. Mr. Gasior, age 50, previously served as Senior Vice President and Chief Financial Officer of the Company and the Bank since November 2005 and has been employed by the Bank since March 1990. Mr. Gasior has also served as a Director of the Company and the Bank since 2005. On an interim basis, Mr. Gasior will continue to serve as the Company's principal financial officer. Mr. Gasior has also served as the General Audit Officer of the Bank and as Vice President and Chief Operations Officer and Senior Vice President and Chief Lending Officer for both the Company and Bank. Also effective November 2, 2009, the Board of Directors of the Company and the Bank appointed Timothy Carney as Executive VicePresident of the Company and the Bank. Mr. Carney, age 44, previously served as Senior Vice President and Chief Operations Officer of the Bank since April 2008. As Executive Vice President, Mr. Carney will continue to serve as the Company's principal operations officer and will have additional responsibilities for branch administration and business development. The Board of Directors of the Company appointed, effective November 2, 2009, Timothy Carney to the Board of Directors of the Company. Mr. Carney will serve the unexpired term of Lawrence A. Fantauzzi who resigned from his position as President, Chief Executive Officer and Director of the Company and as Director of the Bank effective October 16, 2009. Mr. Fantauzzi, had previously announced his resignation as President and Chief Executive Officer of the Bank effective October 2, 2009.

On September 4, 2009, Lawrence Fantauzzi announced his resignation as President and Chief Executive Officer of the Cortland Savings & Banking Company, effective October 2, 2009. The Board of Directors of the company accepted Lawrence A. Fantauzzi’s resignation at a September 8, 2009 meeting of the Board. Mr. Fantauzzi had served as the company’s President and Chief Executive Officer since November 2005. He also served as President and Chief Executive Officer of the subsidiary bank’s parent company, the Cortland Bancorp Inc. On September 8, 2009, the Board of Directors of both the Cortland Bancorp and the Cortland Savings and Banking Company appointed Former Chairman of the Board and CEO, Mr. Rodger W. Platt, to serve as interim President of Cortland Bancorp (the Corporation) and Cortland Savings and Banking ('the subsidiary Bank') until a permanent replacement is found. Mr. Platt retired from the Corporation and the banking company in 2005 after 42 years of service. Mr. Platt served as interim President and Chief Executive Officer from February 28, 2006 to May 1, 2006. At its September 8, 2009 meeting, the Board of Directors also announced a restructuring of management organizational responsibilities for Cortland Bancorp and the Cortland Savings and Banking Company, appointing Senior Vice President, James M. Gasior, to oversee the daily operations of the Finance and Accounting, Investment, Human Resource, Deposit Operations, Information Systems and Investor Relations areas during the interim period. Mr. Gasior has been Senior Vice President and Chief Financial Officer of Cortland Bancorp and the Cortland Savings and Banking Company since November, 2005. Additionally, the Board appointed Senior Vice President, Timothy Carney to oversee the daily operations of Lending and Business Development, Branch Administration, Credit Administration, Special Assets, Marketing, Security, and the Loan Service areas during the interim period. Under the reorganization, the subsidiary bank Audit and Compliance areas will report directly to the Director’s Audit Committee. Rodger Platt, James Gasior and Timothy Carney will serve on the Executive Management Committee of the subsidiary bank and report directly to the Board of Directors.

Cortland Bancorp Inc. reported earnings results for the first quarter ended March 31, 2009. The company reported a loss of $1.397 million for the first quarter of 2009, or $0.31 per share principally due to recognition of pre-tax impairment losses on investment securities of $3.728 million. The company’s first quarter loss compares to net income of $1.034 million or $0.23 per share for the first quarter of 2008. Among its investments, the company owns a number of collateralized debt obligation securities that are backed by trust preferred securities issued by banks, insurance companies and real estate investment trusts. Net interest income, on a fully taxable equivalent basis, for the three months ended March 31, 2009 totaled $4.087 million, an increase of 5.5% from first quarter 2008 net interest income of $3.874 million. The increase was driven by higher loan portfolio balances and improved net interest margins. The net interest margin for the three months ended March 31, 2009 was 3.43%, up from 3.34% for the same period in 2008.