Greene County Bancorp, Inc. (the “Company”) (NASDAQ: GCBC), the
holding company for The Bank of Greene County and its subsidiary
Greene County Commercial Bank, today reported net income for the
quarter ended September 30, 2021, which is the first quarter of the
Company’s fiscal year ending June 30, 2022. Net income for the
three months ended September 30, 2021 was $7.1 million, or $0.84
per basic and diluted share, as compared to $4.9 million, or $0.57
per basic and diluted share, for the quarter ended September 30,
2020. Net income increased $2.2 million, or 45.9%, when comparing
the quarters ended September 30, 2021 and 2020.
Highlights:
- Net Income: $7.1 million for the quarter ended September 30,
2021
- Total Assets: New high of $2.3 billion at September 30,
2021
- Return on Average Assets: 1.28% for the quarter ended September
30, 2021
- Return on Average Equity: 18.60% for the quarter ended
September 30, 2021
Donald Gibson, President & CEO stated: “I am
proud of our strong performance in what has continued to be a very
difficult rate environment. I am also proud to be recognized by
Piper Sandler, as a member of their Sm-all Stars Class of 2021, the
Greene County Bancorp, Inc. is the only bank in the country to have
achieved five consecutive years on their prestigious list. In order
to earn Sm-All Star status, companies needed to have a market cap
below $2.5 billion, and clear numerous hurdles related to growth,
profitability, credit quality, and capital strength. Piper
Sandler’s objective is to identify the top performing small-cap
banks and thrifts in the country.”
Total consolidated assets for the Company were
$2.3 billion at September 30, 2021, primarily consisting of $1.1
billion of net loans and $988.3 million of total securities
available-for-sale and held-to-maturity. Consolidated deposits
totaled $2.1 billion at September 30, 2021, consisting of retail,
business and municipal banking relationships.
The Company continues to closely monitor the
impact of the coronavirus pandemic (“COVID-19”) on our business and
results of operations. The Company continues to maintain strong
asset quality, capital and liquidity and believes it is still well
positioned to withstand the continued financial impact from the
pandemic.
Depending upon the duration of the COVID-19
pandemic and the adequacy of strategies in place by local and
federal governments, borrowers may not have the ability to repay
their debts which may ultimately result in losses to the Company.
Management continues to closely monitor credit relationships,
particularly those on payment deferral or adversely classified. As
discussed under Asset Quality and Loan Loss Provision below, the
Company has maintained its allowance for loan losses during the
three months ended September 30, 2021 and believes that total
reserves are adequate.
Selected highlights for the three months ended
September 30, 2021 are as follows:
Net Interest Income and Margin
- Net interest
income increased $2.6 million to $14.4 million for the
three months ended September 30, 2021 from $11.8 million for the
three months ended September 30, 2020. The increase in net interest
income was primarily the result of the growth in the average
balance of interest-earning assets, which increased $460.5 million
when comparing the three months ended September 30, 2021 and 2020,
offset by a decrease in the average interest rate on
interest-earning assets, which decreased 25 basis points when
comparing the three months ended September 30, 2021 and
2020.Average loan balances increased $74.8 million and the yield on
loans increased 41 basis points when comparing the three months
ended September 30, 2021 and 2020. Included in
interest-earning assets at September 30, 2021 were $37.4 million of
SBA Paycheck Protection Program (PPP) loans at a rate of 1.00%. The
increase in yields on loans was further supported by $1.5 million
in SBA PPP fee income for the three months ended September 30,
2021, which was realized through a deferred origination fee and
recognized within interest income. Average securities increased
$304.6 million, and the yield on such securities decreased 47 basis
points when comparing the three months ended September 30, 2021 and
2020. Average interest-bearing bank balances and federal funds
increased $81.4 million, and the yield increased three basis points
when comparing the three months ended September 30, 2021 and
2020.Cost of interest-bearing liabilities decreased 17 basis points
when comparing the three months ended September 30, 2021 and 2020.
The cost of NOW deposits decreased 23 basis points, the cost of
savings and money market deposits decreased 14 basis points, and
the cost of certificates of deposit decreased 33 basis points when
comparing the three months ended September 30, 2021 and 2020. The
decrease in cost of interest-bearing liabilities was offset by
growth in the average balance of interest-bearing liabilities of
$446.9 million, most notably due to an increase in NOW deposits of
$370.7 million, an increase in average savings and money market
deposits of $69.2 million, and an increase in borrowings of $7.6
million when comparing the three months ended September 30, 2021
and 2020. The cost of borrowings increased 265 basis points when
comparing the three months ended September 30, 2021 and 2020. The
increase in cost of borrowings was due to the Company entering into
Subordinated Note Purchase Agreements in September 2021 and 2020.
Yields on interest-earning assets and costs of interest-bearing
deposits continue to decline as a result of the current low
interest rate environment, and the Federal Reserve Board stance to
continue the low interest rate environment to support an economic
recovery as the pandemic crisis is contained.
- Net interest rate spread
and margin both decreased when comparing the three months
ended September 30, 2021 and 2020. Net interest rate spread
decreased eight basis points to 2.64% for the three months ended
September 30, 2021 compared to 2.72% for the three months ended
September 30, 2020. Net interest margin decreased 12 basis points
to 2.67% for the three months ended September 30, 2021 compared to
2.79% for the three months ended September 30, 2020. Decreases in
net interest rate spread and net interest margin resulted primarily
from lower-yielding securities and loans offset by lower rates on
deposits as well as growth in loan and securities balances.
- Net interest income on a
taxable-equivalent basis includes the additional amount of
interest income that would have been earned if the Company’s
investment in tax-exempt securities and loans had been subject to
federal and New York State income taxes yielding the same after-tax
income. Tax equivalent net interest margin was 2.81% and 2.98% for
the three months ended September 30, 2021 and 2020,
respectively.
Asset Quality and Loan Loss Provision
- Provision for loan
losses amounted to $988,000 and $1.2 million for the three
months ended September 30, 2021 and 2020, respectively. The
provision for loan losses for the three months ended September 30,
2021 and 2020 was due to the impact of the COVID-19 pandemic as
well as growth in gross loans and an increase in loans adversely
classified. The Company instituted a loan deferral program in
response to the COVID-19 pandemic whereby deferral of principal
and/or interest payments have been provided and correspond to the
length of the National Emergency as defined under the CARES Act and
extended under the Consolidated Appropriations Act which was signed
into law on December 27, 2020. At September 30, 2021,
the Company had $7.1 million, consisting of six loans, on payment
deferral as a result of the pandemic, which is a decrease from $8.0
million, consisting of eight loans, at June 30, 2021. Management
continues to monitor these loans, and it remains uncertain whether
all of these loans will continue to perform as agreed once they
reach the end of the deferral period. Loans classified as
substandard or special mention totaled $47.6 million at September
30, 2021, compared to $49.7 million at June 30, 2021, a decrease of
$2.1 million, and compared to $38.9 million at September 30, 2020,
an increase of $8.7 million. Loans classified as substandard or
special mention decreased slightly as compared to June 30, 2021 but
remained elevated as compared to September 30, 2020, due to
insufficient cash flows and revenues related to the COVID-19
pandemic. Reserves on loans classified as substandard
or special mention totaled $8.0 million at September 30, 2021
compared to $7.8 million at June 30, 2021, an increase of $200,000.
No loans were classified as doubtful or loss at September 30, 2021
or June 30, 2021. Allowance for loan losses to total loans
receivable was 1.83% at September 30, 2021 compared to 1.77% at
June 30, 2021. Total loans receivable included $37.4
million and $67.4 million of SBA Paycheck Protection Program (PPP)
loans at September 30, 2021 and June 30, 2021, respectively.
Excluding these SBA guaranteed loans, the allowance for loan losses
to total loans receivable would have been 1.90% and 1.89% at
September 30, 2021 and June 30, 2021, respectively.
- Net charge-offs
amounted to $163,000 and $38,000 for the three months ended
September 30, 2021 and 2020, respectively, an increase of
$125,000. The primary net charge off activity was a commercial
loan charge off that occurred during the quarter ended September
30, 2021.
- Nonperforming
loans amounted to $1.9 million and $2.3 million at
September 30, 2021 and June 30, 2021, respectively. The decrease in
nonperforming loans during the period was primarily due to $304,000
in loan repayments, and $97,000 in charge-offs. At September 30,
2021 nonperforming assets were 0.09% of total assets compared to
0.11% at June 30, 2021. Nonperforming loans were 0.17% and 0.21% of
net loans at September 30, 2021 and June 30, 2021,
respectively.
Noninterest Income and Noninterest Expense
- Noninterest income
increased $851,000, or 41.0%, and totaled $2.9 million and $2.1
million for the three months ended September 30, 2021 and 2020,
respectively. The increase was primarily due to an increase in
debit card fees resulting from continued growth in the number of
checking accounts with debit cards, the income from bank owned life
insurance, and increases in service charges on deposit
accounts.
- Noninterest
expense increased $828,000, or 11.6%, to $8.0 million for
the three months ended September 30, 2021 compared to $7.1 million
for the three months ended September 30, 2020. The increase in
noninterest expense during the three months ended September 30,
2021 was primarily due to an increase in salaries and employee
benefits expense resulting from creating 13 new positions during
the previous fiscal year. The new positions were required to
support growth in the bank’s lending department, customer service
center and finance department. There was also an increase in other
non-interest expense as the bank made a charitable donation to The
Bank of Greene County Charitable Foundation during the three months
ended September 30, 2021.
Income Taxes
- Provision for income
taxes reflects the expected tax associated with the
pre-tax income generated for the given year and certain regulatory
requirements. The effective tax rate was 15.1% for the three months
ended September 30, 2021 and 11.7% for the three months ended
September 30, 2020, respectively. The statutory tax rate is
impacted by the benefits derived from tax-exempt bond and loan
income, the Company’s real estate investment trust subsidiary
income, income received on the bank owned life insurance, as well
as the tax benefits derived from premiums paid to the Company’s
pooled captive insurance subsidiary to arrive at the effective tax
rate. The increase in the current quarter was attributable to the
increase in the New York State tax rate and the increase in income
before taxes for September 30, 2021 compared to September 30,
2020.
Balance Sheet Summary
- Total assets of
the Company were $2.3 billion at September 30, 2021 and $2.2
billion at June 30, 2021, an increase of $82.5 million, or
3.8%.
- Securities
available-for-sale and held-to-maturity increased $100.5
million, or 11.3%, to $988.3 million at September 30, 2021 as
compared to $887.8 million at June 30, 2021. This increase was the
result of utilizing excess cash on hand due to an increase in
deposits. Securities purchases totaled $198.2 million during the
three months ended September 30, 2021 and consisted of $142.3
million of state and political subdivision securities, $33.5
million of mortgage-backed securities, $2.5 million of corporate
securities, and $19.9 million of other securities. Principal
pay-downs and maturities during the three months amounted to $95.0
million, primarily consisting of $11.1 million of mortgage-backed
securities, $81.3 million of state and political subdivision
securities, $867,000 of collateralized mortgage obligations, and
$1.7 million of other securities.
- Net loans
receivable increased $10.9 million, or 1.0%, to $1.1
billion at September 30, 2021 from $1.1 billion at June 30,
2021. Net loans receivable at September 30, 2021
included $37.4 million in SBA Paycheck Protection Program loans.
The loan growth experienced during the three months consisted
primarily of $38.2 million in commercial real estate loans, $1.1
million in residential real estate loans, $2.5 million in
residential construction, $1.6 million in multi-family loans, and a
$1.3 million net decrease in deferred fees due to the forgiveness
of SBA PPP loans. This growth was partially offset by a $1.1
million decrease in commercial construction loans, $32.3 million
decrease in commercial loans and an $825,000 increase in allowance
for loan losses. SBA PPP loans decreased $30.0 million to $37.4
million at September 30, 2021 from $67.4 million at June 30, 2021,
due to the receipt of forgiveness proceeds.
- Deposits totaled
$2.1 billion at September 30, 2021 and $2.0 billion at June 30,
2021, an increase of $51.4 million, or 2.6%. Noninterest-bearing
deposits increased $20.5 million, or 11.8%, and NOW deposits
increased $36.4 million, or 2.7%, when comparing September 30, 2021
and June 30, 2021. These increases were offset by decreases in
certificates of deposits of $84,000, or 0.2%, money market deposits
decreased $5.0 million, or 3.4%, and savings deposits decreased
$410,000, or 0.1%, when comparing September 30, 2021 and June 30,
2021. Deposits increased during the three months ended September
30, 2021 as a result of an increase in municipal deposits at Greene
County Commercial Bank, primarily from tax collection, and new
account relationships.
- Borrowings of the
Company amounted to $49.2 million at September 30, 2021 compared to
$22.6 million at June 30, 2021, an increase of $26.5
million. At September 30, 2021, borrowings consisted of
$49.2 million of Fixed-to-Floating Rate Subordinated
Notes. During the three months ended September 30,
2021, the Company repaid $3.0 million of short-term borrowings with
Atlantic Central Bankers Bank. The Company entered into
Subordinated Note Purchase Agreements on September 15, 2021, issued
at 3.00% Fixed-to-Floating Rate, due September 15, 2031, in the
aggregate principal amount of $30.0 million. These notes are
callable on September 15, 2026.
- Shareholders’
equity increased to $154.8 million at September 30, 2021
from $149.6 million at June 30, 2021, resulting primarily from net
income of $7.1 million, partially offset by dividends declared and
paid of $508,000 and a decrease in other accumulated comprehensive
loss of $1.4 million.
Greene County Bancorp, Inc. is the direct and
indirect holding company, for The Bank of Greene County, a
federally chartered savings bank, and Greene County Commercial
Bank, a New York-chartered commercial bank, both headquartered in
Catskill, New York. Our primary market area is the Hudson Valley
Region and Capital District Region in New York State. For more
information on Greene County Bancorp, Inc., visit
www.tbogc.com.
This press release contains statements about
future events that constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Actual results could differ materially from those projected in the
forward-looking statements. Factors that might cause such a
difference include, but are not limited to, general economic
conditions, financial and regulatory changes related to the
COVID-19 pandemic, changes in interest rates, regulatory
considerations, competition, technological developments, retention
and recruitment of qualified personnel, and market acceptance of
the Company’s pricing, products and services.
In addition to presenting information in
conformity with accounting principles generally accepted in the
United States of America (GAAP), this news release contains
financial information determined by methods other than GAAP
(non-GAAP). The following measures used in this release, which are
commonly utilized by financial institutions, have not been
specifically exempted by the Securities and Exchange Commission
("SEC") and may constitute "non-GAAP financial measures" within the
meaning of the SEC's rules. The Company has provided in this news
release supplemental disclosures for the calculation of net
interest margin utilizing a fully taxable-equivalent adjustment.
The Company has also provided in this news release supplemental
disclosures for the calculation of the allowance for loan loss to
gross loans, adjusted to exclude SBA Paycheck Protection Program
loans. Management believes that the non-GAAP financial measures
disclosed by the Company from time to time are useful in evaluating
the Company's performance and that such information should be
considered as supplemental in nature and not as a substitute for or
superior to the related financial information prepared in
accordance with GAAP. Our non-GAAP financial measures
may differ from similar measures presented by other companies. See
the reconciliation of GAAP to non-GAAP measures in the section
"Select Financial Ratios."
Greene County Bancorp, Inc.Consolidated
Statements of Income, and Selected Financial Ratios
(Unaudited)
|
At or for the Three Months |
|
Ended September 30, |
Dollars in thousands, except share and per share data |
2021 |
|
2020 |
|
Interest
income |
$15,613 |
|
$13,338 |
|
Interest
expense |
1,214 |
|
1,522 |
|
Net
interest income |
14,399 |
|
11,816 |
|
Provision for loan losses |
988 |
|
1,243 |
|
Noninterest income |
2,929 |
|
2,078 |
|
Noninterest expense |
7,961 |
|
7,133 |
|
Income
before taxes |
8,379 |
|
5,518 |
|
Tax
provision |
1,265 |
|
643 |
|
Net
income |
$7,114 |
|
$4,875 |
|
|
|
|
Basic
and diluted EPS |
$0.84 |
|
$0.57 |
|
Weighted
average shares outstanding |
8,513,414 |
|
8,513,414 |
|
Dividends declared per share 4 |
$0.13 |
|
$0.12 |
|
|
|
|
Selected Financial Ratios |
|
|
Return
on average assets1 |
1.28 |
% |
1.14 |
% |
Return
on average equity1 |
18.60 |
% |
14.89 |
% |
Net
interest rate spread1 |
2.64 |
% |
2.72 |
% |
Net
interest margin1 |
2.67 |
% |
2.79 |
% |
Fully
taxable-equivalent net interest margin2 |
2.81 |
% |
2.98 |
% |
Efficiency ratio3 |
45.94 |
% |
51.34 |
% |
Non-performing assets to total
assets |
0.09 |
% |
0.24 |
% |
Non-performing loans to net
loans |
0.17 |
% |
0.42 |
% |
Allowance for loan losses to
non-performing loans |
1078.58 |
% |
404.78 |
% |
Allowance for loan losses to
total loans |
1.83 |
% |
1.68 |
% |
Shareholders’ equity to total assets |
6.78 |
% |
7.39 |
% |
Dividend
payout ratio4 |
15.48 |
% |
21.05 |
% |
Actual
dividends paid to net income5 |
7.14 |
% |
9.60 |
% |
Book
value per share |
$18.19 |
|
$15.62 |
|
1 Ratios are annualized when necessary.2
Interest income calculated on a taxable-equivalent basis includes
the additional interest income that would have been earned if the
Company’s investment in tax-exempt securities and loans had been
subject to federal and New York State income taxes yielding the
same after-tax income. The rate used for this adjustment was 21%
for federal income taxes for the periods ended September 30, 2021
and 2020, 4.44% and 3.98% for New York State income taxes for the
periods ended September 30, 2021 and 2020, respectively. The
following table summarizes the adjustments made to arrive at the
fully taxable-equivalent net interest margins.
|
For the three months ended September 30, |
(Dollars in thousands) |
2021 |
|
2020 |
|
Net interest income
(GAAP) |
$14,399 |
|
$11,816 |
|
Tax-equivalent adjustment |
766 |
|
812 |
|
Net interest income (fully
taxable-equivalent basis) |
$15,165 |
|
$12,628 |
|
|
|
|
Average interest-earning
assets |
$2,155,976 |
|
$1,695,482 |
|
Net interest margin (fully
taxable-equivalent basis) |
2.81 |
% |
2.98 |
% |
3 The efficiency ratio has been calculated as
noninterest expense divided by the sum of net interest income and
noninterest income.4 The dividend payout ratio has been calculated
based on the dividends declared per share divided by basic earnings
per share. No adjustments have been made to account for dividends
waived by Greene County Bancorp, MHC (“MHC”), the Company’s
majority shareholder, owning 54.1% of the shares outstanding. 5
Dividends declared divided by net income. The MHC waived its right
to receive dividends declared during the three months ended March
31, 2020; June 30, 2020; September 30, 2020; December 31, 2020;
June 30, 2021; and September 30, 2021. Dividends declared during
the three months ended December 31, 2019 and March 31, 2021 were
paid to the MHC. The MHC’s ability to waive the receipt of
dividends is dependent upon annual approval of its members as well
as receiving the non-objection of the Federal Reserve
Board.
The above information is preliminary and based on the Company’s
data available at the time of presentation.Greene County
Bancorp, Inc.Consolidated Statements of Financial
Condition (Unaudited)
|
AtSeptember 30, 2021 |
|
AtJune 30, 2021 |
(Dollars In thousands, except
share data) |
|
|
|
Assets |
|
|
|
Total cash and cash equivalents |
$113,329 |
|
|
$149,775 |
|
Long term certificate of
deposit |
4,367 |
|
|
4,553 |
|
Securities- available for
sale, at fair value |
412,375 |
|
|
390,890 |
|
Securities- held to maturity,
at amortized cost |
575,898 |
|
|
496,914 |
|
Equity securities, at fair
value |
297 |
|
|
307 |
|
Federal Home Loan Bank stock,
at cost |
1,091 |
|
|
1,091 |
|
|
|
|
|
Gross loans receivable |
1,118,784 |
|
|
1,108,408 |
|
Less: Allowance for loan
losses |
(20,493 |
) |
|
(19,668 |
) |
Unearned origination fees and costs, net |
(1,475 |
) |
|
(2,793 |
) |
Net loans receivable |
1,096,816 |
|
|
1,085,947 |
|
|
|
|
|
Premises and equipment |
14,161 |
|
|
14,137 |
|
Bank owned life insurance |
47,726 |
|
|
40,425 |
|
Accrued interest
receivable |
8,305 |
|
|
7,781 |
|
Foreclosed real estate |
64 |
|
|
64 |
|
Prepaid expenses and other
assets |
8,371 |
|
|
8,451 |
|
Total assets |
$2,282,800 |
|
|
$2,200,335 |
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
Noninterest bearing deposits |
$194,566 |
|
|
$174,114 |
|
Interest bearing deposits |
1,861,896 |
|
|
1,830,994 |
|
Total deposits |
2,056,462 |
|
|
2,005,108 |
|
|
|
|
|
Borrowings from other banks,
short-term |
- |
|
|
3,000 |
|
Subordinated notes
payable |
49,170 |
|
|
19,644 |
|
Accrued expenses and other
liabilities |
22,332 |
|
|
22,999 |
|
Total liabilities |
2,127,964 |
|
|
2,050,751 |
|
Total shareholders’ equity |
154,836 |
|
|
149,584 |
|
Total liabilities and shareholders’ equity |
$2,282,800 |
|
|
$2,200,335 |
|
Common shares outstanding |
8,513,414 |
|
|
8,513,414 |
|
Treasury shares |
97,926 |
|
|
97,926 |
|
The above information is preliminary and based on the Company’s
data available at the time of presentation.
For Further Information
Contact:Donald E. GibsonPresident & CEO(518)
943-2600donaldg@tbogc.com
Michelle M. Plummer, CPA, CGMASEVP, COO &
CFO(518) 943-2600michellep@tbogc.com
Greene County Bancorp (NASDAQ:GCBC)
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