Greene County Bancorp Inc (GCBC) 10-K Annual Report Thu Sep 12 2019

Greene County Bancorp, Inc. Reports Record Net Income for the EleventhConsecutive Year for Fiscal Year Ended June 30, 2019 and Prepares to Open Full Service Branch in Kinderhook - Valatie, NY

Catskill, N.Y. – July 24, 2019- 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 and fiscal year ended June 30, 2019. Net income for the quarter and fiscal year ended June 30, 2019 was $4.2 million, or $0.49 per basic and diluted share, and $17.5 million, or $2.05 per basic and diluted share, respectively, as compared to $3.6 million, or $0.42 per basic and diluted share, and $14.4 million, or $1.69 per basic and diluted share, for the quarter and year ended June 30, 2018, respectively. Net income increased $545,000, or 15.1%, when comparing the quarters ended June 30, 2019 and 2018, and increased $3.1 million, or 21.5%, when comparing the years ended June 30, 2019 and 2018.

Donald Gibson, President & CEO, stated: “It is with great pleasure that I am able to report another very successful year. For the eleventh consecutive year, Greene County Bancorp, Inc. delivered records earnings, with income up 21.5%, when comparing fiscal years ended June 30, 2019 and 2018.”

Gibson continued: “I am also pleased to report that we have completed the renovations and have a grand opening scheduled for July 27, 2019 for a new full service office in Kinderhook – Valatie, NY. This represents our first branch in the Kinderhook – Valatie market and our sixth branch in Columbia County, NY.”

Selected highlights for the quarter and fiscal year ended June 30, 2019 are as follows:

Net Interest Income and Margin

•

Net interest income increased $898,000 to $10.3 million for the three months ended June 30, 2019 from $9.4 million for the three months ended June 30, 2018. Net interest income increased $5.1 million to $40.0 million for the year ended June 30, 2019 from $34.9 million for the year ended June 30, 2018. These increases in net interest income were primarily the result of the growth in the average balance of interest-earning assets, which increased $108.5 million and $124.1 million when comparing the three months and years ended June 30, 2019 and 2018, respectively, and increases in interest rates on interest-earning assets, which increased 21 basis points and 23 basis points when comparing the three months and years ended June 30, 2019 and 2018, respectively. These increases were partially offset by higher costing interest-bearing liabilities, which increased 25 basis points and 18 basis points when comparing the three months and years ended June 30, 2019 and 2018, respectively. The higher interest costs are primarily the result of growth in NOW deposits due to the introduction of a new higher rate checking account product, in the second half of fiscal 2019, designed to attract new deposits within our newer markets.

•

Net interest spread decreased four basis points to 3.21% for the three months ended June 30, 2019 compared to 3.25% for the three months ended June 30, 2018. Net interest spread increased five basis points to 3.28% for the year ended June 30, 2019 compared to 3.23% for the year ended June 30, 2018.

•

Net interest margin remained flat at 3.34% for the three months ended June 30, 2019 and 2018. Net interest margin increased eight basis points to 3.39% for the year ended June 30, 2019 compared to 3.31%, for the year ended June 30, 2018.

•

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 3.51% and 3.56% for the three months ended June 30, 2019 and 2018, respectively. Tax equivalent net interest margin was 3.56% and 3.52% for the years ended June 30, 2019 and 2018, respectively. As a result of the enactment of the Tax Cut and Jobs Act of 2017 (“TCJA”) in December 2017, which permanently reduces the maximum corporate income tax rate from 35% to 21% effective for tax years beginning after December 31, 2017, the tax benefits derived from tax-exempt securities and loans is lower for the three and twelve months ended June 30, 2019 compared to June 30, 2018. However, beginning January 1, 2018, pricing of tax-exempt securities and loan originations has been adjusted to reflect the change in the corporate tax rate, thereby producing a tax-equivalent yield on these securities and loans that are comparable to yields obtained on similar taxable investments.

Asset Quality and Loan Loss Provision

•

Provision for loan losses amounted to $601,000 and $486,000 for the three months ended June 30, 2019 and 2018, respectively. The provision for loan losses amounted to $1.7 million and $1.5 million for the years ended June 30, 2019 and 2018, respectively. The increase in the provision for loan loss for the three months and year ended June 30, 2019 is the result of continued growth in loan balances, and an increase in loans classified as substandard. Net loans grew $81.3 million during the year ended June 30, 2019. The Company continues to focus on commercial lending. Allowance for loan losses to total loans receivable decreased to 1.65% as of June 30, 2019 as compared to 1.68% as of June 30, 2018. Despite the significant increases in net loans over the past two years, the level of nonperforming loans has remained stable and the level of charge-off activity has been low, which has led to this decrease in the allowance for loan losses to total loans receivable.

•

Net charge-offs amounted to $246,000 and $85,000 for the three months ended June 30, 2019 and 2018, respectively, and amounted to $483,000 and $528,000 for the years ended June 30, 2019 and 2018, respectively. The increase in net charges-offs for the three months ended June 30, 2019 compared to 2018 was the result of the recognition of a partial charge-off totaling $162,000 for a residential mortgage that was modified as a troubled debt restructuring. This increase was offset during the second quarter of the fiscal year ended June 30, 2019 by the recognition of a recovery of a commercial installment loan totaling $150,000.

•

Nonperforming loans amounted to $3.6 million at June 30, 2019 and 2018, respectively. At June 30, 2019 and June 30, 2018, respectively, nonperforming assets to total assets were 0.29% and 0.32% and nonperforming loans to net loans were 0.46% and 0.51%.

Noninterest Income and Noninterest Expense

•

Noninterest income increased $163,000, or 8.2%, to $2.2 million for the three months ended June 30, 2019 as compared to $2.0 million for the three months ended June 30, 2018. Noninterest income increased $880,000, or 11.8%, to $8.4 million for the year ended June 30, 2019 as compared to $7.5 million for the year ended June 30, 2018. These increases are primarily due to increases in debit card fees and service charges on deposit accounts resulting from continued growth in the number of checking accounts with debit cards, as well as increased monthly or transactional service charges on deposit accounts. Investment services income also increased during the periods due to higher sales volume of investment products. The increase in other operating income was primarily the result of an increase in fee income related to loans.

•

Noninterest expense increased $607,000, or 9.5%, to $7.0 million for the three months ended June 30, 2019 as compared to $6.4 million for the three months ended June 30, 2018. Noninterest expense increased $3.3 million, or 14.8%, to $25.7 million for the year ended June 30, 2019 as compared to $22.4 million for the year ended June 30, 2018. These increases in noninterest expense are primarily the result of an increase in salaries and employee benefits expenses as well as other operating costs resulting from the opening of a new branch located in Woodstock, New York and the addition of staffing in anticipation of opening of a new branch in Kinderhook - Valatie, New York. The increase was also the result of the addition of our new Corporate Cash Management Department, and growth within our lending department, customer service center, information technology department, BSA department, operations center, and investment center. Also, other noninterest expense increased as a result of a $250,000 contribution to Bank of Greene County Charitable Foundation during the year ended June 30, 2019.

Income Taxes

•

Provision for income taxes directly reflects the expected tax associated with the pre-tax income generated for the given year and certain regulatory requirements. The effective tax rate was 15.0% and 16.9% for the three months and year ended June 30, 2019, respectively, compared to 20.6% and 22.1% for the three months and year ended June 30, 2018. The decrease in the effective tax rate for the three months and year ended June 30, 2019 is primarily the result of the impact of the enactment of the TCJA in December 2017. The TCJA permanently reduces the maximum corporate income tax rate from 35% to 21% effective for tax years beginning after December 31, 2017. 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, 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.

Balance Sheet Summary

•

Total assets of the Company were $1.3 billion at June 30, 2019 as compared to $1.2 million at June 30, 2018, an increase of $118.0 million, or 10.2%. This growth is the result of the continued expansion within our existing markets, across all three of our primary banking lines - retail, commercial, and municipal.

•

Securities available-for-sale and held-to-maturity increased $31.6 million, or 8.0%, to $426.9 million at June 30, 2019 as compared to $395.3 million at June 30, 2018. Securities purchases totaled $191.3 million during the year ended June 30, 2019 and consisted of $150.9 million of state and political subdivision securities, $40.1 million of mortgage backed securities, and $364,000 of other securities. Principal pay-downs and maturities during the year amounted to $160.7 million, of which $29.4 million consisted of mortgage-backed securities, $131.0 million consisted of state and political subdivision securities, and $250,000 consisted of corporate debt securities.

•

Net loans receivable increased $81.3 million, or 11.5%, to $785.7 million at June 30, 2019 from $704.4 million at June 30, 2018. The loan growth experienced during the year consisted primarily of $45.7 million in commercial real estate loans, $18.9 million in commercial loans, $9.6 million in multi-family real estate loans, $12.0 million in residential real estate loans, partially offset by a $5.6 million decrease in construction loans. The Company continues to experience loan growth as a result of continued growth in customer base within its newest markets in Ulster and Columbia counties, and its relationships with other financial institutions in originating loan participations.

•

Total deposits increased to $1.1 billion at June 30, 2019 from $1.0 billion at June 30, 2018, an increase of $95.3 million, or 9.3%. This increase was partially the result of a $37.5 million increase in municipal deposits at Greene County Commercial Bank, primarily from continued growth in new account relationships as well as tax collection. NOW deposits increased $125.6 million, or 24.1%, and noninterest-bearing deposits increased $4.8 million, or 4.7% when comparing June 30, 2019 and 2018. These increases were partially offset by a decrease in money market deposits of $18.8 million, or 14.1%, certificates of deposit of $14.8 million, or 28.8%, and savings deposits of $1.4 million, or 1.0% when comparing June 30, 2019 and 2018. Included within certificates of deposits at June 30, 2018 were $15.0 million, in brokered certificates of deposit. At June 30, 2019, there were no brokered certificates of deposit.

•

Borrowings amounted to $8.0 million of overnight borrowings and $13.6 million of long-term borrowings, with the Federal Home Loan Bank of New York, at June 30, 2019 At June 30, 2018, there were no overnight borrowings and $18.2 million of long-term borrowings with the Federal Home Loan Bank of New York.

•

Shareholders’ equity increased $16.2 million to $112.4 million at June 30, 2019 from $96.2 million at June 30, 2018, as net income of $17.5 million was partially offset by dividends declared and paid of $2.0 million. Other changes in equity consisted of a decrease in other comprehensive loss of $617,000.

Greene County Bancorp, Inc. is the direct and indirect holding company, respectively, 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 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, 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. 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."

(END)

Greene County Bancorp, Inc.

Consolidated Statements of Income (Unaudited)

	At or for the Three Months						At or for the Years
	Ended June 30,						Ended June 30,
Dollars in thousands, except share and per share data	2019			2018			2019			2018
Interest income	$	12,197		$	10,543		$	46,308		$	38,928
Interest expense		1,875			1,119			6,308			4,014
Net interest income		10,322			9,424			40,000			34,914
Provision for loan losses		601			486			1,659			1,530
Noninterest income		2,158			1,995			8,361			7,481
Noninterest expense		6,982			6,375			25,676			22,362
Income before taxes		4,897			4,558			21,026			18,503
Tax provision		733			939			3,542			4,095
Net Income	$	4,164		$	3,619		$	17,484		$	14,408

Basic EPS	$	0.49		$	0.42		$	2.05		$	1.69
Weighted average shares outstanding		8,537,814			8,529,981			8,537,814			8,513,558
Diluted EPS	$	0.49		$	0.42		$	2.05		$	1.69
Weighted average diluted shares outstanding		8,537,814			8,537,892			8,537,814			8,534,909
Dividends declared per share ⁴	$	0.10		$	0.0975		$	0.40		$	0.39

Selected Financial Ratios
Return on average assets¹		1.33	%		1.26	%		1.46	%		1.34	%
Return on average equity¹		15.11	%		15.35	%		16.83	%		16.09	%
Net interest rate spread¹		3.21	%		3.25	%		3.28	%		3.23	%
Net interest margin¹		3.34	%		3.34	%		3.39	%		3.31	%
Fully taxable-equivalent net interest margin²		3.51	%		3.56	%		3.56	%		3.52	%
Efficiency ratio³		55.95	%		55.83	%		53.09	%		52.75	%
Non-performing assets to total assets								0.29	%		0.32	%
Non-performing loans to net loans								0.46	%		0.51	%
Allowance for loan losses to non-performing loans								362.84	%		335.96	%
Allowance for loan losses to total loans								1.65	%		1.68	%
Shareholders’ equity to total assets								8.85	%		8.35	%
Dividend payout ratio⁴								19.51	%		23.08	%
Actual dividends paid to net income⁵								11.65	%		10.59	%
Book value per share							$	13.16		$	11.27

¹Ratios 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 approximately 21.0% and 28.1% for federal income taxes and 3.98% and 3.62% for New York State income taxes for the three months and years ended June 30, 2019 and 2018, respectively.

Non-GAAP reconciliation – Fully taxable equivalent net interest margin

	For the three months ended June 30,						For the years ended June 30,
(Dollars in thousands)	2019			2018			2019			2018
Net interest income (GAAP)	$	10,322		$	9,424		$	40,000		$	34,914
Tax-equivalent adjustment		547			627			1,999			2,223
Net interest income (fully taxable-equivalent basis)	$	10,869		$	10,051		$	41,999		$	37,137

Average interest-earning assets	$	1,237,878		$	1,129,376		$	1,180,201		$	1,056,101
Net interest margin (fully taxable-equivalent basis)		3.51	%		3.56	%		3.56	%		3.52	%

³ The efficiency ratio has been calculated as noninterest expense divided by the sum of net interest income and noninterest income.

⁴The 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 owner of 54.0% of the Company’s shares outstanding.

⁵Dividends declared divided by net income. Dividends were paid to the MHC during the quarter ended September 30, 2018. The MHC waived its right to receive dividends declared during all other quarters within the fiscal years ended June 30, 2018 and 2019.

Current period information is preliminary and based on company data available at the time of the press release.

Greene County Bancorp, Inc.

Consolidated Statements of Financial Condition (Unaudited)

	As of June 30, 2019			As of June 30, 2018
(Dollars In thousands)
Assets
Total cash and cash equivalents	$	29,538		$	26,504
Long term certificate of deposit		2,875			2,385
Securities- available for sale, at fair value		122,728			120,806
Securities- held to maturity, at amortized cost		304,208			274,550
Equity Securities, at fair value		253			217
Federal Home Loan Bank stock, at cost		1,759			1,545

Gross loans receivable		798,105			715,641
Less: Allowance for loan losses		(13,200	)		(12,024	)
Unearned origination fees and costs, net		833			814
Net loans receivable		785,738			704,431

Premises and equipment		13,255			13,304
Accrued interest receivable		5,853			5,057
Foreclosed real estate		53			119
Prepaid expenses and other assets		3,202			2,560
Total assets	$	1,269,462		$	1,151,478

Liabilities and shareholders’ equity
Noninterest bearing deposits	$	107,469		$	102,694
Interest bearing deposits		1,013,100			922,540
Total deposits		1,120,569			1,025,234

Borrowings from FHLB, short term		8,000			-
Borrowings from FHLB, long term		13,600			18,150
Accrued expenses and other liabilities		14,924			11,903
Total liabilities		1,157,093			1,055,287
Total shareholders’ equity		112,369			96,191
Total liabilities and shareholders’ equity	$	1,269,462		$	1,151,478
Common shares outstanding		8,537,814			8,537,814
Treasury shares		73,526			73,526

Current period information is preliminary and based on company data available at the time of the press release.

The following information was filed by Greene County Bancorp Inc (GCBC) on Wednesday, July 24, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Greene County Bancorp Inc's 10-K Annual Report:

Financial - Expense Highlight
The allowance for loan losses is increased by a provision for loan losses (which results in a charge to expense) and recoveries of loans previously charged off and is reduced by charge-offs.

Financial - Shares Highlight
A significant decline in home values, however, in the Company's markets could have a negative effect on the consolidated results of operations, as any such decline in home values would likely lead to a decrease in residential real estate loans and new home equity loan originations and increased delinquencies and defaults in both the consumer home equity loan and the residential real estate loan portfolios and result in increased losses in these portfolios.
Financial - Shares Highlight
The Company considers many factors, including the severity and duration of the impairment; the intent and ability of the Company to hold the equity security for a period of time sufficient for a recovery in value; recent events specific to the issuer or industry; and for debt securities, the intent to sell the security, the likelihood to be required to sell the security before it recovers the entire amortized cost, external credit ratings and recent downgrades.
Financial - Expense Highlight
Also, other noninterest expense increased as a result of an increase in foreclosed real estate losses, fees related to correspondent bank activity, and a general increase in other expenses related to branch expansion and balance sheet growth.
Other - Other Highlight
IMPACT OF INFLATION AND CHANGING PRICES The consolidated financial statements of Greene County Bancorp, Inc. and notes thereto, presented elsewhere herein, have been prepared in accordance with U.S. generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time and due to inflation.
Other - Other
The yield earned on such...Read more
Other - Other
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS...Read more
Financial - Income
Interest income earned on securities...Read more
Other - Other
The increase was also the...Read more
Other - Other
ALLOWANCE FOR LOAN LOSSES The...Read more
Other - Other
Analysis of allowance for loan...Read more
Other - Other
This increase was primarily due...Read more
Financial - Expense
These increases in noninterest expense...Read more
Financial - Expense
The impact of inflation is...Read more
Financial - Income
Investment services income also increased...Read more
Financial - Earnings
FINANCIAL OVERVIEW Net income for...Read more
Financial - Earnings
The increase in accrued interest...Read more
Financial - Expense
This increase was due to...Read more
Financial - Earnings
Net interest spread and margin...Read more
Other - Other
The Company has an Irrevocable...Read more
Financial - Shares
SHAREHOLDERS' EQUITY Shareholders' equity increased...Read more
Financial - Earnings
Net interest margin increased to...Read more
Other - Other
Analysis of Nonaccrual Loans, Nonperforming...Read more
Other - Other
Greene County Bancorp, Inc. holds...Read more
Financial - Income
The statutory tax rate is...Read more
Financial - Earnings
Net interest margin increased eight...Read more
Other - Other
Total assets grew $118.0 million,...Read more
Other - Other
LOANS Net loans receivable increased...Read more
Financial - Income
The change in net interest...Read more
Other - Other
The Company continues to experience...Read more
Other - Other
Generally, management places loans on...Read more
Other - Other
Purchases totaled $589,000 during the...Read more
Other - Other
Purchases totaled $324,000 during the...Read more
Other - Other
The allowance for loan losses...Read more
Other - Other
Growth in loans was primarily...Read more
Other - Other
The decrease in impaired loans...Read more
Other - Other
Such evaluation, which includes a...Read more
Other - Other
We believe that the continued...Read more
Financial - Expense
INTEREST EXPENSE Interest expense for...Read more
Financial - Expense
Interest expense paid on certificates...Read more
Other - Other
Deposits grew $95.3 million, or...Read more
Other - Other
Critical Accounting Policies Greene County...Read more
Financial - Earnings
Total average interest-earning assets increased...Read more
Financial - Earnings
Growth in interest-earning assets was...Read more
Other - Other
The effective tax rate was...Read more
Other - Other
The increase in the average...Read more
Revenue - Product
Comparison of Financial Condition as...Read more
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Greene County Bancorp, Inc. has...Read more
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Taxable-equivalent net interest income and...Read more
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The average balance of savings...Read more

Financial Statements, Disclosures and Schedules

Inside this 10-K Annual Report

Material Contracts, Statements, Certifications & more

Greene County Bancorp Inc provided additional information to their SEC Filing as exhibits

Exhibit 21.0: Subsidaries Of The Registrant

Exhibit 23.0: Consents Of Experts And Counsel

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32.1: Section 1350 Certification

Exhibit 32.2: Section 1350 Certification

Ticker: GCBC
CIK: 1070524
Form Type: 10-K Annual Report
Accession Number: 0001140361-19-016552
Submitted to the SEC: Thu Sep 12 2019 2:05:49 AM EST
Accepted by the SEC: Thu Sep 12 2019
Period: Sunday, June 30, 2019
Industry: Savings Institutions Not Federally Chartered

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Greene County Bancorp Inc (GCBC) SEC Filing 10-K Annual report for the fiscal year ending Sunday, June 30, 2019

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