Greene County Bancorp, Inc. Reports 23.1% Increase in Net Income for the Nine Months Ended March 31, 2019
April 24 2019 - 9:50AM
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, 2019, which is the third
quarter of the Company’s fiscal year ending June 30, 2019.
Net income for the three and nine months ended March 31, 2019 was
$4.4 million, or $0.51 per basic and diluted share, and $13.3
million, or $1.56 per basic and diluted share, respectively, as
compared to $3.7 million, or $0.43 per basic and diluted share, and
$10.8 million, or $1.27 per basic and $1.26 per diluted share, for
the three and nine months ended March 31, 2018, respectively.
Net income increased $679,000, or 18.5%, when comparing the three
months ended March 31, 2019 and 2018, and increased $2.5 million,
or 23.1%, when comparing the nine months ended March 31, 2019 and
2018.
Donald Gibson, President & CEO, stated: “I
am pleased to report another strong quarterly performance. We
continue to execute our long-term strategy of investing in our
business to better support our clients. The strategy in turn
continues to drive strong organic growth across all three of our
primary business lines: retail, commercial, and municipal
banking.”
Selected highlights for the three and nine
months ended March 31, 2019 are as follows:
Net Interest Income and Margin
- Net interest income increased $1.1 million to
$10.0 million for the three months ended March 31, 2019 from $8.9
million for the three months ended March 31, 2018. Net interest
income increased $4.2 million to $29.7 million for the nine months
ended March 31, 2019 from $25.5 million for the nine months ended
March 31, 2018. 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 seven basis
points to 3.24% for the three months ended March 31, 2019 compared
to 3.17% for the three months ended March 31, 2018. Net interest
spread increased nine basis points to 3.31% for the nine months
ended March 31, 2019 compared to 3.22% for the nine months ended
March 31, 2018.
- Net interest margin increased 10 basis points
to 3.34% for the three months ended March 31, 2019 compared to
3.24% for the three months ended March 31, 2018. Net interest
margin increased 12 basis points to 3.41% for the nine months ended
March 31, 2019 compared to 3.29%, for the nine months ended March
31, 2018.
- Increases in net interest spread and margin
are primarily the result of the increasing rate environment 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 average short-term
borrowing 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 3.51% and 3.45% for the three
months ended March 31, 2019 and 2018, respectively, and was 3.58%
and 3.50% for the nine months ended March 31, 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 nine months ended March 31, 2019 compared to March 31,
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 $350,000
and $345,000 for the three months ended March 31, 2019 and 2018,
respectively. The provision for loan losses amounted to $1.1
million and $1.0 million for the nine months ended March 31, 2019
and 2018, 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 nine
month ended March 31, 2019. Allowance for loan losses
to total loans receivable decreased to 1.66% at March 31, 2019 as
compared to 1.68% at June 30, 2018, and 1.69% at March 31,
2018.
- Net charge-offs for the three months ended
March 31, 2019, amounted to $177,000, and for the three months
ended March 31, 2018, amounted to $75,000. Net charge-offs
amounted to $236,000 and $444,000 for the nine months ended March
31, 2019 and 2018, respectively.
- Nonperforming loans amounted to $3.0 million
at March 31, 2019 and $3.6 million at June 30, 2018. At March 31,
2019 and June 30, 2018, respectively, nonperforming assets were
0.24% and 0.32% of total assets and nonperforming loans were 0.39%
and 0.51% of net loans. At March 31, 2018, nonperforming
assets to total assets were 0.32% and nonperforming loans to net
loans were 0.52%.
Noninterest Income and Noninterest Expense
- Noninterest income increased $151,000, or
8.1%, and totaled $2.0 million and $1.9 million for the three
months ended March 31, 2019 and 2018. Noninterest income
increased $717,000, or 13.1%, and totaled $6.2 million and $5.5
million for the nine months ended March 31, 2019 and 2018.
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. The
increase in other operating income was primarily the result of an
increase in fee income related to loans.
- Noninterest expense increased $704,000, or
12.2%, to $6.5 million for the three months ended March 31, 2019,
compared to $5.8 million for the three months ended March 31,
2018. Noninterest expense increased $2.7 million, or 16.9%,
to $18.7 million for the nine months ended March 31, 2019, compared
to $16.0 million for the nine months ended March 31, 2018. This
increase was primarily due to an increase in salaries and employee
benefits expenses, resulting from additional staffing for the
addition of our new Corporate Cash Management Department and two
new branches located in Copake and Woodstock, New York. Staffing
was also increased 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 $200,000
contribution to Bank of Greene County Charitable Foundation during
the nine months ended March 31, 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 16.2% and 17.4% for the three months and nine months
ended March 31, 2019, respectively, compared to 19.9% and 22.6% for
the three and nine months ended March 31, 2018, respectively.
The decrease in the effective tax rate for the three and nine
months ended March 31, 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 March 31, 2019 and $1.2 billion at June 30, 2018, an increase of
$122.3 million, or 10.6%. 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 $108,000 to $395.5 million at
March 31, 2019 as compared to $395.4 million at June 30, 2018,
primarily the result of an increase in the unrealized gain on
available-for-sale securities partially offset by the amortization
of premiums during the period. Securities purchases totaled
$113.6 million during the nine months ended March 31, 2019 and
consisted of $83.9 million of state and political subdivision
securities, $29.3 million of mortgage-backed securities and
$364,000 of other securities. Principal pay-downs and maturities
during the nine months ended March 31, 2019 amounted to $113.8
million, of which $21.8 million were mortgage-backed securities,
$91.0 million were state and political subdivision securities and
$980,000 were other securities.
- Net loans receivable increased $58.9 million,
or 8.4%, to $763.3 million at March 31, 2019 from $704.4 million at
June 30, 2018. The loan growth experienced during the nine
months ended March 31, 2019 consisted primarily of $25.3 million in
commercial real estate loans, $2.1 million in commercial
construction loans, $15.4 million in commercial loans, $12.4
million in residential real estate loans, and $7.2 million in
multi-family real estate loans. This growth was partially
offset by a decrease in residential construction loans of $3.2
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 $1.1 billion at March 31,
2019 and $1.0 billion at June 30, 2018, an increase of $114.5
million, or 11.2%. NOW deposits increased $151.8 million, or 29.1%,
when comparing March 31, 2019 and June 30, 2018. This
increase was offset by a decrease in money market deposits of $11.5
million, or 8.6%, a decrease in savings deposits of $7.3 million,
or 3.4%, a decrease in certificates of deposit of $15.6 million or
30.3%, and a decrease in noninterest-bearing deposits of $2.9
million, or 2.8%, when comparing March 31, 2019 and June 30, 2018.
The overall increase in deposits is primarily the result of normal
fluctuations in municipal deposits complimented by an increase in
retail and commercial deposits as the Company continues to expand
into its newest markets. Included within certificates of
deposits at June 30, 2018 were $15.0 million, respectively, in
brokered certificates of deposit. There were no brokered
certificates of deposit at March 31, 2019.
- Borrowings amounted to $12.7 million of
long-term borrowings, with the Federal Home Loan Bank of New York
at March 31, 2019, compared to $18.2 million of long-term
borrowings at June 30, 2018.
- Shareholders’ equity increased to $108.3
million at March 31, 2019 from $96.2 million at June 30, 2018,
resulting primarily from net income of $13.3 million, partially
offset by dividends declared and paid of $1.6 million and a
decrease in other accumulated comprehensive loss of $284,000.
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 Nine
Months |
|
Ended March 31, |
Ended March 31, |
Dollars in thousands, except share and per share data |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Interest income |
$ |
11,708 |
|
$ |
9,876 |
|
$ |
34,111 |
|
$ |
28,385 |
|
Interest expense |
|
1,682 |
|
|
1,016 |
|
|
4,433 |
|
|
2,895 |
|
Net interest income |
|
10,026 |
|
|
8,860 |
|
|
29,678 |
|
|
25,490 |
|
Provision for loan losses |
|
350 |
|
|
345 |
|
|
1,058 |
|
|
1,044 |
|
Noninterest income |
|
2,010 |
|
|
1,859 |
|
|
6,203 |
|
|
5,486 |
|
Noninterest expense |
|
6,486 |
|
|
5,782 |
|
|
18,694 |
|
|
15,987 |
|
Income before taxes |
|
5,200 |
|
|
4,592 |
|
|
16,129 |
|
|
13,945 |
|
Tax provision |
|
844 |
|
|
915 |
|
|
2,809 |
|
|
3,156 |
|
Net Income |
$ |
4,356 |
|
$ |
3,677 |
|
$ |
13,320 |
|
$ |
10,789 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS |
$ |
0.51 |
|
$ |
0.43 |
|
$ |
1.56 |
|
$ |
1.27 |
|
Weighted average shares outstanding |
|
8,537,814 |
|
|
8,517,614 |
|
|
8,537,814 |
|
|
8,508,103 |
|
Diluted EPS |
$ |
0.51 |
|
$ |
0.43 |
|
$ |
1.56 |
|
$ |
1.26 |
|
Weighted average diluted shares outstanding |
|
8,537,814 |
|
|
8,536,407 |
|
|
8,537,814 |
|
|
8,533,850 |
|
Dividends declared per share 4 |
$ |
0.10 |
|
$ |
0.0975 |
|
$ |
0.30 |
|
$ |
0.2925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Financial Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets1 |
|
1.43 |
% |
|
1.32 |
% |
|
1.51 |
% |
|
1.37 |
% |
Return on average equity1 |
|
16.44 |
% |
|
16.17 |
% |
|
17.45 |
% |
|
16.36 |
% |
Net interest rate spread1 |
|
3.24 |
% |
|
3.17 |
% |
|
3.31 |
% |
|
3.22 |
% |
Net interest margin1 |
|
3.34 |
% |
|
3.24 |
% |
|
3.41 |
% |
|
3.29 |
% |
Fully taxable-equivalent net interest
margin2 |
|
3.51 |
% |
|
3.45 |
% |
|
3.58 |
% |
|
3.50 |
% |
Efficiency ratio3 |
|
53.89 |
% |
|
53.94 |
% |
|
52.10 |
% |
|
51.61 |
% |
Non-performing assets
to total assets |
|
|
|
|
|
|
|
0.24 |
% |
|
0.32 |
% |
Non-performing loans to
net loans |
|
|
|
|
|
|
|
0.39 |
% |
|
0.52 |
% |
Allowance for loan
losses to non-performing loans |
|
|
|
|
|
|
|
429.92 |
% |
|
328.58 |
% |
Allowance for loan
losses to total loans |
|
|
|
|
|
|
|
1.66 |
% |
|
1.69 |
% |
Shareholders’ equity to total assets |
|
|
|
|
|
|
|
8.50 |
% |
|
7.89 |
% |
Dividend payout ratio4 |
|
|
|
|
|
|
|
19.23 |
% |
|
23.03 |
% |
Actual dividends paid to net income5 |
|
|
|
|
|
|
|
12.34 |
% |
|
10.61 |
% |
Book value per share |
|
|
|
|
|
|
$ |
12.68 |
|
$ |
10.87 |
|
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 three and nine months ended March
31, 2019 and 2018 respectively.
Non-GAAP reconciliation – Fully taxable
equivalent net interest margin
|
For the three months ended |
For the nine months ended |
(Dollars in
thousands) |
March 31, 2019 |
|
March 31, 2018 |
|
March 31, 2019 |
|
March 31, 2018 |
|
Net interest income
(GAAP) |
$ |
10,026 |
|
$ |
8,860 |
|
$ |
29,678 |
|
$ |
25,490 |
|
Tax-equivalent
adjustment |
|
496 |
|
|
558 |
|
|
1,455 |
|
|
1,595 |
|
Net interest income
(fully taxable-equivalent basis) |
$ |
10,522 |
|
$ |
9,418 |
|
$ |
31,133 |
|
$ |
27,085 |
|
|
|
|
|
|
Average
interest-earning assets |
$ |
1,199,096 |
|
$ |
1,093,356 |
|
$ |
1,161,046 |
|
$ |
1,031,765 |
|
Net interest margin
(fully taxable-equivalent basis) |
|
3.51 |
% |
|
3.45 |
% |
|
3.58 |
% |
|
3.50 |
% |
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 March 31,
2019 and December 31, 2018 and each quarter during the nine months
ended March 31, 2018. 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)
|
At March 31, 2019 |
|
At June 30, 2018 |
(Dollars In thousands, except share data) |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Total cash and cash equivalents |
$ |
88,422 |
|
|
$ |
26,504 |
|
Long term certificate of deposit |
|
2,875 |
|
|
|
2,385 |
|
Securities- available for sale, at fair
value |
|
104,008 |
|
|
|
120,806 |
|
Securities- held to maturity, at amortized
cost |
|
291,456 |
|
|
|
274,550 |
|
Equity securities, at fair value |
|
237 |
|
|
|
217 |
|
Federal Home Loan Bank stock, at cost |
|
1,298 |
|
|
|
1,545 |
|
|
|
|
|
|
|
|
|
Gross loans receivable |
|
775,352 |
|
|
|
715,641 |
|
Less: Allowance for loan losses |
|
(12,846 |
) |
|
|
(12,024 |
) |
Unearned origination fees and
costs, net |
|
779 |
|
|
|
814 |
|
Net loans receivable |
|
763,285 |
|
|
|
704,431 |
|
|
|
|
|
|
|
|
|
Premises and equipment |
|
13,193 |
|
|
|
13,304 |
|
Accrued interest receivable |
|
6,125 |
|
|
|
5,057 |
|
Foreclosed real estate |
|
54 |
|
|
|
119 |
|
Prepaid expenses and other assets |
|
2,835 |
|
|
|
2,560 |
|
Total assets |
$ |
1,273,788 |
|
|
$ |
1,151,478 |
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders’ equity |
|
|
|
|
|
|
|
Noninterest bearing deposits |
$ |
99,824 |
|
|
$ |
102,694 |
|
Interest bearing deposits |
|
1,039,954 |
|
|
|
922,540 |
|
Total deposits |
|
1,139,778 |
|
|
|
1,025,234 |
|
|
|
|
|
|
|
|
|
Borrowings, long term |
|
12,650 |
|
|
|
18,150 |
|
Accrued expenses and other liabilities |
|
13,095 |
|
|
|
11,903 |
|
Total liabilities |
|
1,165,523 |
|
|
|
1,055,287 |
|
Total shareholders’ equity |
|
108,265 |
|
|
|
96,191 |
|
Total liabilities and shareholders’
equity |
$ |
1,273,788 |
|
|
$ |
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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