Greene County Bancorp, Inc. Reports 26.8% Increase in Net Income for the Six Months Ended December 31, 2018 and Bank Celebra...
January 23 2019 - 9:22AM
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 six months ended December 31, 2018, which is the second
quarter of the Company’s fiscal year ending June 30, 2019.
Net income for the three and six months ended December 31, 2018 was
$4.6 million, or $0.54 per basic and diluted share, and $9.0
million, or $1.05 per basic and diluted share, respectively, as
compared to $3.6 million, or $0.43 per basic and diluted share, and
$7.1 million, or $0.84 per basic and $0.83 per diluted share, for
the three and six months ended December 31, 2017,
respectively. Net income increased $1.0 million, or 27.8%,
when comparing the three months ended December 31, 2018 and 2017,
and increased $1.9 million, or 26.8%, when comparing the six months
ended December 31, 2018 and 2017.
Donald Gibson, President & CEO stated: “On
January 22, 2019 we celebrated the Bank's 130th
Anniversary. Reflecting back on our long term success, I would
like to take this opportunity to thank our employees for their
excellent work, dedication, and for always going the extra mile. I
consider our employees to be our most important asset. Their
continued outstanding work is the primary driver of our continued
success and high performance.”
Gibson continued, “I am pleased to report, for
the six months ended on December 31, 2018 our return on average
assets was 1.55% and return on average equity was 17.98%. I am also
proud to report record high net income for both the three and six
months ended December 31, 2018.”
Selected highlights for the three and six months
ended December 31, 2018 are as follows:
Net Interest Income and Margin
- Net interest income increased $1.5 million to
$10.0 million for the three months ended December 31, 2018 from
$8.5 million for the three months ended December 31, 2017. Net
interest income increased $3.1 million to $19.7 million for the six
months ended December 31, 2018 from $16.6 million for the six
months ended December 31, 2017. These increases in net
interest income were primarily the result of the growth in the
average balance of interest-earning assets, with continued growth
in loans and securities.
- Net interest spread increased 16 basis points
to 3.37% for the three months ended December 31, 2018 compared to
3.21% for the three months ended December 31, 2017. Net interest
spread increased 10 basis points to 3.34% for the six months ended
December 31, 2018 compared to 3.24% for the six months ended
December 31, 2017.
- Net interest margin Net interest margin
increased 18 basis points to 3.47% for the three months ended
December 31, 2018 compared to 3.29% for the three months ended
December 31, 2017. Net interest margin increased 12 basis points to
3.44% for the six months ended December 31, 2018 compared to 3.32%
for the six months ended December 31, 2017. Increases
in net interest spread and margin are the result of the increases
in rates by the Federal Reserve Bank over the past two years, with
repricing of the Company’s adjustable rate investment and loan
products, and the reinvestment of cash flows into higher rate
investments and loans. These increases have been partially
offset by increases in cost of funds from both increases in deposit
rates and in increased short-term borrowings.
- 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 3.65% and 3.50% for the three
months ended December 31, 2018 and 2017, respectively, and was
3.61% and 3.53% for the six months ended December 31, 2018 and
2017, 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 six months ended December 31, 2018 compared to
December 31, 2017. However, beginning January 1, 2018,
pricing of tax-exempt securities and loan originations have 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 $354,000
and $352,000 for the three months ended December 31, 2018 and 2017,
respectively. The provision for loan losses amounted to $708,000
and $699,000 for the six months ended December 31, 2018 and 2017,
respectively. The provision for loan loss was relatively
unchanged between these periods despite continued loan growth as a
result of the recognition of a $150,000 recovery during the three
and six month ended December 31, 2018. Allowance for loan
losses to total loans receivable decreased to 1.66% at December 31,
2018 as compared to 1.68% at June 30, 2018, and December 31,
2017.
- Net charge-offs activity for the three months
ended December 31, 2018, resulted in a net recovery of $12,000, and
a net charge-off of $98,000 for the three months ended December 31,
2017. Net charge-offs amounted to $58,000 and $369,000 for
the six months ended December 31, 2018 and 2017,
respectively. The lower level of net charges-offs for these
periods are the result of a recovery of a commercial loan that had
previously been charged-off during fiscal 2018.
- Nonperforming loans amounted to $3.6 million
at December 31, 2018 and June 30, 2018. At December 31, 2018 and
June 30, 2018, respectively, nonperforming assets were 0.31% and
0.32% of total assets and nonperforming loans were 0.48% and 0.51%
of net loans. At December 31, 2017, nonperforming assets to total
assets were 0.43% and nonperforming loans to net loans were
0.55%.
Noninterest Income and Noninterest Expense
- Noninterest income increased $254,000, or
13.5%, and totaled $2.1 million and $1.9 million for the three
months ended December 31, 2018 and 2017. Noninterest income
increased $566,000, or 15.6%, and totaled $4.2 million and $3.6
million for the six months ended December 31, 2018 and 2017.
This increase was 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
period due to higher sales volume of investment products.
- Noninterest expense increased $935,000, or
17.6%, to $6.2 million for the three months ended December 31,
2018, compared to $5.3 million for the three months ended December
31, 2017. Noninterest expense increased $2.0 million, or
19.6%, to $12.2 million for the six months ended December 31, 2018,
compared to $10.2 million for the six months ended December 31,
2017. This increase was primarily due to an increase in salaries
and employee benefits expenses, resulting from additional staffing.
Additional staffing was required for our new branch offices located
in Copake and Woodstock, New York. Staffing was also increased in
operations, information technology, compliance, and lending to
support growth and maintain superior customer service. The increase
is also due to costs associated with the opening of the newest
branch in Woodstock, New York during the six months ended December
31, 2018, and an increase in professional fees. Also, other
noninterest expense increased as a result of a $200,000
contribution to The Bank of Greene County Charitable Foundation
during the six months ended December 31, 2018.
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 17.2% and 18.0% for the three months and six months
ended December 31, 2018, respectively, compared to 22.3% and 24.0%
for the three and six months ended December 31, 2017,
respectively. The decrease in the effective tax rate for the
three and six months ended December 31, 2018 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 $1.2 billion
at December 31, 2018 and at June 30, 2018, an increase of $43.8
million, or 3.8%. 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 decreased $11.3 million, or 2.9%, to
$384.1 million at December 31, 2018 as compared to $395.4 million
at June 30, 2018. Securities purchases totaled $72.4 million
during the six months ended December 31, 2018 and consisted of
$59.4 million of state and political subdivision securities and
$13.0 million of mortgage-backed securities. Principal pay-downs
and maturities during the six months ended December 31, 2018
amounted to $83.8 million, of which $19.2 million were
mortgage-backed securities, and $64.6 million were state and
political subdivision securities.
- Net loans receivable increased $46.0 million,
or 6.5%, to $750.4 million at December 31, 2018 from $704.4 million
at June 30, 2018. The loan growth experienced during the six
months ended December 31, 2018 consisted primarily of $16.8 million
in commercial real estate loans, $14.9 million in commercial loans,
$12.6 million in residential real estate loans, and $7.7 million in
multi-family real estate loans. This growth was partially
offset by a decrease in construction loans (both residential and
nonresidential) of $6.1 million. 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.
- Deposits totaled $1.0 billion at December 31,
2018 and at June 30, 2018, a decrease of $16.0 million, or 1.6%.
Certificates of deposits increased $6.5 million, or 12.7%, and NOW
deposits increased $5.7 million, or 1.1%, when comparing December
31, 2018 and June 30, 2018. These increases were offset by a
decrease in money market deposits of $25.4 million, or 19.0%, a
decrease in savings deposits of $1.5 million, or 0.7%, and a
decrease in noninterest-bearing deposits of $1.3 million, or 1.3%,
when comparing December 31, 2018 and June 30, 2018. These decreases
are primarily the result of normal fluctuations in municipal
deposits which have been partially offset by an increase in retail
and commercial deposits as the Company continues to expand into its
newest markets. Included within certificates of deposits at
December 31, 2018 and June 30, 2018 were $22.0 million and $15.0
million, respectively, in brokered certificates of deposit.
- Borrowings amounted to $54.7 million of
overnight and $15.2 million of long-term borrowings, with the
Federal Home Loan Bank of New York and $200,000 of short-term
borrowings with Atlantic Community Bankers Bank at December 31,
2018, compared to no overnight or short-term borrowings and $18.2
million of long-term borrowings at June 30, 2018. The
increase in short-term borrowings is the result of the continued
growth in earning assets and the decrease in deposits, as discussed
above.
- Shareholders’ equity increased to $104.1
million at December 31, 2018 from $96.2 million at June 30, 2018,
resulting primarily from net income of $9.0 million, partially
offset by dividends declared and paid of $1.3 million and a
decrease in other accumulated comprehensive loss of
$217,000.
Greene County Bancorp, Inc. is the direct and
indirect holding company, respectively, for 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."
Greene County Bancorp, Inc.Consolidated
Statements of Income (Unaudited)
|
At or for the Three Months |
At or for the Six Months |
|
Ended December 31, |
Ended December 31, |
Dollars in thousands,
except share and per share data |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Interest income |
$11,406 |
|
$9,420 |
|
$22,403 |
|
$18,509 |
|
Interest expense |
|
1,411 |
|
|
960 |
|
|
2,751 |
|
|
1,879 |
|
Net interest
income |
|
9,995 |
|
|
8,460 |
|
|
19,652 |
|
|
16,630 |
|
Provision for loan
losses |
|
354 |
|
|
352 |
|
|
708 |
|
|
699 |
|
Noninterest income |
|
2,141 |
|
|
1,887 |
|
|
4,193 |
|
|
3,627 |
|
Noninterest
expense |
|
6,247 |
|
|
5,312 |
|
|
12,208 |
|
|
10,205 |
|
Income before
taxes |
|
5,535 |
|
|
4,683 |
|
|
10,929 |
|
|
9,353 |
|
Tax provision |
|
951 |
|
|
1,043 |
|
|
1,965 |
|
|
2,241 |
|
Net Income |
$4,584 |
|
$3,640 |
|
$8,964 |
|
$7,112 |
|
|
|
|
|
|
Basic EPS |
$0.54 |
|
$0.43 |
|
$1.05 |
|
$0.84 |
|
Weighted average shares
outstanding |
|
8,537,814 |
|
|
8,504,168 |
|
|
8,537,814 |
|
|
8,503,451 |
|
Diluted EPS |
$0.54 |
|
$0.43 |
|
$1.05 |
|
$0.83 |
|
Weighted average
diluted shares outstanding |
|
8,537,814 |
|
|
8,533,126 |
|
|
8,537,814 |
|
|
8,532,274 |
|
Dividends declared per
share 4 |
$0.10 |
|
$0.0975 |
|
$0.20 |
|
$0.195 |
|
|
|
|
|
|
Selected
Financial Ratios |
|
|
|
|
Return on average
assets1 |
|
1.57% |
|
|
1.39% |
|
|
1.55% |
|
|
1.40% |
|
Return on average
equity1 |
|
18.03% |
|
|
16.55% |
|
|
17.98% |
|
|
16.45% |
|
Net interest rate
spread1 |
|
3.37% |
|
|
3.21% |
|
|
3.34% |
|
|
3.24% |
|
Net interest
margin1 |
|
3.47% |
|
|
3.29% |
|
|
3.44% |
|
|
3.32% |
|
Fully
taxable-equivalent net interest margin2 |
|
3.65% |
|
|
3.50% |
|
|
3.61% |
|
|
3.53% |
|
Efficiency ratio3 |
|
51.47% |
|
|
51.34% |
|
|
51.20% |
|
|
50.38% |
|
Non-performing assets
to total assets |
|
|
|
0.31% |
|
|
0.43% |
|
Non-performing loans to
net loans |
|
|
|
0.48% |
|
|
0.55% |
|
Allowance for loan
losses to non-performing loans |
|
|
|
350.66% |
|
|
309.91% |
|
Allowance for loan
losses to total loans |
|
|
|
1.66% |
|
|
1.68% |
|
Shareholders’ equity to
total assets |
|
|
|
8.71% |
|
|
8.44% |
|
Dividend payout
ratio4 |
|
|
|
19.05% |
|
|
23.21% |
|
Actual dividends paid
to net income5 |
|
|
|
13.96% |
|
|
10.73% |
|
Book value per
share |
|
|
$12.20 |
|
$10.53 |
|
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% and 28.1% for federal income taxes and 3.98% and 3.62% for New
York State income taxes for the period ended December 31, 2018 and
2017 respectively.
Non-GAAP reconciliation – Fully taxable
equivalent net interest margin
|
For the three months ended |
For the six months ended |
(Dollars in
thousands) |
12/31/2018 |
|
12/31/2017 |
|
12/31/2018 |
|
12/31/2017 |
|
Net interest income
(GAAP) |
$9,995 |
|
$8,460 |
|
$19,652 |
|
$16,630 |
|
Tax-equivalent
adjustment |
|
493 |
|
|
532 |
|
|
962 |
|
|
1,037 |
|
Net interest income
(fully taxable-equivalent basis) |
$10,488 |
|
$8,992 |
|
$20,614 |
|
$17,667 |
|
|
|
|
|
|
Average
interest-earning assets |
$1,150,768 |
|
$1,028,241 |
|
$1,142,434 |
|
$1,001,639 |
|
Net interest margin
(fully taxable-equivalent basis) |
|
3.65% |
|
|
3.50% |
|
|
3.61% |
|
|
3.53% |
|
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 owner
of 54.0% of the Company’s shares outstanding. 5 Dividends
declared divided by net income. The MHC waived its right to
receive dividends declared during the three months ended December
31, 2018 and the three and six months ended December 31,
2017. Dividends declared during the three months ended
September 30, 2018 were paid to the MHC. The MHC’s ability to
waive the receipt of dividends is dependent upon annual approval of
its members as well as receiving the non-objection of the Federal
Reserve Board.
The above information is preliminary and based
on the Company’s data available at the time of presentation.
Greene County Bancorp, Inc.Consolidated
Statements of Financial Condition (Unaudited)
|
As ofDecember 31, 2018 |
|
As ofJune 30, 2018 |
(Dollars In thousands,
except share data) |
|
|
|
Assets |
|
|
|
Total cash and cash
equivalents |
$31,945 |
|
|
$26,504 |
|
Long term certificate of
deposit |
|
2,385 |
|
|
|
2,385 |
|
Securities- available
for sale, at fair value |
|
107,192 |
|
|
|
120,806 |
|
Securities- held to
maturity, at amortized cost |
|
276,939 |
|
|
|
274,550 |
|
Equity securities, at
fair value |
|
215 |
|
|
|
217 |
|
Federal Home Loan Bank
stock, at cost |
|
3,873 |
|
|
|
1,545 |
|
|
|
|
|
Gross loans
receivable |
|
762,233 |
|
|
|
715,641 |
|
Less: Allowance
for loan losses |
|
(12,673) |
|
|
|
(12,024) |
|
Unearned
origination fees and costs, net |
|
810 |
|
|
|
814 |
|
Net loans
receivable |
|
750,370 |
|
|
|
704,431 |
|
|
|
|
|
Premises and
equipment |
|
13,308 |
|
|
|
13,304 |
|
Accrued interest
receivable |
|
5,765 |
|
|
|
5,057 |
|
Foreclosed real
estate |
|
79 |
|
|
|
119 |
|
Prepaid expenses and
other assets |
|
3,215 |
|
|
|
2,560 |
|
Total
assets |
$1,195,286 |
|
|
$1,151,478 |
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
Noninterest bearing
deposits |
$101,387 |
|
|
$102,694 |
|
Interest bearing
deposits |
|
907,833 |
|
|
|
922,540 |
|
Total
deposits |
|
1,009,220 |
|
|
|
1,025,234 |
|
|
|
|
|
Borrowings, short
term |
|
54,900 |
|
|
|
- |
|
Borrowings, long
term |
|
15,150 |
|
|
|
18,150 |
|
Accrued expenses and
other liabilities |
|
11,895 |
|
|
|
11,903 |
|
Total
liabilities |
|
1,091,165 |
|
|
|
1,055,287 |
|
Total
shareholders’ equity |
|
104,121 |
|
|
|
96,191 |
|
Total
liabilities and shareholders’ equity |
$1,195,286 |
|
|
$1,151,478 |
|
Common shares
outstanding |
|
8,537,814 |
|
|
|
8,537,814 |
|
Treasury shares |
|
73,526 |
|
|
|
73,526 |
|
The above information is preliminary and based on the Company’s
data available at the time of presentation.
For Further Information
Contact:Donald E. GibsonPresident & CEO(518)
943-2600donaldg@tbogc.com
Michelle M. Plummer, CPAEVP, COO & CFO(518)
943-2600michellep@tbogc.com
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