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Greene County Bancorp Inc (GCBC) SEC Filing 10-Q Quarterly report for the period ending Tuesday, March 31, 2020

SEC Filings

GCBC Quarterly Reports

Greene County Bancorp Inc

CIK: 1070524 Ticker: GCBC

EXHIBIT  99.1


FOR RELEASE

Date: April 24, 2020

For Further Information Contact:
Donald E. Gibson
President & CEO
(518) 943-2600
donaldg@tbogc.com

Michelle M. Plummer, CPA & CGMA
EVP, COO & CFO
(518) 943-2600
michellep@tbogc.com

Greene County Bancorp, Inc. Reports Strong Net Income for the Nine Months Ended March 31, 2020 and Remains Well Positioned to Support Community Needs During COVID-19 Crisis

Catskill, N.Y. – April 24, 2020-- 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 three and nine months ended March 31, 2020.  Net income for the three and nine months ended March 31, 2020 was $4.1 million, or $0.47 per basic and diluted share, and $14.0 million, or $1.64 per basic and diluted share, respectively, as compared to $4.4 million, or $0.51 per basic and diluted share, and $13.3 million, or $1.56 per basic and diluted share, for the three and nine months ended March 31, 2019, respectively.  Net income decreased $305,000, or 7.5%, when comparing the three months ended March 31, 2020 and 2019, and increased $707,000, or 5.3%, when comparing the nine months ended March 31, 2020 and 2019.  The decrease in net income for the three months ended March 31, 2020 was primarily the result of additional provision for loan loss recorded for the period as a result of the COVID-19 crisis.

Total assets for the Company were $1.6 billion at March 31, 2020, primarily consisting of $591.7 million of total securities available-for-sale and held-to-maturity and $883.7 million of net loans.  Deposits totaled $1.4 billion at March 31, 2020, consisting of retail, business and municipal banking relationships.  The Bank of Greene County operates 16 full-service banking offices, with operations and lending centers located in the Capital District and Hudson Valley Regions of New York State.

Over the three months ended March 31, 2020, a novel strain of coronavirus (“COVID-19”) has spread world-wide and the Federal and state governments have been diligently working to contain its spread. The coronavirus pandemic has created much turmoil for many businesses throughout our country and in our financial markets. With much uncertainty regarding the duration of the containment strategies, the overall impact to the Company’s financial position cannot be determined at this time. However, the Company continues to maintain quality assets, strong capital and liquidity.  With 11 years of record income and continued growth in both assets and earnings during the nine months ended March 31, 2020, management believes that it is well positioned to withstand the financial impact from this health crisis.

Donald Gibson, President & CEO stated: “I can’t define how long this crisis will last or how fast or slow the recovery will take. What I do know is that our institution will be there for our customers, communities and employees. It has been our objective for decades to build one of America’s great community banks, one defined by long term superior performance and a quality balance sheet. It is during these very difficult times that we need to use our strong capital and liquidity to provide assistance to our clients and community. Rest assured that is exactly what we are doing.”


The Company’s strength not only lies within its balance sheet, but with its employees.  With a strong management team, we believe we have been able to adapt to the rapidly changing needs of our customers, proactively reaching out to borrowers and providing assistance to both individuals and businesses during this time of great need.   Management is working with borrowers to determine best strategies to help mitigate the impact of the temporary business closures, decline in business, and loss of employment, including payment deferrals, debt consolidations and/or loan restructurings. The Company has instituted a loan deferment program whereby short-term (3-6 months) deferral of principal and/or interest payments will be provided.  As of April 23, 2020, the Bank has received requests to modify 637 loans aggregating $174.7 million.   Based on guidance provided by bank regulators on March 22, 2020 regarding deferrals granted due to COVID-19, the Company will not report these loans as delinquent and will continue to recognize interest income during the deferral period.  These loans will be closely monitored to determine collectability and accrual and delinquency status will be updated as deemed appropriate.

The Company is also participating in the CARES Act Paycheck Protection Program (“PPP”), providing loans to local small businesses through the Small Business Administration.  As of April 23, 2020, the Company has processed 521 applications for up to $61.1 million of loans under the PPP.  We expect that most of the funds provided will be forgiven based on certain criteria established within the Act.

Depending upon the duration of the crisis, these strategies may not be sufficient for all borrowers impacted and may ultimately result in losses to the Company.  As discussed under Asset Quality and Loan Loss Provision below, the Company has increased its allowance for loan losses during the three months ended March 31, 2020 and believes that total reserves are adequate.

The Federal Reserve Board has taken a number of measures in an attempt to mitigate the impact of the coronavirus on the economy.  In addition to providing guidance to financial institutions who are working with borrowers affected by the coronavirus, the Federal Reserve Board decreased the Federal Funds benchmark rate by 100 basis points to 0.00%-.0.25%, in mid-March 2020.  Although the impact to the Company from this rate decrease is minimal for the three and nine months ended March 31, 2020, it is anticipated that it will have a negative impact on the Company’s interest rate spread and margin during the quarter and fiscal year ended June 30, 2020.

Selected highlights for the three and nine months ended March 31, 2020 are as follows:

Net Interest Income and Margin

Net interest income increased $1.1 million to $11.1 million for the three months ended March 31, 2020 from $10.0 million for the three months ended March 31, 2019. Net interest income increased $2.9 million to $32.6 million for the nine months ended March 31, 2020 from $29.7 million for the nine months ended March 31, 2019. These increases in net interest income were primarily the result of growth in the average balance of interest-earning assets, with continued growth in loans and securities, funded primarily from growth in deposits.  Increases in net interest income as a result of growth in balances have been partially offset by decreases in yields on interest-earning assets resulting from five interest rate decreases by the Federal Reserve Board during the nine months ended March 31, 2020. Average loan balances increased $108.3 million and $93.1 million when comparing the three and nine months ended March 31, 2020 and 2019, respectively. The yield on loans decreased nine basis points when comparing the three months ended March 31, 2020 and 2019, and increased one basis point when comparing the nine months ended March 31, 2020 and 2019.   Average securities increased $154.0 million and $106.5 million, and the yield on such securities decreased 24 basis points and 14 basis points when comparing the three and nine months ended March 31, 2020 and 2019, respectively.  The increase in net interest income was partially offset by an increase in interest expense primarily the result of increases in the rates paid on interest-bearing liabilities, most notably NOW deposit accounts.  The average balance of NOW deposits grew by $261.0 million and $234.5 million when comparing the three and nine months ended March 31, 2020 and 2019.  The rate paid on these NOW accounts increased seven basis points and 23 basis points when comparing the three and nine months ended March 31, 2020 and 2019, respectively. This growth in higher costing deposits was the result of promotions within the Company’s newer markets targeting new business, municipal and retail customers.

Net interest rate spread and margin both decreased when comparing the three and nine months ended March 31, 2020 and 2019. Net interest rate spread decreased 36 basis points to 2.88% for the three months ended March 31, 2020 compared to 3.24% for the three months ended March 31, 2019. Net interest margin decreased 35 basis points to 2.99% for the three months ended March 31, 2020 compared to 3.34% for the three months ended March 31, 2019. Net interest rate spread decreased 31 basis points to 3.00% for the nine months ended March 31, 2020 compared to 3.31% for the nine months ended March 31, 2019. Net interest rate margin decreased 29 basis points to 3.12% for the nine months ended March 31, 2020 compared to 3.41% for the nine Months ended March 31, 2019.  Decreases in net interest spread and margin resulted primarily from the higher cost of interest-bearing liabilities and lower yields on securities, partially offset by growth in average 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 3.16% and 3.51% for the three months ended March 31, 2020 and 2019, respectively, and was 3.29% and 3.58% for the nine months ended March 31, 2020 and 2019, respectively.

Asset Quality and Loan Loss Provision

Provision for loan losses amounted to $1.4 million and $350,000 for the three months ended March 31, 2020 and 2019, respectively, and amounted to $2.7 million and $1.1 million for the nine months ended March 31, 2020 and 2019, respectively. The increases during the 2020 periods was due to the growth in gross loans, an increase in loans adversely classified and additional provision of $500,000 due to the economic uncertainties surrounding the COVID-19 pandemic.  Loans classified as substandard or special mention totaled $27.1 million at March 31, 2020 compared to $17.1 million at June 30, 2019, an increase of $10.0 million. Reserves on these loans totaled $2.0 million at March 31, 2020 compared to $1.5 million at June 30, 2019, an increase of $517,000. The increase in classified loans was primarily due to the downgrade of a construction loan to special mention during the nine months ended March 31, 2020 as a result of project cost overruns and several delinquent payments. Several other commercial real estate and commercial loan relationships have been downgraded to special mention during the three and nine months ended March 31, 2020 due to a deterioration in borrower cash flows.  These changes in classification were not due to the COVID-19 pandemic. At March 31, 2020, these loans were all performing.  Management continues to monitor this loan relationship closely.  No loans were classified as doubtful or loss at March 31, 2020 or June 30, 2019. Allowance for loan losses to total loans receivable was 1.69% at March 31, 2020, and 1.65% at June 30, 2019.

Net charge-offs for the three months ended March 31, 2020 totaled $204,000 compared to $177,000 for the three months ended March 31, 2019.  Net charge-offs totaled $661,000 and $236,000 for the nine months ended March 31, 2020 and 2019, respectively.  The increases in net charge-off activity during the 2020 periods were primarily due to an increase in charge-offs within the commercial and consumer loan portfolios and decreases in recoveries within the commercial loan portfolio. Commercial loan net charge-offs totaled $297,000 for the nine months ended March 31, 2020 compared to a net recovery of $102,000 for the nine months ended March 31, 2019. Consumer loan net charge-offs totaled $276,000 and $181,000 for the nine months ended March 31, 2020 and 2019, respectively, an increase of $95,000.  Charge-offs during the three and nine months ended March 31, 2020 were not the result of COVID-19.

Nonperforming loans amounted to $3.9 million and $3.6 million at March 31, 2020 and June 30, 2019, respectively. Nonperforming assets were 0.25% and 0.29% of total assets, and nonperforming loans were 0.44% and 0.46% of net loans at March 31, 2020 and June 30, 2019, respectively.  Nonperforming assets to total assets were 0.24% and nonperforming loans to net loans were 0.39%, at March 31, 2019.

Noninterest Income and Noninterest Expense

Noninterest income increased $116,000, or 5.8%, and totaled $2.1 million and $2.0 million for the three months ended March 31, 2020 and 2019.  Noninterest income increased $505,000, or 8.1%, and totaled $6.7 million and $6.2 million for the nine months ended March 31, 2020 and 2019.  The increases during the 2020 periods were 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.

Noninterest expense increased $742,000 or 11.4%, to $7.2 million for the three months ended March 31, 2020 as compared to $6.5 million for the three months ended March 31, 2019. Noninterest expense increased $1.5 million, or 8.0%, to $20.2 million for the nine months ended March 31, 2020, compared to $18.7 million for the nine months ended March 31, 2019.  The increases during the three and nine months ended March 31, 2020 were primarily due to an increase in salaries and employee benefits expenses resulting from additional staffing for a new branch located in Kinderhook-Valatie, New York, which opened in July 2019. As the Company continues to grow, staffing was also increased within our lending department, customer service center and investment center. This increase was partially offset by a decrease in FDIC insurance premiums.  In January 2019, the FDIC provided notification to the Company that a credit in the amount of $177,000 was calculated for The Bank of Greene County, and a credit in the amount of $91,000 was calculated for Greene County Commercial Bank, based on a change in assessments under FDIC regulations resulting from the Deposit Insurance Fund Reserve Ratio reaching 1.36%.  The Company received credits totaling $40,000 and $268,000 during the three and nine months ended March 31, 2020.  This credit was applied against FDIC insurance premiums expense. No credits remain at March 31, 2020.


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 12.2% and 14.5% for the three and nine months ended March 31, 2020, compared to 16.2% and 17.4% for the three and nine months ended March 31, 2019.   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 $1.6 billion at March 31, 2020 and $1.3 billion at June 30, 2019, an increase of $315.0 million, or 24.8%.

Securities available-for-sale and held-to-maturity increased $164.8 million, or 38.6%, to $591.7 million at March 31, 2020 as compared to $426.9 million at June 30, 2019. Securities purchases totaled $286.1 million during the nine months ended March 31, 2020, and consisted of $194.1 million of state and political subdivision securities and $84.7 million of mortgage-backed securities, $3.8 million of other securities, and $3.5 million of corporate securities.  Principal pay-downs and maturities during the nine months amounted to $120.9 million, of which $27.1 million were mortgage-backed securities, $83.1 million were state and political subdivision securities, $10.3 million were U.S. government sponsored enterprises and $0.3 million were other securities.

Net loans receivable increased $98.0 million, or 12.5%, to $883.7 million at March 31, 2020 from $785.7 million at June 30, 2019.  The loan growth experienced during the nine months ended March 31, 2020 consisted primarily of $34.0 million in commercial construction loans, $44.5 million in commercial real estate loans, $10.1 million in commercial loans, $10.1 million in residential mortgages, $1.0 million in multi-family loans and $1.6 million in residential construction and land loans.  This growth was partially offset by a $1.0 million decrease in home equity loans, and $2.0 million increase in allowance for loan losses.  We believe that the continued low interest rate environment and strong customer satisfaction from personal service continued to enhance loan growth.

Deposits totaled $1.4 billion at March 31, 2020 and $1.1 billion at June 30, 2019, an increase of $309.0 million, or 27.6%. NOW deposits increased $292.2 million, or 45.2%, money market deposits increased $15.0 million, or 13.1%, and savings deposits increased $3.0 million, or 1.4% when comparing March 31, 2020 and June 30, 2019.  These increases were offset by a decrease in noninterest-bearing deposits of $625,000, or 0.6%, and a decrease in certificates of deposits of $548,000, or 1.5%, when comparing March 31, 2020 and June 30, 2019. Deposits increased during the nine months ended March 31, 2020 as a result of an increase in municipal deposits at Greene County Commercial Bank, primarily from tax collection, and new account relationships resulting from promotions in newer markets.

Borrowings for the Company amounted to $9.1 million of term borrowings with the Federal Home Loan Bank of New York (“FHLB”), at March 31, 2020, compared to $8.0 million of overnight borrowings and $13.6 million of term borrowings, with the FHLB, at June 30, 2019. There were no overnight borrowings outstanding at March 31, 2020.  The Company also had $4.0 million of short-term borrowings with Atlantic Central Bankers Bank (“ACBB”) at March 31, 2020.  At March 31, 2020, the Company had $180.2 million available in unused lines of credit from the FHLB, Federal Reserve Bank (“FRB”), ACBB and two other financial institutions.  Effective April 9, 2020, the FRB instituted a program, the Paycheck Protection Plan Lending Facility (“PPPLF”) to provide banks additional funding for liquidity whereby the PPP loans are pledged as collateral.  The PPPLF can provide additional liquidity up to the principal balance of PPP loans on the Company’s balance sheet.  The Company is closely monitoring is liquidity needs and is set up to be able to obtain funds up to the principal balance of PPP loans outstanding from the Federal Reserve Bank should it become necessary.

Shareholders’ equity increased to $124.0 million at March 31, 2020 from $112.4 million at June 30, 2019, resulting primarily from net income of $14.0 million and a decrease in other accumulated comprehensive loss of $36,000, partially offset by dividends declared and paid of $1.8 million and repurchase of stock of $631,000.  On September 17, 2019, the Board of Directors of the Company adopted a stock repurchase program.  Under the repurchase program, the Company may repurchase up to 200,000 shares of its common stock.  Repurchases will be made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. At March 31, 2020, the Company had repurchased a total of 24,400 shares of the 200,000 shares authorized by the repurchase program.


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 and Capital District 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.

(END)


Greene County Bancorp, Inc.
Consolidated Statements of Income, and Selected Financial Ratios (Unaudited)

   
At or for the Three Months
Ended March 31,
   
At or for the Nine Months
Ended March 31,
 
Dollars in thousands, except share and per share data
 
2020
   
2019
   
2020
   
2019
 
Interest income
 
$
13,437
   
$
11,708
   
$
39,242
   
$
34,111
 
Interest expense
   
2,296
     
1,682
     
6,690
     
4,433
 
Net interest income
   
11,141
     
10,026
     
32,552
     
29,678
 
Provision for loan losses
   
1,425
     
350
     
2,666
     
1,058
 
Noninterest income
   
2,126
     
2,010
     
6,708
     
6,203
 
Noninterest expense
   
7,228
     
6,486
     
20,185
     
18,694
 
Income before taxes
   
4,614
     
5,200
     
16,409
     
16,129
 
Tax provision
   
563
     
844
     
2,382
     
2,809
 
Net Income
 
$
4,051
   
$
4,356
   
$
14,027
   
$
13,320
 
                                 
Basic and diluted EPS
 
$
0.47
   
$
0.51
   
$
1.64
   
$
1.56
 
Weighted average shares outstanding
   
8,531,304
     
8,537,814
     
8,535,391
     
8,537,814
 
Dividends declared per share 4
 
$
0.11
   
$
0.10
   
$
0.33
   
$
0.30
 
                                 
Selected Financial Ratios
                               
Return on average assets1
   
1.07
%
   
1.43
%
   
1.32
%
   
1.51
%
Return on average equity1
   
13.22
%
   
16.44
%
   
15.80
%
   
17.45
%
Net interest rate spread1
   
2.88
%
   
3.24
%
   
3.00
%
   
3.31
%
Net interest margin1
   
2.99
%
   
3.34
%
   
3.12
%
   
3.41
%
Fully taxable-equivalent net interest margin2
   
3.16
%
   
3.51
%
   
3.29
%
   
3.58
%
Efficiency ratio3
   
54.48
%
   
53.89
%
   
51.41
%
   
52.10
%
Non-performing assets to total assets
                   
0.25
%
   
0.24
%
Non-performing loans to net loans
                   
0.44
%
   
0.39
%
Allowance for loan losses to non-performing loans
                   
391.38
%
   
429.92
%
Allowance for loan losses to total loans
                   
1.69
%
   
1.66
%
Shareholders’ equity to total assets
                   
7.83
%
   
8.50
%
Dividend payout ratio4
                   
20.12
%
   
19.23
%
Actual dividends paid to net income5
                   
12.89
%
   
12.34
%
Book value per share
                 
$
14.56
   
$
12.68
 

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 and 3.32% for New York State income taxes for the periods ended March 31, 2020 and 2019. The following table summarizes the adjustments made to arrive at the fully taxable-equivalent net interest margin.

   
For the three months ended
   
For the nine months ended
 
(Dollars in thousands)
 
March 31, 2020
   
March 31, 2019
   
March 31, 2020
   
March 31, 2019
 
Net interest income (GAAP)
 
$
11,141
   
$
10,026
   
$
32,552
   
$
29,678
 
Tax-equivalent adjustment
   
628
     
496
     
1,820
     
1,455
 
Net interest income (fully taxable-equivalent basis)
 
$
11,769
   
$
10,522
   
$
34,372
   
$
31,133
 
                                 
Average interest-earning assets
 
$
1,489,279
   
$
1,199,096
   
$
1,392,940
   
$
1,161,046
 
Net interest margin (fully taxable-equivalent basis)
   
3.16
%
   
3.51
%
   
3.29
%
   
3.58
%

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 September 30, 2019 and March 31, 2020.  Dividends declared during the three months ended December 31, 2019 were paid to the MHC.  Dividends declared during the three months ended September 30, 2018 were paid to the MHC.  The MHC waived its right to receive dividends during the three months ended December 31, 2018 and March 31, 2019.  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)

   
At
March 31, 2020
   
At
June 30, 2019
 
(Dollars In thousands, except share data)
           
Assets
           
Total cash and cash equivalents
 
$
77,814
   
$
29,538
 
Long term certificate of deposit
   
4,071
     
2,875
 
Securities- available for sale, at fair value
   
209,122
     
122,728
 
Securities- held to maturity, at amortized cost
   
382,532
     
304,208
 
Equity securities, at fair value
   
238
     
253
 
Federal Home Loan Bank stock, at cost
   
1,196
     
1,759
 
                 
Gross loans receivable
   
897,961
     
798,105
 
Less:  Allowance for loan losses
   
(15,205
)
   
(13,200
)
Unearned origination fees and costs, net
   
979
     
833
 
Net loans receivable
   
883,735
     
785,738
 
                 
Premises and equipment
   
13,366
     
13,255
 
Accrued interest receivable
   
7,506
     
5,853
 
Foreclosed real estate
   
-
     
53
 
Prepaid expenses and other assets
   
4,892
     
3,202
 
Total assets
 
$
1,584,472
   
$
1,269,462
 
                 
Liabilities and shareholders’ equity
               
Noninterest bearing deposits
 
$
106,844
   
$
107,469
 
Interest bearing deposits
   
1,322,688
     
1,013,100
 
Total deposits
   
1,429,532
     
1,120,569
 
                 
Borrowings from FHLB, short term
   
-
     
8,000
 
Borrowings from other banks, short term
   
4,000
     
-
 
Borrowings from FHLB, long term
   
9,100
     
13,600
 
Accrued expenses and other liabilities
   
17,847
     
14,924
 
Total liabilities
   
1,460,479
     
1,157,093
 
Total shareholders’ equity
   
123,993
     
112,369
 
Total liabilities and shareholders’ equity
 
$
1,584,472
   
$
1,269,462
 
Common shares outstanding
   
8,513,414
     
8,537,814
 
Treasury shares
   
97,926
     
73,526
 

The above information is preliminary and based on the Company’s data available at the time of presentation.
 



The following information was filed by Greene County Bancorp Inc (GCBC) on Friday, April 24, 2020 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-Q

☒ QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT


GREENE COUNTY BANCORP, INC.
(Exact name of registrant as specified in its charter)

Commission file number  0-25165

United States
 
14-1809721
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer  Identification Number)

302 Main Street, Catskill, New York
 
12414
(Address of principal executive office)
 
(Zip code)

Registrant’s telephone number, including area code: (518) 943-2600

Securities registered pursuant to Section 12(b) of the Act:

Title of class
 
Trading symbol
 
Name of exchange on which registered
Common Stock, $0.10 par value
 
GCBC
 
The Nasdaq Stock Market

Securities Registered Pursuant to Section 12(g) of the Act:
None
(Title of Class)

Check 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 ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES ☒  NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐
 
Accelerated filer ☒
 
Emerging Growth Company ☐
Non-accelerated filer ☐
 
Smaller reporting company ☒
   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   YES ☐   NO ☒

As of May 6, 2020, the registrant had 8,513,414 shares of common stock outstanding at $ 0.10 par value per share.



 
GREENE COUNTY BANCORP, INC.
 
     
 
INDEX
 
     
PART I.
FINANCIAL INFORMATION
 
   
Page
Item 1.
Financial Statements (unaudited)
 
 
3
 
4
 
5
 
6
 
7
 
8-33
     
Item 2.
34-50
     
Item 3.
50
     
Item 4.
50
     
PART II.
OTHER INFORMATION
 
     
Item 1.
51
     
Item 1A.
51
     
Item 2.
51
     
Item 3.
51
     
Item 4.
51
     
Item 5.
51
     
Item 6.
51
     
 
52

2

Greene County Bancorp, Inc.
Consolidated Statements of Financial Condition
At March 31, 2020 and June 30, 2019
(Unaudited)
(In thousands, except share and per share amounts)

ASSETS
 
March 31, 2020
   
June 30, 2019
 
Total cash and cash equivalents
 
$
77,814
   
$
29,538
 
                 
Long term certificates of deposit
   
4,071
     
2,875
 
Securities available-for-sale, at fair value
   
209,122
     
122,728
 
Securities held-to-maturity, at amortized cost (fair value $399,256 at March 31, 2020; $313,613 at June 30, 2019)
   
382,532
     
304,208
 
Equity securities, at fair value
   
238
     
253
 
Federal Home Loan Bank stock, at cost
   
1,196
     
1,759
 
                 
Loans
   
897,961
     
798,105
 
Allowance for loan losses
   
(15,205
)
   
(13,200
)
Unearned origination fees and costs, net
   
979
     
833
 
Net loans receivable
   
883,735
     
785,738
 
                 
Premises and equipment, net
   
13,366
     
13,255
 
Accrued interest receivable
   
7,506
     
5,853
 
Foreclosed real estate
   
-
     
53
 
Prepaid expenses and other assets
   
4,892
     
3,202
 
Total assets
 
$
1,584,472
   
$
1,269,462
 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Noninterest-bearing deposits
 
$
106,844
   
$
107,469
 
Interest-bearing deposits
   
1,322,688
     
1,013,100
 
Total deposits
   
1,429,532
     
1,120,569
 
                 
Borrowings from Federal Home Loan Bank, short-term
   
-
     
8,000
 
Borrowings from other banks, short-term
   
4,000
     
-
 
Borrowings from Federal Home Loan Bank, long-term
   
9,100
     
13,600
 
Accrued expenses and other liabilities
   
17,847
     
14,924
 
Total liabilities
   
1,460,479
     
1,157,093
 
                 
SHAREHOLDERS’ EQUITY
               
Preferred stock, Authorized - 1,000,000 shares; Issued - None
   
-
     
-
 
Common stock, par value $.10 per share;
               
Authorized - 12,000,000 shares; Issued – 8,611,340;
               
Outstanding – 8,513,414 shares at March 31, 2020, and 8,537,814 at June 30, 2019
   
861
     
861
 
Additional paid-in capital
   
11,017
     
11,017
 
Retained earnings
   
113,993
     
101,774
 
Accumulated other comprehensive loss
   
(970
)
   
(1,006
)
Treasury stock, at cost 97,926 shares at March 31, 2020, and 73,526 shares at June 30, 2019
   
(908
)
   
(277
)
Total shareholders’ equity
   
123,993
     
112,369
 
Total liabilities and shareholders’ equity
 
$
1,584,472
   
$
1,269,462
 

See notes to consolidated financial statements

3

       Greene County Bancorp, Inc.
Consolidated Statements of Income
For the Three and Nine Months Ended March 31, 2020 and 2019
(Unaudited)
(In thousands, except share and per share amounts)

   
For the three months ended
March 31,
   
For the nine months ended
March 31,
 
   
2020
   
2019
   
2020
   
2019
 
Interest income:
                       
Loans
 
$
9,955
   
$
8,900
   
$
29,161
   
$
25,894
 
Investment securities - taxable
   
178
     
197
     
509
     
608
 
Mortgage-backed securities
   
1,327
     
978
     
3,832
     
3,151
 
Investment securities - tax exempt
   
1,771
     
1,418
     
5,129
     
4,184
 
Interest-bearing deposits and federal funds sold
   
206
     
215
     
611
     
274
 
Total interest income
   
13,437
     
11,708
     
39,242
     
34,111
 
                                 
Interest expense:
                               
Interest on deposits
   
2,239
     
1,584
     
6,494
     
3,891
 
Interest on borrowings
   
57
     
98
     
196
     
542
 
Total interest expense
   
2,296
     
1,682
     
6,690
     
4,433
 
                                 
Net interest income
   
11,141
     
10,026
     
32,552
     
29,678
 
Provision for loan losses
   
1,425
     
350
     
2,666
     
1,058
 
Net interest income after provision for loan losses
   
9,716
     
9,676
     
29,886
     
28,620
 
                                 
Noninterest income:
                               
Service charges on deposit accounts
   
1,034
     
960
     
3,270
     
3,103
 
Debit card fees
   
698
     
604
     
2,196
     
1,929
 
Investment services
   
120
     
145
     
433
     
396
 
E-commerce fees
   
24
     
31
     
90
     
102
 
Other operating income
   
250
     
270
     
719
     
673
 
Total noninterest income
   
2,126
     
2,010
     
6,708
     
6,203
 
                                 
Noninterest expense:
                               
Salaries and employee benefits
   
4,412
     
4,005
     
12,346
     
11,160
 
Occupancy expense
   
496
     
471
     
1,403
     
1,287
 
Equipment and furniture expense
   
191
     
112
     
598
     
453
 
Service and data processing fees
   
626
     
546
     
1,838
     
1,583
 
Computer software, supplies and support
   
285
     
260
     
791
     
683
 
Advertising and promotion
   
115
     
110
     
373
     
306
 
FDIC insurance premiums
   
159
     
117
     
132
     
344
 
Legal and professional fees
   
274
     
280
     
878
     
892
 
Other
   
670
     
585
     
1,826
     
1,986
 
Total noninterest expense
   
7,228
     
6,486
     
20,185
     
18,694
 
                                 
Income before provision for income taxes
   
4,614
     
5,200
     
16,409
     
16,129
 
Provision for income taxes
   
563
     
844
     
2,382
     
2,809
 
Net income
 
$
4,051
   
$
4,356
   
$
14,027
   
$
13,320
 
                                 
Basic and diluted earnings per share
 
$
0.47
   
$
0.51
   
$
1.64
   
$
1.56
 
Basic and diluted average shares outstanding
   
8,531,304
     
8,537,814
     
8,535,391
     
8,537,814
 
Dividends per share
 
$
0.11
   
$
0.10
   
$
0.33
   
$
0.30
 

See notes to consolidated financial statements

4

Greene County Bancorp, Inc.
Consolidated Statements of Comprehensive Income
For the Three and Nine Months Ended March 31, 2020 and 2019
(Unaudited)
(In thousands)

   
For the three months ended
March 31,
   
For the nine months ended
March 31,
 
   
2020
   
2019
   
2020
   
2019
 
Net Income
 
$
4,051
   
$
4,356
   
$
14,027
   
$
13,320
 
Other comprehensive  income:
                               
Unrealized holding  gains on available-for-sale securities, net of income tax expense of $149 and $64, for the three months, and  $13 and $141, for the nine months ended March 31, 2020 and 2019, respectively
   
421
     
181
     
36
     
398
 
                                 
Total other comprehensive  income, net of taxes
   
421
     
181
     
36
     
398
 
                                 
Comprehensive income
 
$
4,472
   
$
4,537
   
$
14,063
   
$
13,718
 

See notes to consolidated financial statements.

5

Greene County Bancorp, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
For the Three Months Ended March 31, 2020 and 2019
(Unaudited)
(In thousands)

 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Treasury
Stock
 
Total
Shareholders’
Equity
 
Balance at December 31, 2018
 
$
861
   
$
11,017
   
$
94,040
   
$
(1,520
)
 
$
(277
)
 
$
104,121
 
Dividends declared
   
-
     
-
     
(393
)
   
-
     
-
     
(393
)
Net income
   
-
     
-
     
4,356
     
-
     
-
     
4,356
 
Other comprehensive income, net of taxes
   
-
     
-
     
-
     
181
     
-
     
181
 
Balance at March 31, 2019
 
$
861
   
$
11,017
   
$
98,003
   
$
(1,339
)
 
$
(277
)
 
$
108,265
 

 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Treasury
Stock
 
Total
Shareholders’
Equity
 
Balance at December 31, 2019
 
$
861
   
$
11,017
   
$
110,374
   
$
(1,391
)
 
$
(315
)
 
$
120,546
 
Stock repurchases
   
-
     
-
     
-
     
-
     
(594
)
   
(594
)
Dividends declared
   
-
     
-
     
(432
)
   
-
     
-
     
(432
)
Net income
   
-
     
-
     
4,051
     
-
     
-
     
4,051
 
Other comprehensive income, net of taxes
   
-
     
-
     
-
     
421
     
-
     
421
 
Balance at March 31, 2020
 
$
861
   
$
11,017
   
$
113,993
   
$
(970
)
 
$
(908
)
 
$
123,993
 

Greene County Bancorp, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
For the Nine Months Ended March 31, 2020 and 2019
(Unaudited)
(In thousands)

   
Common
Stock
   
Additional
Paid-In
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Loss
   
Treasury
Stock
   
Total
Shareholders’
Equity
 
Balance at June 30, 2018
 
$
861
   
$
11,017
   
$
86,213
   
$
(1,623
)
 
$
(277
)
 
$
96,191
 
Impact of Adopting ASU 2016-01(1)
   
-
     
-
     
114
     
(114
)
   
-
     
-
 
Dividends declared
   
-
     
-
     
(1,644
)
   
-
     
-
     
(1,644
)
Net income
   
-
     
-
     
13,320
     
-
     
-
     
13,320
 
Other comprehensive income, net of taxes
   
-
     
-
     
-
     
398
     
-
     
398
 
Balance at March 31, 2019
 
$
861
   
$
11,017
   
$
98,003
   
$
(1,339
)
 
$
(277
)
 
$
108,265
 

   
Common
Stock
   
Additional
Paid-In
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Loss
   
Treasury
Stock
   
Total
Shareholders’
Equity
 
Balance at June 30, 2019
 
$
861
     
11,017
   
$
101,774
   
$
(1,006
)
 
$
(277
)
 
$
112,369
 
Stock repurchases
   
-
     
-
             
-
     
(631
)
   
(631
)
Dividends declared
   
-
     
-
     
(1,808
)
   
-
     
-
     
(1,808
)
Net income
   
-
     
-
     
14,027
     
-
     
-
     
14,027
 
Other comprehensive income, net of taxes
   
-
     
-
     
-
     
36
     
-
     
36
 
Balance at March 31, 2020
 
$
861
   
$
11,017
   
$
113,993
   
$
(970
)
 
$
(908
)
 
$
123,993
 


(1)
Cumulative effect of change in measurement of equity securities (ASU 2016-01).

See notes to consolidated financial statements.

6

Greene County Bancorp, Inc.
Consolidated Statements of Cash Flows
For the Nine Months Ended March 31, 2020 and 2019
(Unaudited)
(In thousands)

   
2020
   
2019
 
Cash flows from operating activities:
           
Net Income
 
$
14,027
   
$
13,320
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation
   
539
     
481
 
Deferred income tax benefit
   
(285
)
   
(563
)
Net amortization of premiums and discounts
   
625
     
214
 
Net amortization of deferred loan costs and fees
   
386
     
358
 
Provision for loan losses
   
2,666
     
1,058
 
Net loss (gain) on equity securities
   
15
     
(20
)
Net (gain) loss on sale of foreclosed real estate
   
(19
)
   
34
 
Net increase in accrued income taxes
   
762
     
899
 
Net increase in accrued interest receivable
   
(1,653
)
   
(1,068
)
Net increase in prepaid and other assets
   
(1,944
)
   
(489
)
Net increase in accrued expenses and other liabilities
   
2,687
     
929
 
Net cash provided by operating activities
   
17,806
     
15,153
 
                 
Cash flows from investing activities:
               
Securities available-for-sale:
               
Proceeds from maturities
   
70,520
     
77,974
 
Purchases of securities
   
(164,360
)
   
(62,996
)
Principal payments on securities
   
7,329
     
2,335
 
Securities held-to-maturity:
               
Proceeds from maturities
   
22,873
     
13,007
 
Purchases of securities
   
(121,783
)
   
(50,591
)
Principal payments on securities
   
20,127
     
20,488
 
Net  redemption of Federal Home Loan Bank Stock
   
563
     
247
 
Purchase of long term certificate of deposit
   
(1,441
)
   
(735
)
Maturity of long term certificates of deposit
   
245
     
245
 
Net increase in loans receivable
   
(101,264
)
   
(60,304
)
Proceeds from sale of foreclosed real estate
   
287
     
65
 
Purchases of premises and equipment
   
(650
)
   
(370
)
Net cash used by investing activities
   
(267,554
)
   
(60,635
)
                 
Cash flows from financing activities
               
Net decrease in short-term FHLB advances
   
(8,000
)
   
-
 
Repayment of long-term FHLB advances
   
(4,500
)
   
(5,500
)
Net increase in short-term advances from other banks
   
4,000
     
-
 
Payment of cash dividends
   
(1,808
)
   
(1,644
)
Purchase of treasury stock
   
(631
)
   
-
 
Net increase in deposits
   
308,963
     
114,544
 
Net cash provided by financing activities
   
298,024
     
107,400
 
                 
Net increase in cash and cash equivalents
   
48,276
     
61,918
 
Cash and cash equivalents at beginning of period
   
29,538
     
26,504
 
Cash and cash equivalents at end of period
 
$
77,814
   
$
88,422
 
                 
Non-cash investing activities:
               
Foreclosed loans transferred to foreclosed real estate
 
$
215
   
$
34
 
Cash paid during period for:
               
Interest
 
$
6,675
   
$
4,423
 
Income taxes
 
$
1,904
   
$
2,473
 

See notes to consolidated financial statements

7

Greene County Bancorp, Inc.
Notes to Consolidated Financial Statements
At and for the Three and Nine Months Ended March 31, 2020 and 2019

(1)
Basis of Presentation

Within the accompanying unaudited consolidated statement of financial condition, and related notes to the consolidated financial statements, June 30, 2019 data was derived from the audited consolidated financial statements of Greene County Bancorp, Inc. (the “Company”) and its wholly owned subsidiaries, The Bank of Greene County (the “Bank”) and Greene Risk Management, Inc., and the Bank’s wholly owned subsidiaries, Greene County Commercial Bank and Greene Property Holdings, Ltd.  The consolidated financial statements at and for the three and nine months ended March 31, 2020 and 2019 are unaudited.

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.  To the extent that information and notes required by GAAP for complete financial statements are contained in or are consistent with the audited financial statements incorporated by reference to Greene County Bancorp, Inc.’s Annual Report on Form 10-K for the year ended June 30, 2019, such information and notes have not been duplicated herein.  In the opinion of management, all adjustments (consisting of only normal recurring items) necessary for a fair presentation of the financial position and results of operations and cash flows at and for the periods presented have been included.   The Company had no reclassifications from amounts in the prior year’s consolidated financial statements to conform to the current year’s presentation.  All material inter-company accounts and transactions have been eliminated in the consolidation. The results of operations and other data for the three and nine months ended March 31, 2020 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2020.   These consolidated financial statements consider events that occurred through the date the consolidated financial statements were issued.

CRITICAL ACCOUNTING POLICIES

Greene County Bancorp, Inc.’s critical accounting policies relate to the allowance for loan losses and the evaluation of securities for other-than-temporary impairment.  The allowance for loan losses is based on management’s estimation of an amount that is intended to absorb losses in the existing portfolio.  The allowance for loan losses is established through a provision for loan losses based on management’s evaluation of the risk inherent in the loan portfolio, the composition of the portfolio, specific impaired loans and current economic conditions.  Such evaluation, which includes a review of all loans for which full collectability may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, historical loan loss experience, management’s estimate of probable credit losses and other factors that warrant recognition in providing for the allowance of loan losses.  However, this evaluation involves a high degree of complexity and requires management to make subjective judgments that often require assumptions or estimates about highly uncertain matters.  This critical accounting policy and its application are periodically reviewed with the Audit Committee and the Board of Directors. There have been no significant changes in the application of this critical accounting policy during the three and nine months ended March 31, 2020.

Securities are evaluated for other-than-temporary impairment by performing periodic reviews of individual securities in the investment portfolio.  Greene County Bancorp, Inc. makes an assessment to determine whether there have been any events or economic circumstances to indicate that a security, on which there is an unrealized loss, is impaired on an other-than-temporary basis.  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.  The Company is required to record other-than-temporary impairment charges through earnings, if it has the intent to sell, or will more likely than not be required to sell an impaired debt security before a recovery of its amortized cost basis.  In addition, the Company is required to record other-than-temporary impairment charges through earnings for the amount of credit losses, regardless of the intent or requirement to sell.  Credit loss is measured as the difference between the present value of an impaired debt security’s cash flows and its amortized cost basis.  Non-credit related write-downs to fair value must be recorded as decreases to accumulated other comprehensive income as long as the Company has no intent or requirement to sell an impaired security before a recovery of amortized cost basis.

8

(2)
Nature of Operations

Greene County Bancorp, Inc.’s primary business is the ownership and operation of its subsidiaries, The Bank of Greene County and Greene Risk Management, Inc.  The Bank of Greene County has 16 full-service offices, an operations center and lending center located in its market area within the Hudson Valley and Capital District Regions of New York State.    The Bank of Greene County is primarily engaged in the business of attracting deposits from the general public in The Bank of Greene County’s market area, and investing such deposits, together with other sources of funds, in loans and investment securities.  Greene Risk Management, Inc. is a pooled captive insurance company, which provides additional insurance coverage for the Company and its subsidiaries related to the operations of the Company for which insurance may not be economically feasible.  The Bank of Greene County also owns and operates two subsidiaries, Greene County Commercial Bank and Greene Property Holdings, Ltd. Greene County Commercial Bank’s primary business is to attract deposits from and provide banking services to local municipalities. Greene Property Holdings, Ltd. is a real estate investment trust, which holds mortgages and notes which were originated through and serviced by The Bank of Greene County.

(3)
Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could materially differ from those estimates.  Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the assessment of other-than-temporary security impairment.

While management uses available information to recognize losses on loans, future additions to the allowance for loan losses (the “Allowance”) may be necessary, based on changes in economic conditions, asset quality or other factors.  In addition, various regulatory authorities, as an integral part of their examination process, periodically review the Allowance.  Such authorities may require the Company to recognize additions to the Allowance based on their judgments of information available to them at the time of their examination.

Greene County Bancorp, Inc. makes an assessment to determine whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is impaired on an other-than-temporary basis.  The Company considers many factors including the severity and duration of the impairment; the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value; recent events specific to the issuer or industry; and for debt securities, intent to sell the security, whether it is more likely than not we will be required to sell the security before recovery, whether loss is expected, external credit ratings and recent downgrades.  Securities on which there is an unrealized loss that is deemed to be other-than-temporary are written down to fair value through earnings.

(4)
Securities

Securities at March 31, 2020 consisted of the following:

(In thousands)
 
Amortized Cost
   
Gross Unrealized
Gains
   
Gross Unrealized
Losses
   
Estimated
Fair Value
 
Securities available-for-sale:
                       
U.S. government sponsored enterprises
 
$
2,506
   
$
16
   
$
-
   
$
2,522
 
State and political subdivisions
   
167,823
     
257
     
65
     
168,015
 
Mortgage-backed securities-residential
   
9,814
     
313
     
-
     
10,127
 
Mortgage-backed securities-multi-family
   
23,293
     
706
     
1
     
23,998
 
Corporate debt securities
   
4,511
     
80
     
131
     
4,460
 
Total securities available-for-sale
   
207,947
     
1,372
     
197
     
209,122
 
Securities held-to-maturity:
                               
U.S. government sponsored enterprises
   
2,000
     
12
     
-
     
2,012
 
State and political subdivisions
   
191,244
     
8,445
     
274
     
199,415
 
Mortgage-backed securities-residential
   
41,525
     
897
     
-
     
42,422
 
Mortgage-backed securities-multi-family
   
140,738
     
7,640
     
8
     
148,370
 
Corporate debt securities
   
1,993
     
8
     
36
     
1,965
 
Other securities
   
5,032
     
40
     
-
     
5,072
 
Total securities held-to-maturity
   
382,532
     
17,042
     
318
     
399,256
 
Total securities
 
$
590,479
   
$
18,414
   
$
515
   
$
608,378
 

9

Securities at June 30, 2019 consisted of the following:

(In thousands)
 
Amortized Cost
   
Gross Unrealized
Gains
   
Gross Unrealized
Losses
   
Estimated
Fair Value
 
Securities available-for-sale:
                       
U.S. government sponsored enterprises
 
$
5,522
   
$
31
   
$
-
   
$
5,553
 
State and political subdivisions
   
95,782
     
788
     
-
     
96,570
 
Mortgage-backed securities-residential
   
2,634
     
31
     
20
     
2,645
 
Mortgage-backed securities-multi-family
   
16,151
     
259
     
-
     
16,410
 
Corporate debt securities
   
1,513
     
37
     
-
     
1,550
 
Total securities available-for-sale
   
121,602
     
1,146
     
20
     
122,728
 
Securities held-to-maturity:
                               
U.S. government sponsored enterprises
   
9,249
     
1
     
14
     
9,236
 
State and political subdivisions
   
152,358
     
6,212
     
23
     
158,547
 
Mortgage-backed securities-residential
   
4,570
     
97
     
-
     
4,667
 
Mortgage-backed securities-multi-family
   
134,970
     
3,122
     
17
     
138,075
 
Corporate debt securities
   
1,478
     
18
     
25
     
1,471
 
Other securities
   
1,583
     
34
     
-
     
1,617
 
Total securities held-to-maturity
   
304,208
     
9,484
     
79
     
313,613
 
Total securities
 
$
425,810
   
$
10,630
   
$
99
   
$
436,341
 

Greene County Bancorp, Inc.’s current policies generally limit securities investments to U.S. Government and securities of government sponsored enterprises, federal funds sold, municipal bonds, corporate debt obligations and certain mutual funds.  In addition, the Company’s policies permit investments in mortgage-backed securities, including securities issued and guaranteed by Fannie Mae, Freddie Mac, and GNMA, and collateralized mortgage obligations issued by these entities.  At March 31, 2020, all mortgage-backed securities including collateralized mortgage obligations were securities of government sponsored enterprises, no private-label mortgage-backed securities or collateralized mortgage obligations were held in the securities portfolio.  The Company’s investments in state and political subdivisions securities generally are municipal obligations that are general obligations supported by the general taxing authority of the issuer, and in some cases are insured.  The obligations issued by school districts are supported by state aid.  Primarily, these investments are issued by municipalities within New York State.

The Company’s current securities investment strategy utilizes a risk management approach of diversified investing among three categories: short-, intermediate- and long-term. The emphasis of this approach is to increase overall investment securities yields while managing interest rate risk.  The Company will only invest in high quality securities as determined by management’s analysis at the time of purchase.  The Company generally does not engage in any derivative or hedging transactions, such as interest rate swaps or caps.

The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2020.

   
Less Than 12 Months
   
More Than 12 Months
   
Total
 
(In thousands, except number of securities)
 
Fair
Value
   
Unrealized
Losses
   
Number
of
Securities
   
Fair
Value
   
Unrealized
Losses
   
Number
of
Securities
   
Fair
Value
   
Unrealized
Losses
   
Number
of
Securities
 
Securities available-for-sale:
                                                     
State and political subdivisions
 
$
23,401
   
$
65
     
7
   
$
-
   
$
-
     
-
   
$
23,401
   
$
65
     
7
 
Mortgage-backed securities-multi-family
   
1,232
     
1
     
2
     
-
     
-
     
-
     
1,232
     
1
     
2
 
Corporate debt securities
   
2,869
     
131
     
4
     
-
     
-
     
-
     
2,869
     
131
     
4
 
Total securities available-for-sale
   
27,502
     
197
     
13
     
-
     
-
     
-
     
27,502
     
197
     
13
 
Securities held-to-maturity:
                                                                       
State and political subdivisions
   
26,827
     
269
     
113
     
1,201
     
5
     
15
     
28,028
     
274
     
128
 
Mortgage-backed securities-multi-family
   
4,512
     
8
     
4
     
-
     
-
     
-
     
4,512
     
8
     
4
 
Corporate debt securities
   
504
     
3
     
1
     
452
     
33
     
1
     
956
     
36
     
2
 
Total securities held-to-maturity
   
31,843
     
280
     
118
     
1,653
     
38
     
16
     
33,496
     
318
     
134
 
Total securities
 
$
59,345
   
$
477
     
131
   
$
1,653
   
$
38
     
16
   
$
60,998
   
$
515
     
147
 

10

The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2019.

   
Less Than 12 Months
   
More Than 12 Months
   
Total
 
(In thousands, except number of securities)
 
Fair
Value
   
Unrealized
Losses
   
Number
of
Securities
   
Fair
Value
   
Unrealized
Losses
   
Number
of
Securities
   
Fair
Value
   
Unrealized
Losses
   
Number
of
Securities
 
Securities available-for-sale:
                                                     
Mortgage-backed securities-residential
 
$
856
   
$
20
     
1
   
$
-
   
$
-
     
-
   
$
856
   
$
20
     
1
 
Total securities available-for-sale
   
856
     
20
     
1
     
-
     
-
     
-
     
856
     
20
     
1
 
Securities held-to-maturity:
                                                                       
U.S. government sponsored enterprises
   
-
     
-
     
-
     
1,986
     
14
     
1
     
1,986
     
14
     
1
 
State and political subdivisions
   
3,541
     
17
     
22
     
2,111
     
6
     
13
     
5,652
     
23
     
35
 
Mortgage-backed securities-multi-family
   
1,250
     
6
     
1
     
3,799
     
11
     
3
     
5,049
     
17
     
4
 
Corporate debt securities
   
-
     
-
     
-
     
452
     
25
     
1
     
452
     
25
     
1
 
Total securities held-to-maturity
   
4,791
     
23
     
23
     
8,348
     
56
     
18
     
13,139
     
79
     
41
 
Total securities
 
$
5,647
   
$
43
     
24
   
$
8,348
   
$
56
     
18
   
$
13,995
   
$
99
     
42
 

When the fair value of a held-to-maturity or available-for-sale security is less than its amortized cost basis, an assessment is made as to whether other-than-temporary impairment (“OTTI”) is present.  The Company considers numerous factors when determining whether a potential OTTI exists and the period over which the debt security is expected to recover.  The principal factors considered are (1) the length of time and the extent to which the fair value has been less than the amortized cost basis, (2) the financial condition of the issuer (and guarantor, if any) and adverse conditions specifically related to the security, industry or geographic area, (3) failure of the issuer of the security to make scheduled interest or principal payments, (4) any changes to the rating of the security by a rating agency, and (5) the presence of credit enhancements, if any, including the guarantee of the federal government or any of its agencies.

For debt securities, OTTI is considered to have occurred if (1) the Company intends to sell the security before recovery of its amortized cost basis, (2) it is more likely than not the Company will be required to sell the security before recovery of its amortized cost basis, or (3) if the present value of expected cash flows is not sufficient to recover the entire amortized cost basis.  In determining the present value of expected cash flows, the Company discounts the expected cash flows at the effective interest rate implicit in the security at the date of acquisition.  In estimating cash flows expected to be collected, the Company uses available information with respect to security prepayment speeds, default rates and severity.  In determining whether OTTI has occurred for equity securities, the Company considers the applicable factors described above and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

For debt securities, credit-related OTTI is recognized in earnings while noncredit-related OTTI on securities not expected to be sold is recognized in other comprehensive income/loss (“OCI”).  Credit-related OTTI is measured as the difference between the present value of an impaired security’s expected cash flows and its amortized cost basis.  Noncredit-related OTTI is measured as the difference between the fair value of the security and its amortized cost less any credit-related losses recognized.  For securities classified as held-to-maturity, the amount of OTTI recognized in OCI is accreted to the credit-adjusted expected cash flow amounts of the securities over future periods.  Management evaluated securities considering the factors as outlined above, and based on this evaluation the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2020.  Management believes that the reasons for the decline in fair value are due to interest rates, widening credit spreads and market illiquidity at the reporting date.

There were no transfers of securities available-for-sale to held-to-maturity during the three and nine months ended March 31, 2020 or 2019. During the three and nine months ended March 31, 2020 and 2019, there were no sales of securities and no gains or losses were recognized.  There was no other-than-temporary impairment loss recognized during the three and nine months ended March 31, 2020 and 2019.

11

The estimated fair values of debt securities at March 31, 2020, by contractual maturity are shown below.  Expected maturities may differ from contractual maturities, because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

(In thousands)

Available-for-sale debt securities
 
Amortized Cost
   
Fair Value
 
Within one year
 
$
169,715
   
$
169,918
 
After one year through five years
   
1,581
     
1,629
 
After five years through ten years
   
1,544
     
1,562
 
After ten years
   
2,000
     
1,888
 
Total available-for-sale debt securities
   
174,840
     
174,997
 
Mortgage-backed securities
   
33,107
     
34,125
 
Total available-for-sale securities
   
207,947
     
209,122
 
                 
Held-to-maturity debt securities
               
Within one year
   
33,677
     
34,000
 
After one year through five years
   
92,123