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, 2018.
The following table sets forth information regarding delinquent and/or nonaccrual loans at June 30, 2018:
(In thousands)
|
|
30-59 days
past due
|
|
|
60-89
days
past due
|
|
|
90 days
or more
past due
|
|
|
Total
past due
|
|
|
Current
|
|
|
Total Loans
|
|
|
Loans on
Non-accrual
|
|
Residential real estate
|
|
$
|
1,617
|
|
|
$
|
458
|
|
|
$
|
1,211
|
|
|
$
|
3,286
|
|
|
$
|
252,562
|
|
|
$
|
255,848
|
|
|
$
|
1,778
|
|
Residential construction and land
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,951
|
|
|
|
9,951
|
|
|
|
-
|
|
Multi-family
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,961
|
|
|
|
14,961
|
|
|
|
-
|
|
Commercial real estate
|
|
|
1,568
|
|
|
|
487
|
|
|
|
568
|
|
|
|
2,623
|
|
|
|
281,312
|
|
|
|
283,935
|
|
|
|
1,147
|
|
Commercial construction
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
39,366
|
|
|
|
39,366
|
|
|
|
-
|
|
Home equity
|
|
|
38
|
|
|
|
128
|
|
|
|
299
|
|
|
|
465
|
|
|
|
21,454
|
|
|
|
21,919
|
|
|
|
298
|
|
Consumer installment
|
|
|
3
|
|
|
|
30
|
|
|
|
8
|
|
|
|
41
|
|
|
|
4,976
|
|
|
|
5,017
|
|
|
|
18
|
|
Commercial loans
|
|
|
250
|
|
|
|
195
|
|
|
|
182
|
|
|
|
627
|
|
|
|
84,017
|
|
|
|
84,644
|
|
|
|
276
|
|
Total gross loans
|
|
$
|
3,476
|
|
|
$
|
1,298
|
|
|
$
|
2,268
|
|
|
$
|
7,042
|
|
|
$
|
708,599
|
|
|
$
|
715,641
|
|
|
$
|
3,517
|
|
The Bank of Greene County had no accruing loans delinquent more than 90 days at September 30, 2018 and $62,000 at June 30, 2018, respectively. The
loans delinquent more than 90 days and accruing consist of loans that are well collateralized and the borrowers have demonstrated the ability and willingness to pay. The borrower has made arrangements with the Bank to bring the loan current
within a specified time period and has made a series of payments as agreed.
The table below details additional information related to nonaccrual loans for the three months ended September 30:
(In thousands)
|
|
2018
|
|
|
2017
|
|
Interest income that would have been recorded if loans had been performing in accordance with original
terms
|
|
$
|
71
|
|
|
$
|
78
|
|
Interest income that was recorded on nonaccrual loans
|
|
|
32
|
|
|
|
34
|
|
Impaired Loan Analysis
The Company identifies impaired loans and measures the impairment in accordance with FASB ASC subtopic “
Receivables – Loan Impairment.”
Management may consider a loan impaired once it is classified as nonaccrual and when it is probable that the borrower will be unable to repay the loan according
to the original contractual terms of the loan agreement or the loan is restructured in a troubled debt restructuring. It should be noted that management does not evaluate all loans individually for impairment. Generally, The Bank of Greene
County considers residential mortgages, home equity loans and installment loans as small, homogeneous loans, which are evaluated for impairment collectively based on historical loan experience and other factors. In contrast, large commercial
mortgage, construction, multi-family, business loans and select larger balance residential mortgage loans are reviewed individually and considered impaired if it is probable that The Bank of Greene County will not be able to collect scheduled
payments of principal and interest when due, according to the contractual terms of the loan agreement. The measurement of impaired loans is generally based on the fair value of the underlying collateral. The majority of The Bank of Greene
County loans, including most nonaccrual loans, are small homogenous loan types adequately supported by collateral. Management considers the payment status of loans in the process of evaluating the adequacy of the allowance for loan losses
among other factors. Based on this evaluation, a delinquent loan’s risk rating may be downgraded to either pass-watch, special mention, or substandard, and the allocation of the allowance for loan loss is based upon the risk associated with
such designation. Loans that have been modified as a troubled debt restructuring are included in impaired loans. The measurement of impairment is generally based on the discounted cash flows based on the original rate of the loan before the
restructuring, unless it is determined that the restructured loan is collateral dependent. If the restructured loan is deemed to be collateral dependent, impairment is based on the fair value of the underlying collateral.
The tables below detail additional information on impaired loans at the date or periods indicated:
|
|
At September 30, 2018
|
|
|
For the three months ended
September 30, 2018
|
|
(In thousands)
|
|
Recorded
Investment
|
|
|
Unpaid
Principal
|
|
|
Related
Allowance
|
|
|
Average Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
7
|
|
|
$
|
3
|
|
Commercial real estate
|
|
|
794
|
|
|
|
794
|
|
|
|
-
|
|
|
|
796
|
|
|
|
8
|
|
Home equity
|
|
|
309
|
|
|
|
309
|
|
|
|
-
|
|
|
|
224
|
|
|
|
-
|
|
Commercial loans
|
|
|
155
|
|
|
|
155
|
|
|
|
-
|
|
|
|
157
|
|
|
|
-
|
|
Total impaired loans with no allowance
|
|
|
1,258
|
|
|
|
1,258
|
|
|
|
-
|
|
|
|
1,184
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
|
1,800
|
|
|
|
1,800
|
|
|
|
310
|
|
|
|
1,855
|
|
|
|
23
|
|
Commercial real estate
|
|
|
360
|
|
|
|
360
|
|
|
|
41
|
|
|
|
365
|
|
|
|
-
|
|
Commercial construction
|
|
|
176
|
|
|
|
176
|
|
|
|
29
|
|
|
|
176
|
|
|
|
-
|
|
Home equity
|
|
|
322
|
|
|
|
322
|
|
|
|
59
|
|
|
|
322
|
|
|
|
4
|
|
Total impaired loans with allowance
|
|
|
2,658
|
|
|
|
2,658
|
|
|
|
439
|
|
|
|
2,718
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
|
1,800
|
|
|
|
1,800
|
|
|
|
310
|
|
|
|
1,862
|
|
|
|
26
|
|
Commercial real estate
|
|
|
1,154
|
|
|
|
1,154
|
|
|
|
41
|
|
|
|
1,161
|
|
|
|
8
|
|
Commercial construction
|
|
|
176
|
|
|
|
176
|
|
|
|
29
|
|
|
|
176
|
|
|
|
-
|
|
Home equity
|
|
|
631
|
|
|
|
631
|
|
|
|
59
|
|
|
|
546
|
|
|
|
4
|
|
Commercial loans
|
|
|
155
|
|
|
|
155
|
|
|
|
-
|
|
|
|
157
|
|
|
|
-
|
|
Total impaired loans
|
|
$
|
3,916
|
|
|
$
|
3,916
|
|
|
$
|
439
|
|
|
$
|
3,902
|
|
|
$
|
38
|
|
|
|
At June 30, 2018
|
|
|
For the three months ended
September 30, 2017
|
|
(In thousands)
|
|
Recorded
Investment
|
|
|
Unpaid
Principal
|
|
|
Related
Allowance
|
|
|
Average Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
$
|
22
|
|
|
$
|
22
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Commercial real estate
|
|
|
799
|
|
|
|
799
|
|
|
|
-
|
|
|
|
807
|
|
|
|
8
|
|
Home equity
|
|
|
181
|
|
|
|
181
|
|
|
|
-
|
|
|
|
183
|
|
|
|
-
|
|
Commercial loans
|
|
|
347
|
|
|
|
347
|
|
|
|
-
|
|
|
|
245
|
|
|
|
-
|
|
Total impaired loans with no allowance
|
|
|
1,349
|
|
|
|
1,349
|
|
|
|
-
|
|
|
|
1,235
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
|
1,922
|
|
|
|
1,922
|
|
|
|
332
|
|
|
|
1,536
|
|
|
|
11
|
|
Commercial real estate
|
|
|
379
|
|
|
|
379
|
|
|
|
60
|
|
|
|
430
|
|
|
|
-
|
|
Commercial construction
|
|
|
176
|
|
|
|
176
|
|
|
|
29
|
|
|
|
176
|
|
|
|
-
|
|
Home equity
|
|
|
322
|
|
|
|
322
|
|
|
|
61
|
|
|
|
325
|
|
|
|
3
|
|
Total impaired loans with allowance
|
|
|
2,799
|
|
|
|
2,799
|
|
|
|
482
|
|
|
|
2,467
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
|
1,944
|
|
|
|
1,944
|
|
|
|
332
|
|
|
|
1,536
|
|
|
|
11
|
|
Commercial real estate
|
|
|
1,178
|
|
|
|
1,178
|
|
|
|
60
|
|
|
|
1,237
|
|
|
|
8
|
|
Commercial construction
|
|
|
176
|
|
|
|
176
|
|
|
|
29
|
|
|
|
176
|
|
|
|
-
|
|
Home equity
|
|
|
503
|
|
|
|
503
|
|
|
|
61
|
|
|
|
508
|
|
|
|
3
|
|
Commercial loans
|
|
|
347
|
|
|
|
347
|
|
|
|
-
|
|
|
|
245
|
|
|
|
-
|
|
Total impaired loans
|
|
$
|
4,148
|
|
|
$
|
4,148
|
|
|
$
|
482
|
|
|
$
|
3,702
|
|
|
$
|
22
|
|
The table below details loans that have been modified as a troubled debt restructuring during the three months ended September 30, 2018 or 2017.
(D
ollars in thousands)
|
|
Number of
Contracts
|
|
|
Pre-Modification
Outstanding
Recorded
Investment
|
|
|
Post-Modification
Outstanding
Recorded
Investment
|
|
|
Current
Outstanding
Recorded
Investment
|
|
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity
|
|
|
1
|
|
|
$
|
325
|
|
|
$
|
325
|
|
|
$
|
325
|
|
There were no loans that had been modified as a troubled debt restructuring during the twelve months prior to June 30, 2018 or 2017 which have
subsequently defaulted during the three months ended September 30, 2018 or 2017, respectively.
Allowance for Loan Losses
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 loan portfolio, specific impaired loans and current economic conditions. Such evaluation, which includes a review of certain identified loans on 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, payment status of the loan, historical loan loss experience and other factors that warrant recognition in
providing for the loan loss allowance. In addition, various regulatory agencies, as an integral part of their examination process, periodically review The Bank of Greene County’s allowance for loan losses. Such agencies may require The Bank
of Greene County to recognize additions to the allowance based on their judgment about information available to them at the time of their examination. The Bank of Greene County considers smaller balance residential mortgages, home equity loans,
commercial loans and installment loans to customers as small, homogeneous loans, which are evaluated for impairment collectively based on historical loss experience. Larger balance residential, commercial mortgage and business loans are viewed
individually and considered impaired if it is probable that The Bank of Greene County will not be able to collect scheduled payments of principal and interest when due, according to the contractual terms of the loan agreements. The measurement
of impaired loans is generally based on the fair value of the underlying collateral. The Bank of Greene County charges loans off against the allowance for credit losses when it becomes evident that a loan cannot be collected within a
reasonable amount of time or that it will cost the Bank more than it will receive, and all possible avenues of repayment have been analyzed, including the potential of future cash flow, the value of the underlying collateral, and strength of
any guarantors or co-borrowers. Generally, consumer loans and smaller business loans (not secured by real estate) in excess of 90 days are charged-off against the allowance for loan losses, unless equitable arrangements are made. For loans
secured by real estate, a charge-off is recorded when it is determined that the collection of all or a portion of a loan may not be collected and the amount of that loss can be reasonably estimated.
The following tables set forth the activity and allocation of the allowance for loan losses by loan category during and at the periods indicated. The
allowance is allocated to each loan category based on historical loss experience and economic conditions.
|
|
Activity for the three months ended September 30, 2018
|
|
(In thousands)
|
|
Balance at
June 30, 2018
|
|
|
Charge-offs
|
|
|
Recoveries
|
|
|
Provision
|
|
|
Balance at
September 30,
2018
|
|
Residential real estate
|
|
$
|
2,116
|
|
|
$
|
21
|
|
|
$
|
13
|
|
|
$
|
-
|
|
|
$
|
2,108
|
|
Residential construction and land
|
|
|
114
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2
|
|
|
|
116
|
|
Multi-family
|
|
|
162
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9
|
|
|
|
171
|
|
Commercial real estate
|
|
|
5,979
|
|
|
|
-
|
|
|
|
-
|
|
|
|
44
|
|
|
|
6,023
|
|
Commercial construction
|
|
|
950
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7
|
|
|
|
957
|
|
Home equity
|
|
|
317
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
317
|
|
Consumer installment
|
|
|
224
|
|
|
|
99
|
|
|
|
37
|
|
|
|
67
|
|
|
|
229
|
|
Commercial loans
|
|
|
2,128
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5
|
|
|
|
2,133
|
|
Unallocated
|
|
|
34
|
|
|
|
-
|
|
|
|
-
|
|
|
|
220
|
|
|
|
254
|
|
Total
|
|
$
|
12,024
|
|
|
$
|
120
|
|
|
$
|
50
|
|
|
$
|
354
|
|
|
$
|
12,308
|
|
|
|
Allowance for Loan Losses
|
|
|
Loans Receivable
|
|
|
|
Ending Balance At
September 30, 2018
Impairment Analysis
|
|
|
Ending Balance At
September 30, 2018
Impairment Analysis
|
|
(In thousands)
|
|
Individually
Evaluated
|
|
|
Collectively Evaluated
|
|
|
Individually Evaluated
|
|
|
Collectively
Evaluated
|
|
Residential real estate
|
|
$
|
310
|
|
|
$
|
1,798
|
|
|
$
|
1,800
|
|
|
$
|
260,464
|
|
Residential construction and land
|
|
|
-
|
|
|
|
116
|
|
|
|
-
|
|
|
|
9,803
|
|
Multi-family
|
|
|
-
|
|
|
|
171
|
|
|
|
-
|
|
|
|
21,076
|
|
Commercial real estate
|
|
|
41
|
|
|
|
5,982
|
|
|
|
1,154
|
|
|
|
288,271
|
|
Commercial construction
|
|
|
29
|
|
|
|
928
|
|
|
|
176
|
|
|
|
38,660
|
|
Home equity
|
|
|
59
|
|
|
|
258
|
|
|
|
631
|
|
|
|
21,113
|
|
Consumer installment
|
|
|
-
|
|
|
|
229
|
|
|
|
-
|
|
|
|
5,217
|
|
Commercial loans
|
|
|
-
|
|
|
|
2,133
|
|
|
|
155
|
|
|
|
87,556
|
|
Unallocated
|
|
|
-
|
|
|
|
254
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
439
|
|
|
$
|
11,869
|
|
|
$
|
3,916
|
|
|
$
|
732,160
|
|
|
|
Activity for the three months ended September 30, 2017
|
|
(In thousands)
|
|
Balance at
June 30, 2017
|
|
|
Charge-offs
|
|
|
Recoveries
|
|
|
Provision
|
|
|
Balance at
September 30,
2017
|
|
Residential real estate
|
|
$
|
2,289
|
|
|
$
|
44
|
|
|
$
|
-
|
|
|
$
|
(169
|
)
|
|
$
|
2,076
|
|
Residential construction and land
|
|
|
89
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
|
93
|
|
Multi-family
|
|
|
43
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33
|
|
|
|
76
|
|
Commercial real estate
|
|
|
5,589
|
|
|
|
-
|
|
|
|
-
|
|
|
|
170
|
|
|
|
5,759
|
|
Commercial construction
|
|
|
687
|
|
|
|
-
|
|
|
|
-
|
|
|
|
63
|
|
|
|
750
|
|
Home equity
|
|
|
234
|
|
|
|
-
|
|
|
|
-
|
|
|
|
81
|
|
|
|
315
|
|
Consumer installment
|
|
|
231
|
|
|
|
88
|
|
|
|
18
|
|
|
|
42
|
|
|
|
203
|
|
Commercial loans
|
|
|
1,680
|
|
|
|
157
|
|
|
|
-
|
|
|
|
225
|
|
|
|
1,748
|
|
Unallocated
|
|
|
180
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(102
|
)
|
|
|
78
|
|
Total
|
|
$
|
11,022
|
|
|
$
|
289
|
|
|
$
|
18
|
|
|
$
|
347
|
|
|
$
|
11,098
|
|
|
|
Allowance for Loan Losses
|
|
|
Loans Receivable
|
|
|
|
Ending Balance At
June 30, 2018
Impairment Analysis
|
|
|
Ending Balance At
June 30, 2018
Impairment Analysis
|
|
(In thousands)
|
|
Individually
Evaluated
|
|
|
Collectively
Evaluated
|
|
|
Individually
Evaluated
|
|
|
Collectively
Evaluated
|
|
Residential real estate
|
|
$
|
332
|
|
|
$
|
1,784
|
|
|
$
|
1,944
|
|
|
$
|
253,904
|
|
Residential construction and land
|
|
|
-
|
|
|
|
114
|
|
|
|
-
|
|
|
|
9,951
|
|
Multi-family
|
|
|
-
|
|
|
|
162
|
|
|
|
-
|
|
|
|
14,961
|
|
Commercial real estate
|
|
|
60
|
|
|
|
5,919
|
|
|
|
1,178
|
|
|
|
282,757
|
|
Commercial construction
|
|
|
29
|
|
|
|
921
|
|
|
|
176
|
|
|
|
39,190
|
|
Home equity
|
|
|
61
|
|
|
|
256
|
|
|
|
503
|
|
|
|
21,416
|
|
Consumer installment
|
|
|
-
|
|
|
|
224
|
|
|
|
-
|
|
|
|
5,017
|
|
Commercial loans
|
|
|
-
|
|
|
|
2,128
|
|
|
|
347
|
|
|
|
84,297
|
|
Unallocated
|
|
|
-
|
|
|
|
34
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
482
|
|
|
$
|
11,542
|
|
|
$
|
4,148
|
|
|
$
|
711,493
|
|
Foreclosed real estate (FRE)
FRE consists of properties acquired through mortgage loan foreclosure proceedings or in full or partial satisfaction of loans. The following table sets
forth information regarding FRE at September 30, 2018 and June 30, 2018:
(in thousands)
|
|
September 30, 2018
|
|
|
June 30, 2018
|
|
Residential real estate
|
|
$
|
79
|
|
|
$
|
119
|
|
Total foreclosed real estate
|
|
$
|
79
|
|
|
$
|
119
|
|
(6)
|
Fair Value Measurements and Fair Value of Financial Instruments
|
Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any
estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sale transaction on the dates indicated. The
estimated fair value amounts have been measured at September 30, 2018 and June 30, 2018 and have not been re-evaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates. As such, the
estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end.
The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only
provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other
companies may not be meaningful.
The FASB ASC Topic on “
Fair Value Measurement”
established a
fair value hierarchy that prioritized the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets
or liabilities.
Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for
substantially the full term of the asset or liability.
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable
(i.e., supported with little or no market activity).
An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value
measurement.
For assets measured at fair value on a recurring basis, the fair value measurements by
level within the fair value hierarchy used are as follows:
|
|
|
|
|
Fair Value Measurements Using
|
|
|
|
|
|
|
Quoted
Prices In
Active Markets
|
|
|
Significant
Other
Observable
|
|
|
Significant
Unobservable
Inputs
|
|
(In thousands)
|
|
September 30, 2018
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government sponsored enterprises
|
|
$
|
5,496
|
|
|
$
|
-
|
|
|
$
|
5,496
|
|
|
$
|
-
|
|
State and political subdivisions
|
|
|
92,320
|
|
|
|
-
|
|
|
|
92,320
|
|
|
|
-
|
|
Mortgage-backed securities-residential
|
|
|
2,985
|
|
|
|
-
|
|
|
|
2,985
|
|
|
|
-
|
|
Mortgage-backed securities-multi-family
|
|
|
17,095
|
|
|
|
-
|
|
|
|
17,095
|
|
|
|
-
|
|
Corporate debt securities
|
|
|
1,704
|
|
|
|
1,704
|
|
|
|
-
|
|
|
|
-
|
|
Securities available-for-sale
|
|
|
119,600
|
|
|
|
1,704
|
|
|
|
117,896
|
|
|
|
-
|
|
Equity securities
|
|
|
232
|
|
|
|
232
|
|
|
|
-
|
|
|
|
-
|
|
Total securities measured at fair value
|
|
$
|
119,832
|
|
|
$
|
1,936
|
|
|
$
|
117,896
|
|
|
$
|
-
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
|
|
|
|
|
Quoted Prices
In Active
Markets For
Identical Assets
|
|
|
Significant
Other Observable
Inputs
|
|
|
Significant
Unobservable
Inputs
|
|
(In thousands)
|
|
June 30, 2018
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government sponsored enterprises
|
|
$
|
5,531
|
|
|
$
|
-
|
|
|
$
|
5,531
|
|
|
$
|
-
|
|
State and political subdivisions
|
|
|
92,255
|
|
|
|
-
|
|
|
|
92,255
|
|
|
|
-
|
|
Mortgage-backed securities-residential
|
|
|
3,247
|
|
|
|
-
|
|
|
|
3,247
|
|
|
|
-
|
|
Mortgage-backed securities-multi-family
|
|
|
18,069
|
|
|
|
-
|
|
|
|
18,069
|
|
|
|
-
|
|
Corporate debt securities
|
|
|
1,704
|
|
|
|
1,704
|
|
|
|
-
|
|
|
|
-
|
|
Securities available-for-sale
|
|
$
|
120,806
|
|
|
$
|
1,704
|
|
|
$
|
119,102
|
|
|
$
|
-
|
|
Equity securities
|
|
|
217
|
|
|
|
217
|
|
|
|
-
|
|
|
|
-
|
|
Total securities measured at fair value
|
|
$
|
121,023
|
|
|
$
|
1,921
|
|
|
$
|
119,102
|
|
|
$
|
-
|
|
Certain investments that are actively traded and have quoted market prices have been classified as Level 1 valuations. Other available-for-sale
investment securities have been valued by reference to prices for similar securities or through model-based techniques in which all significant inputs are observable and, therefore, such valuations have been classified as Level 2.
In addition to disclosures of the fair value of assets on a recurring basis, FASB ASC Topic on “
Fair Value Measurement”
requires disclosures for assets and liabilities measured at fair value on a nonrecurring basis, such as impaired assets, in the period in which a re-measurement at fair value is
performed. Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the
uncollectible portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral-dependent loans calculated as required by the “
Receivables –Loan Impairment”
subtopic of the FASB ASC when establishing the allowance for credit losses. Impaired loans are those loans in which the Company has measured impairment based on the fair value of the loan’s
collateral or the discounted value of expected future cash flows. Fair value is generally determined based upon market value evaluations by third parties of the properties and/or estimates by management of working capital collateral or
discounted cash flows based upon expected proceeds. These appraisals may include up to three approaches to value: the sales comparison approach, the income approach (for income-producing property), and the cost approach. Management modifies the
appraised values, if needed, to take into account recent developments in the market or other factors, such as, changes in absorption rates or market conditions from the time of valuation and anticipated sales values considering management’s
plans for disposition. Such modifications to the appraised values could result in lower valuations of such collateral. Estimated costs to sell are based on current amounts of disposal costs for similar assets. These measurements are classified
as Level 3 within the valuation hierarchy. Impaired loans are subject to nonrecurring fair value adjustment upon initial recognition or subsequent impairment. A portion of the allowance for loan losses is allocated to impaired loans if the
value of such loans is deemed to be less than the unpaid balance.
Fair values for foreclosed real estate are initially recorded based on market value evaluations by third parties, less costs to sell (“initial cost
basis”). Any write-downs required when the related loan receivable is exchanged for the underlying real estate collateral at the time of transfer to foreclosed real estate are charged to the allowance for loan losses. Values are derived from
appraisals, similar to impaired loans, of underlying collateral or discounted cash flow analysis. Subsequent to foreclosure, valuations are updated periodically and assets are marked to current fair value, not to exceed the initial cost basis.
In the determination of fair value subsequent to foreclosure, management also considers other factors or recent developments, such as, changes in absorption rates and market conditions from the time of valuation and anticipated sales values
considering management’s plans for disposition. Either change could result in adjustment to lower the property value estimates indicated in the appraisals. These measurements are classified as Level 3 within the fair value hierarchy.
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
(In thousands)
|
|
Recorded
Investment
|
|
|
Related
Allowance
|
|
|
Fair Value
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
2,658
|
|
|
$
|
439
|
|
|
$
|
2,219
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,219
|
|
Foreclosed real estate
|
|
|
79
|
|
|
|
-
|
|
|
|
79
|
|
|
|
-
|
|
|
|
-
|
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
2,799
|
|
|
$
|
482
|
|
|
$
|
2,317
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,317
|
|
Foreclosed real estate
|
|
|
119
|
|
|
|
-
|
|
|
|
119
|
|
|
|
-
|
|
|
|
-
|
|
|
|
119
|
|
The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Level 3
inputs were utilized to determine fair value:
(Dollars in thousands)
|
|
Fair Value
|
|
Valuation Technique
|
Unobservable Input
|
|
Range
|
|
|
Weighted
Average
|
|
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Loans
|
|
$
|
1,594
|
|
Appraisal of collateral
(1)
|
Appraisal adjustments
(2)
|
|
|
26.58%-31.00
|
%
|
|
|
28.11
|
%
|
|
|
|
|
|
|
Liquidation expenses
(3)
|
|
|
4.14%-7.26
|
%
|
|
|
5.11
|
%
|
|
|
|
625
|
|
Discounted cash flow
|
Discount rate
|
|
|
4.19%-6.63
|
%
|
|
|
5.36
|
%
|
Foreclosed real estate
|
|
|
79
|
|
Appraisal of collateral
(1)
|
Appraisal adjustments
(2)
|
|
|
0.00-0.00
|
%
|
|
|
0.00
|
%
|
|
|
|
|
|
|
Liquidation expenses
(3)
|
|
|
8.99%-8.99
|
%
|
|
|
8.99
|
%
|
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
1,687
|
|
Appraisal of collateral
(1)
|
Appraisal adjustments
(2)
|
|
|
26.58%-31.00
|
%
|
|
|
28.17
|
%
|
|
|
|
|
|
|
Liquidation expenses
(3)
|
|
|
4.14%-7.26
|
%
|
|
|
5.07
|
%
|
|
|
|
630
|
|
Discounted cash flow
|
Discount rate
|
|
|
4.19%-6.63
|
%
|
|
|
5.36
|
%
|
Foreclosed real estate
|
|
|
119
|
|
Appraisal of collateral
(1)
|
Appraisal adjustments
(2)
|
|
|
0.00%-0.00
|
%
|
|
|
0.00
|
%
|
|
|
|
|
|
|
Liquidation expenses
(3)
|
|
|
8.99%-11.78
|
%
|
|
|
9.92
|
%
|
|
(1)
|
Fair value is generally determined through independent third-party appraisals of the underlying collateral, which generally includes various Level 3 inputs which are
not observable.
|
|
(2)
|
Appraisals may be adjusted downwards by management for qualitative factors such as economic conditions. Higher downward adjustments are caused by negative changes to
the collateral or conditions in the real estate market, actual offers or sales contracts received or age of the appraisal.
|
|
(3)
|
Appraisals are adjusted downwards by management for qualitative factors such as the estimated costs to
liquidate the collateral.
|
The carrying amounts reported in the statements of financial condition for cash and cash equivalents, accrued interest receivable and accrued interest
payable approximate their fair values. Fair values of securities are based on quoted market prices (Level 1), where available, or matrix pricing (Level 2), which is a mathematical technique, used widely in the industry to value debt securities
without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. The carrying amount of Federal Home Loan Bank stock approximates fair value
due to its restricted nature. ASU 2016-01 "Recognition and Measurement of Financial Assets and Financial Liabilities" requires that, effective for the quarter ended September 30, 2018 the fair value for loans must be disclosed using the "exit
price" notion which is a reasonable estimate of what another party might pay in an orderly transaction. Fair values for variable rate loans that reprice frequently, with no significant credit risk, are based on carrying value. Fair value for
fixed rate loans are estimated using discounted cash flows and interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values disclosed for demand and savings deposits are equal to
carrying amounts at the reporting date. The carrying amounts for variable rate money market deposits approximate fair values at the reporting date. Fair values for fixed rate certificates of deposit are estimated using discounted cash flows
and interest rates currently being offered in the market on similar certificates. Fair value for Federal Home Loan Bank long term borrowings are estimated using discounted cash flows and interest rates currently being offered on similar
borrowings. The carrying value of short-term Federal Home Loan Bank borrowings approximates its fair value.
The fair value of commitments to extend credit is estimated based on an analysis of the interest rates and fees currently charged to enter into similar
transactions, considering the remaining terms of the commitments and the credit-worthiness of the potential borrowers. At September 30, 2018 and June 30, 2018, the estimated fair values of these off-balance sheet financial instruments were
immaterial, and are therefore excluded from the table below.
The carrying amounts and estimated fair value of financial instruments are as follows:
(In thousands)
|
|
September 30, 2018
|
|
|
Fair Value Measurements Using
|
|
|
|
Carrying
Amount
|
|
|
Fair Value
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Cash and cash equivalents
|
|
$
|
35,132
|
|
|
$
|
35,132
|
|
|
$
|
35,132
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Long term certificate of deposit
|
|
|
2,385
|
|
|
|
2,385
|
|
|
|
2,385
|
|
|
|
-
|
|
|
|
-
|
|
Securities available-for-sale
|
|
|
119,600
|
|
|
|
119,600
|
|
|
|
1,704
|
|
|
|
117,896
|
|
|
|
-
|
|
Securities held-to-maturity
|
|
|
280,774
|
|
|
|
279,061
|
|
|
|
-
|
|
|
|
279,061
|
|
|
|
-
|
|
Equity securities
|
|
|
232
|
|
|
|
232
|
|
|
|
232
|
|
|
|
-
|
|
|
|
|
|
Federal Home Loan Bank stock
|
|
|
4,147
|
|
|
|
4,147
|
|
|
|
-
|
|
|
|
4,147
|
|
|
|
-
|
|
Net loans
|
|
|
724,526
|
|
|
|
708,759
|
|
|
|
-
|
|
|
|
-
|
|
|
|
708,759
|
|
Accrued interest receivable
|
|
|
5,437
|
|
|
|
5,437
|
|
|
|
-
|
|
|
|
5,437
|
|
|
|
-
|
|
Deposits
|
|
|
1,002,461
|
|
|
|
1,002,468
|
|
|
|
-
|
|
|
|
1,002,468
|
|
|
|
-
|
|
Borrowings
|
|
|
75,950
|
|
|
|
75,604
|
|
|
|
-
|
|
|
|
75,604
|
|
|
|
-
|
|
Accrued interest payable
|
|
|
96
|
|
|
|
96
|
|
|
|
-
|
|
|
|
96
|
|
|
|
-
|
|
(In thousands)
|
|
June 30, 2018
|
|
|
Fair Value Measurements Using
|
|
|
|
Carrying
Amount
|
|
|
Fair Value
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Cash and cash equivalents
|
|
$
|
26,504
|
|
|
$
|
26,504
|
|
|
$
|
26,504
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Long term certificate of deposit
|
|
|
2,385
|
|
|
|
2,385
|
|
|
|
2,385
|
|
|
|
-
|
|
|
|
-
|
|
Securities available-for-sale
|
|
|
120,806
|
|
|
|
120,806
|
|
|
|
1,704
|
|
|
|
119,102
|
|
|
|
-
|
|
Securities held-to-maturity
|
|
|
274,550
|
|
|
|
274,177
|
|
|
|
-
|
|
|
|
274,177
|
|
|
|
-
|
|
Equity securities
|
|
|
217
|
|
|
|
217
|
|
|
|
217
|
|
|
|
-
|
|
|
|
-
|
|
Federal Home Loan Bank stock
|
|
|
1,545
|
|
|
|
1,545
|
|
|
|
-
|
|
|
|
1,545
|
|
|
|
-
|
|
Net loans
|
|
|
704,431
|
|
|
|
698,879
|
|
|
|
-
|
|
|
|
-
|
|
|
|
698,879
|
|
Accrued interest receivable
|
|
|
5,057
|
|
|
|
5,057
|
|
|
|
-
|
|
|
|
5,057
|
|
|
|
-
|
|
Deposits
|
|
|
1,025,234
|
|
|
|
1,025,302
|
|
|
|
-
|
|
|
|
1,025,302
|
|
|
|
-
|
|
Borrowings
|
|
|
18,150
|
|
|
|
17,755
|
|
|
|
-
|
|
|
|
17,755
|
|
|
|
-
|
|
Accrued interest payable
|
|
|
88
|
|
|
|
88
|
|
|
|
-
|
|
|
|
88
|
|
|
|
-
|
|
Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted
earnings per share is computed in a manner similar to that of basic earnings per share except that the weighted-average number of common shares outstanding is increased to include the number of incremental common shares that would have been
outstanding under the treasury stock method if all potentially dilutive common shares (such as stock options) issued became vested during the period. There were no anti-dilutive securities or contracts outstanding during the three months ended
September 30, 2018 and 2017.
|
|
For the three months ended September 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
4,380
,000
|
|
|
$
|
3,472,000
|
|
Weighted Average Shares – Basic
|
|
|
8,537,814
|
|
|
|
8,502,734
|
|
Effect of Dilutive Stock Options
|
|
|
-
|
|
|
|
28,508
|
|
Weighted Average Shares - Dilute
|
|
|
8,537,814
|
|
|
|
8,531,242
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - Basic
|
|
$
|
0.51
|
|
|
$
|
0.41
|
|
Earnings per share - Diluted
|
|
$
|
0.51
|
|
|
$
|
0.41
|
|
On July 18, 2018, Greene County Bancorp, Inc. announced that its Board of Directors had approved a quarterly cash dividend of $0.10 per share on the
Company’s common stock. The dividend reflects an annual cash dividend rate of $0.40 per share which represents a 2.6% increase from the previous annual cash dividend rate of $0.39 per share. The dividend was payable to stockholders of record as
of August 15, 2018, and was paid on August 31, 2018. The MHC did not waive its right to receive this dividend.
(9)
|
Impact of Recent Accounting Pronouncements
|
Accounting Pronouncements Recently Adopted
The following accounting standards have been adopted in the first quarter ended September 30, 2018:
On July 1, 2018, Greene County Bancorp, Inc. adopted Accounting Standard Update (“ASU”) 2014-09 amending guidance on “Revenue from Contracts with
Customers (Topic 606)”. The objective of the ASU is to align the recognition of revenue with the transfer of promised goods or services provided to customers in an amount that reflects the consideration which the entity expects to be entitled
in exchange for those goods or services. This ASU replaces most existing revenue recognition guidance under GAAP. A significant amount of the Company’s revenues are derived from net interest income on financial assets and liabilities, which
are excluded from the scope of the amended guidance. With respect to noninterest income, the Company has identified revenue streams within the scope of the guidance, which include service charges on deposits, interchange income, investment
services fees and gains (losses) from the transfer of other real estate owned. Further details regarding the revenue recognition of these revenue streams is provided in Note 13 to these Unaudited Consolidated Financial Statements.
On July 1, 2018, Greene County Bancorp, Inc. adopted ASU 2016-01 amending guidance on “Financial Instruments (Subtopic 825-10)”. This amendment
addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. These amendments require equity securities to be measured at fair value with changes in the fair value to be recognized through net
income. The amendments also simplify the impairment assessment of equity investments without readily determinable fair values by requiring assessment for impairment qualitatively at each reporting period. As of June 30, 2018, the Company had
several small equity investments with a cost of $62,000 and a fair value of $217,000. On July 1, 2018, the Company recorded a cumulative-effect adjustment to increase retained earnings in the amount of $114,000 representing the unrealized
gain, net of tax, on these equity securities. Changes in fair value during the three-months ended September 30, 2018 have been recognized in net income. ASU 2016-01 also emphasized the existing requirement to use exit prices to measure fair
value for disclosure purposes and clarifies that entities not make use of a practicability exception in determining the fair value of loans. Accordingly, we refined the calculation used to determine the disclosed fair value of our loans as part
of adopting this standard. See Note 6. Fair Value Measurements and Fair Value of Financial Instruments for further information.
On July 1, 2018, Greene County Bancorp, Inc. adopted ASU 2017-07 amending guidance on “Compensation - Retirement Benefits (Topic 715)” to improve the
presentation of net periodic pension cost and net periodic postretirement benefit cost. ASU 2017-07 requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services
rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if
one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items
used in the income statement to present the other components of net benefit cost must be disclosed. Prior to adoption of this update, the Company presented all components of net periodic pension cost in “salaries and employee benefits” on its
income statement. The Company is presenting all components of net period pension cost in “other expense” for the three-months ended September 30, 2018 and 2017, as the Company’s defined pension plan does not have a service cost component since
the plan was frozen in 2006. Further details regarding the Company’s net periodic pension cost are provided in Note 10 to these Unaudited Consolidated Financial Statements.
In August 2014, the FASB issued an amendment (ASU 2014-14) to its guidance on “Receivables – Troubled Debt Restructurings by Creditors (Subtopic
310-40)”. The objective of the ASU is to reduce the diversity in how creditors classify government-guaranteed mortgage loans, including FHA or VA guaranteed loans, upon foreclosure, to provide more decision-useful information about a
creditor’s foreclosed mortgage loans that are expected to be recovered, at least in part, through government guarantees. The adoption of this guidance had no impact on our consolidated results of operations or financial position.
In August 2016, the FASB issued an Update (ASU 2016-15) which clarifies how certain cash receipts and cash payments are presented and classified in the
statement of cash flows. The amendments are intended to reduce diversity in practice. The amendment covers the following cash flows: Cash payments for debt prepayment or extinguishment costs will be classified in financing activities. Upon
settlement of zero-coupon bonds and bonds with insignificant cash coupons, the portion of the payment attributable to imputed interest will be classified as an operating activity, while the portion of the payment attributable to principal will
be classified as a financing activity. Cash paid by an acquirer that isn’t soon after a business combination for the settlement of a contingent consideration liability will be separated between financing activities and operating activities.
Cash payments up to the amount of the contingent consideration liability recognized at the acquisition date will be classified in financing activities; any excess will be classified in operating activities. Cash paid soon after the business
combination will be classified in investing activities. Cash proceeds received from the settlement of insurance claims will be classified on the basis of the related insurance coverage (that is, the nature of the loss). Cash proceeds from
lump-sum settlements will be classified based on the nature of each loss included in the settlement. Cash proceeds received from the settlement of corporate-owned life insurance (COLI) and bank-owned life insurance (BOLI) policies will be
classified as cash inflows from investing activities. Cash payments for premiums on COLI and BOLI may be classified as cash outflows for investing, operating, or a combination of both. A transferor’s beneficial interest obtained in a
securitization of financial assets will be disclosed as a noncash activity, and cash received from beneficial interests will be classified in investing activities. Distributions received from equity method investees will be classified using
either a cumulative earnings approach or a look- through approach as an accounting policy election. The ASU contains additional guidance clarifying when an entity should separate cash receipts and cash payments and classify them into more than
one class of cash flows (including when reasonable judgment is required to estimate and allocate cash flows) versus when an entity should classify the aggregate amount into one class of cash flows on the basis of predominance. The adoption of
this guidance had no impact on our consolidated results of operations or financial position.
In November 2016, the FASB issued an Update (ASU 2016-18) to its guidance on “Statement of Cash Flows (Topic 230) Restricted Cash” addresses diversity
in practice from entities classifying and presenting transfers between cash and restricted cash as operating, investing or financing activities or as a combination of those activities in the statement of cash flows. The ASU requires entities
to show the changes in the total cash, cash equivalents, restricted cash and restricted cash equivalents in the Statement of Cash Flows. As a result, transfers between such categories will no longer be presented in the Statement of Cash
Flows. The adoption of this guidance had no impact on our consolidated results of operations or financial position.
In May 2017, the FASB issued an Update (ASU 2017-09) to its guidance on “Compensation - Stock Compensation (Topic 718)” such that an entity must apply
modification accounting to changes in the terms or conditions of a share-based payment award unless all of the following criteria are met: (1) The fair value of the modified award is the same as the fair value of the original award immediately
before the modification. The standard indicates that if the modification does not affect any of the inputs to the valuation technique used to value the award, the entity is not required to estimate the value immediately before and after the
modification. (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the modification. (3) The classification of the modified award as an equity instrument or a liability
instrument is the same as the classification of the original award immediately before the modification. The adoption of this guidance had no impact on our consolidated results of operations or financial position.
Accounting Pronouncements to be adopted in future periods
In February 2016, the FASB issued an Update (ASU 2016-02) to its guidance on “Leases (Topic 842)”. The new leases standard applies a right-of-use
(ROU) model that requires a lessee to record, for all leases with a lease term of more than 12 months, an asset representing its right to use the underlying asset and a liability to make lease payments. For leases with a term of 12 months or
less, a practical expedient is available whereby a lessee may elect, by class of underlying asset, not to recognize an ROU asset or lease liability. The new leases standard requires a lessor to classify leases as either sales-type, direct
financing or operating, similar to existing U.S. GAAP. Classification depends on the same five criteria used by lessees plus certain additional factors. The subsequent accounting treatment for all three lease types is substantially equivalent
to existing U.S. GAAP for sales-type leases, direct financing leases, and operating leases. However, the new standard updates certain aspects of the lessor accounting model to align it with the new lessee accounting model, as well as with the
new revenue standard under Topic 606. Lessees and lessors are required to provide certain qualitative and quantitative disclosures to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from
leases. The amendments are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The adoption of this ASU will result in a
gross up of the Consolidated Statements of Financial Condition for right-of-use assets and associated lease liabilities for operating leases in which the Company is the lessee.
In
July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842. Leases to address certain narrow aspects of the guidance issued in ASU No. 2016-02. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842):
Targeted Improvements, which amends FASB Accounting Standards Codification (ASC) Topic 842, Leases, to (1) add an optional transition method that would permit entities to apply the new requirements by recognizing a cumulative-effect adjustment
to the opening balance of retained earnings in the year of adoption, and (2) provide a practical expedient for lessors regarding the separation of the lease and non-lease components of a contract. The Company is evaluating the significance and
other effects of adoption on the consolidated financial statements and related disclosures.
The adoption of this guidance is not expected to have a material impact on our
consolidated results of operations. Branch building leases have been reviewed and are considered immaterial to the financial statements; there are no equipment leases to consider.
In June 2016, the FASB issued an Update (ASU 2016-13) to its guidance on “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments”. ASU 2016-13 requires credit losses on most financial assets measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected
credit loss (CECL) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications unless reasonable expectation
of a troubled debt restructuring exists) from the date of initial recognition of that instrument. The ASU also replaces the current accounting model for purchased credit impaired loans and debt securities. The allowance for credit losses for
purchased financial assets with a more-than insignificant amount of credit deterioration since origination (“PCD assets”), should be determined in a similar manner to other financial assets measured on an amortized cost basis. However, upon
initial recognition, the allowance for credit losses is added to the purchase price (“gross up approach”) to determine the initial amortized cost basis. The subsequent accounting for PCD financial assets is the same expected loss model
described above. Further, the ASU made certain targeted amendments to the existing impairment model for available-for-sale (AFS) debt securities. For an AFS debt security for which there is neither the intent nor a more-likely-than-not
requirement to sell, an entity will record credit losses as an allowance rather than a write-down of the amortized cost basis. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this
Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2018,
including interim periods within those fiscal years. An entity will apply the amendments in this Update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is
effective (that is, a modified-retrospective approach). The Company is currently evaluating the potential impact on our consolidated results of operations or financial position. The initial adjustment will not be reported in earnings and
therefore will not have any material impact on our consolidated results of operations, but it is expected that it will have an impact on our consolidated financial position at the date of adoption of this Update. At this time, we have not
calculated the estimated impact that this Update will have on our Allowance for Loan Losses, however, we anticipate it will have a significant impact on the methodology process we utilize to calculate the allowance. A vendor has been selected
and alternative methodologies are currently being considered. Data requirements and integrity are being reviewed and enhancements incorporated into standard processes. The Company is in the early stages of evaluation and implementation of the
guidance.
In March 2017, the FASB issued an Update (ASU 2017-08) to its guidance on “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20) related
to premium amortization on purchased callable debt securities. The amendments in this Update shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be
amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public business entities, the amendments in this Update are
effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period,
any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment
directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosure about a change in accounting principle. The adoption of this guidance is not expected to
have a material impact on our consolidated results of operations or financial position.
In August 2018, the FASB issued an Update (ASU 2018-13) to its guidance on “Fair Value Measurement (Topic 820)”. This update modifies the disclosure
requirements on fair value measurements. The following disclosure requirements were removed from Topic 820: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (2) the policy for timing of
transfers between levels; (3) the valuation processes for Level 3 fair value measurements; and (4) for nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value
measurements held at the end of the reporting period. The following disclosure requirements were modified in Topic 820: (1) in lieu of a rollforward for Level 3 fair value measurements, a nonpublic entity is required to disclose transfers into
and out of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities; (2) for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an
investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and (3) the amendments clarify that the measurement uncertainty
disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The following disclosure requirements were added to Topic 820; however, the disclosures are not required for nonpublic entities: (1) the
changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and (2) the range and weighted average of significant
unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity
determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. In addition, the amendments eliminate at a
minimum from the phrase “an entity shall disclose at a minimum” to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of
entities and their auditors when evaluating disclosure requirements. The amendments in ASU No. 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The
amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied
prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is
permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU No. 2018-13 and delay adoption of the additional disclosures until their effective date. The adoption of this guidance is not expected to
have a material impact on our consolidated results of operations or financial position.
In August 2018, the FASB has issued an Update (ASU No. 2018-14), “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20):
Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans”, that applies to all employers that sponsor defined benefit pension or other postretirement plans. The amendments modify the disclosure requirements for
employers that sponsor defined benefit pension or other postretirement plans. The following disclosure requirements were removed from Subtopic 715-20: (1) the amounts in accumulated other comprehensive income expected to be recognized as
components of net periodic benefit cost over the next fiscal year; (2) the amount and timing of plan assets expected to be returned to the employer; (3) the disclosures related to the June 2001 amendments to the Japanese Welfare Pension
Insurance Law; related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan; (4) for nonpublic entities, the
reconciliation of the opening balances to the closing balances of plan assets measured on a recurring basis in Level 3 of the fair value hierarchy. However, nonpublic entities will be required to disclose separately the amounts of transfers
into and out of Level 3 of the fair value hierarchy and purchases of Level 3 plan assets; and (5) for public entities, the effects of a one-percentage-point change in assumed health care cost trend rates on the (a) aggregate of the service and
interest cost components of net periodic benefit costs and (b) benefit obligation for postretirement health care benefits. The following disclosure requirements were added to Subtopic 715-20: (1) the weighted-average interest crediting rates
for cash balance plans and other plans with promised interest crediting rates; and (2) an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The amendments also clarify the
disclosure requirements in paragraph 715-20-50-3, which state that the following information for defined benefit pension plans should be disclosed: (1) the projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in
excess of plan assets; and (2) the accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets. ASU No. 2018-14 is effective for fiscal years ending after December 15, 2020, for public
business entities and for fiscal years ending after December 15, 2021, for all other entities. Early adoption is permitted for all entities. The adoption of this guidance is not expected to have a material impact on our consolidated results of
operations or financial position.
(10)
|
Employee Benefit Plans
|
Defined Benefit Plan
The components of net periodic pension cost related to the defined benefit pension plan for the three months ended September 30, 2018 and 2017 were as
follows:
|
|
Three months ended
September 30,
|
|
(In thousands)
|
|
2018
|
|
|
2017
|
|
Interest cost
|
|
$
|
54
|
|
|
$
|
55
|
|
Expected return on plan assets
|
|
|
(59
|
)
|
|
|
(62
|
)
|
Amortization of net loss
|
|
|
35
|
|
|
|
42
|
|
Net periodic pension cost
|
|
$
|
30
|
|
|
$
|
35
|
|
The Company does not anticipate that it will make any additional contributions to the defined benefit pension plan during fiscal 2019.
SERP
The Board of Directors of The Bank of Greene County adopted The Bank of Greene County Supplemental Executive Retirement Plan (the “SERP
Plan”), effective as of July 1, 2010. The SERP Plan benefits certain key senior executives of the Bank who have been selected by the Board to participate. The SERP Plan is intended to provide a benefit from the Bank upon retirement, death or
disability or voluntary or involuntary termination of service (other than “for cause”). The SERP Plan is more fully described in Note 9 of the consolidated financial statements and notes thereto for the year ended June 30, 2018.
The net periodic pension costs related to the SERP Plan for the three months ended September 30, 2018 and 2017 were $158,000 and $101,000,
respectively, consisting primarily of service costs and interest costs. The total liability for the SERP Plan was $4.1
million and $3.9 million at September 30, 2018 and June
30, 2018, respectively, and is included in accrued expenses and other liabilities. The total liability for the SERP Plan includes both accumulated net periodic pension costs and participant contributions.
(11)
|
Stock-Based Compensation
|
Stock Option Plan
The Company’s 2008 Option Plan expired on August 19, 2018. All options were exercised prior to June 30, 2018. A summary of the Company’s stock option
activity and related information for this option plan for the three months ended September 30, 2017 was as follows:
|
|
September 30, 2017
|
|
|
|
Shares
|
|
|
Weighted Average
Exercise Price
Per Share
|
|
Outstanding at beginning of year
|
|
|
37,770
|
|
|
$
|
6.25
|
|
Exercised
|
|
|
(1,000
|
)
|
|
$
|
6.25
|
|
Outstanding and exercisable at period end
|
|
|
36,770
|
|
|
$
|
6.25
|
|
The intrinsic value of options both outstanding and exercisable was $875,000 at September 30, 2017. The total intrinsic value of the options exercised
during the three months ended September 30, 2017 was approximately $23,000. There were no stock options granted during the three months ended September 30, 2017.
Phantom Stock Option Plan and Long-term Incentive Plan
The Greene County Bancorp, Inc. 2011 Phantom Stock Option and Long-term Incentive Plan (the “Plan”) was adopted effective July 1, 2011, to promote the
long-term financial success of the Company and its subsidiaries by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company’s shareholders. The
Plan is intended to provide benefits to employees and directors of the Company or any subsidiary as designated by the Compensation Committee of the Board of Directors of the Company (“Committee”). A phantom stock option represents the right
to receive a cash payment on the date the award vests. The Plan is more fully described in Note 10 of the consolidated financial statements and notes thereto for the year ended June 30, 2018.
A summary of the Company’s phantom stock option activity and related information for the Plan for the three months ended September 30, 2018 and 2017 is
as follows:
|
|
2018
|
|
|
2017
|
|
Number of options outstanding at beginning of year
|
|
|
1,634,160
|
|
|
|
1,522,720
|
|
Options granted
|
|
|
592,700
|
|
|
|
594,200
|
|
Options paid in cash
|
|
|
(484,760
|
)
|
|
|
(3,000
|
)
|
Number of options outstanding at period end
|
|
|
1,742,100
|
|
|
|
2,113,920
|
|
(In thousands)
|
|
2018
|
|
|
2017
|
|
Cash paid out on options vested
|
|
$
|
1,704
|
|
|
$
|
7
|
|
Compensation expense recognized
|
|
|
516
|
|
|
|
360
|
|
The total liability for Plan was $1.8 million and $3.0 million at September 30, 2018 and June 30, 2018, respectively, and is included in accrued expenses
and other liabilities.
(12)
|
Accumulated Other Comprehensive Loss
|
The components of accumulated other comprehensive loss at September 30, 2018 and 2017 are presented in the following table:
|
|
Unrealized
gain (losses)
on securities
available-for-
sale
|
|
|
Pension benefits
|
|
|
Total
|
|
Balance - June 30, 2017
|
|
$
|
612
|
|
|
$
|
(1,604
|
)
|
|
$
|
(992
|
)
|
Other comprehensive income before reclassification
|
|
|
235
|
|
|
|
-
|
|
|
|
235
|
|
Amounts reclassified from accumulated other comprehensive income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Other comprehensive income for the year ended June 30, 2017
|
|
|
235
|
|
|
|
-
|
|
|
|
235
|
|
Balance - September 30, 2017
|
|
$
|
847
|
|
|
$
|
(1,604
|
)
|
|
$
|
(757
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - June 30, 2018
|
|
$
|
10
|
|
|
$
|
(1,633
|
)
|
|
$
|
(1,623
|
)
|
Other comprehensive loss before reclassification
|
|
|
(76
|
)
|
|
|
-
|
|
|
|
(76
|
)
|
Amounts reclassified from accumulated other comprehensive income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Other comprehensive loss for the year ended June 30, 2018
|
|
|
(76
|
)
|
|
|
-
|
|
|
|
(76
|
)
|
Reclassification for change in accounting
(1)
|
|
|
(114
|
)
|
|
|
-
|
|
|
|
(114
|
)
|
Balance - September 30, 2018
|
|
$
|
(180
|
)
|
|
$
|
(1,633
|
)
|
|
$
|
(1,813
|
)
|
|
(1)
|
Adoption of ASU 2016-01 – cumulative effect of change in measurement of equity securities.
|
(13)
|
Revenue from Contracts with Customers
|
The majority of the Company's revenue-generating transactions are not subject to ASC Topic 606, including revenue generated from financial instruments,
such as loans and investment securities which are presented in our consolidated income statements as components of net interest income. All of the Company's revenue from contracts with customers in the scope of ASC 606 is recognized within
non-interest income, with the exception of net gains and losses from sales of foreclosed real estate, which is recognized within non-interest expense. The following table presents revenues subject to ASC 606 for the three months ended September
30, 2018 and 2017, respectively.
|
|
For the three months ended
September 30,
|
|
(in thousands)
|
|
2018
|
|
|
2017
|
|
Service charges on deposit accounts
|
|
|
|
|
|
|
Insufficient funds fees
|
|
$
|
930
|
|
|
$
|
760
|
|
Deposit related fees
|
|
|
37
|
|
|
|
38
|
|
ATM/point of sale fees
|
|
|
70
|
|
|
|
53
|
|
Total service charges
|
|
|
1,037
|
|
|
|
851
|
|
Interchange fee income
|
|
|
|
|
|
|
|
|
Debit card interchange fees
|
|
|
640
|
|
|
|
566
|
|
E-commerce fee income
|
|
|
|
|
|
|
|
|
E-commerce fees
|
|
|
37
|
|
|
|
38
|
|
Investment services income
|
|
|
|
|
|
|
|
|
Investment services
|
|
|
115
|
|
|
|
72
|
|
Sales of assets
|
|
|
|
|
|
|
|
|
Net loss on sale of foreclosed real estate
|
|
|
(9
|
)
|
|
|
(37
|
)
|
Service Charges on Deposit Accounts
: The Company earns fees from its
deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which included services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the
transaction is executed as that is the point in time the Company fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are recognized at the time the maintenance occurs. Overdraft fees are
recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer's account balance.
Debit Card Interchange Fee Income
: The Company earns interchange fees from
debit cardholder transactions conducted through the Visa DPS payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction
processing services provided to cardholder.
E-commerce income
: The Company earns fees for merchant transaction
processing services provided to its business customers by a third party service provider. The fees represent a percentage of the monthly transaction activity net of related costs, and are received from the service provider on a monthly basis.
Investment Services Income
: The Company earns fees from investment
brokerage services provided to its customers by a third-party service provider. The Company receives commissions from the third-party service provider on a monthly basis based upon customer activity for the month. The Company (i) acts as an
agent in arranging the relationship between the customer and the third-party service provider and (ii) does not control the services rendered to the customers. Investment brokerage fees are presented net of related costs.
Net Gains/Losses on Sales of Foreclosed Real Estate
: The Company records a
gain or loss from the sale of foreclosed real estate when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of foreclosed real estate to the buyer, the
Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the foreclosed real estate asset is derecognized and
the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing
component is present.
On October 16, 2018, the Board of Directors declared a cash dividend for the quarter ended September 30, 2018 of $0.10 per share on Greene County
Bancorp, Inc.’s common stock. The dividend reflects an annual cash dividend rate of $0.40 per share, which was the same rate as the dividend declared during the previous quarter. The dividend will be payable to stockholders of record as of
November 15, 2018, and will be paid on November 30, 2018. The MHC intends to waive its receipt of this dividend.
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operation
|
Overview of the Company’s Activities and Risks
Greene County Bancorp, Inc.’s results of operations depend primarily on its net interest income, which is the difference between the income earned on
Greene County Bancorp, Inc.’s loan and securities portfolios and its cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by Greene County Bancorp, Inc.’s provision for loan losses,
gains and losses from sales of securities, noninterest income and noninterest expense. Noninterest income consists primarily of fees and service charges. Greene County Bancorp, Inc.’s noninterest expense consists principally of compensation
and employee benefits, occupancy, equipment and data processing, and other operating expenses. Results of operations are also significantly affected by general economic and competitive conditions, changes in interest rates, as well as
government policies and actions of regulatory authorities. Additionally, future changes in applicable law, regulations or government policies may materially affect Greene County Bancorp, Inc.
To operate successfully, the Company must manage various types of risk, including but not limited to, market or interest rate risk, credit risk,
transaction risk, liquidity risk, security risk, strategic risk, reputation risk and compliance risk. While all of these risks are important, the risks of greatest significance to the Company relate to market or interest rate risk and credit
risk.
Market risk is the risk of loss from adverse changes in market prices and/or interest rates. Since net interest income (the difference between
interest earned on loans and investments and interest paid on deposits and borrowings) is the Company’s primary source of revenue, interest rate risk is the most significant non-credit related market risk to which the Company is exposed. Net
interest income is affected by changes in interest rates as well as fluctuations in the level and duration of the Company’s assets and liabilities.
Interest rate risk is the exposure of the Company’s net interest income to adverse movements in interest rates. In addition to directly impacting net
interest income, changes in interest rates can also affect the amount of new loan originations, the ability of borrowers and debt issuers to repay loans and debt securities, the volume of loan repayments and refinancings, and the flow and mix
of deposits.
Credit risk is the risk to the Company’s earnings and shareholders’ equity that results from customers, to whom loans have been made and to the issuers
of debt securities in which the Company has invested, failing to repay their obligations. The magnitude of risk depends on the capacity and willingness of borrowers and debt issuers to repay and the sufficiency of the value of collateral
obtained to secure the loans made or investments purchased.
Special Note Regarding Forward-Looking Statements
This quarterly report contains forward-looking statements. Greene County Bancorp, Inc. desires to take advantage of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995 and is including this statement for the express purpose of availing itself of the protections of the safe harbor with respect to all such forward-looking statements. These forward-looking
statements, which are included in this Management’s Discussion and Analysis and elsewhere in this quarterly report, describe future plans or strategies and include Greene County Bancorp, Inc.’s expectations of future financial results. The
words “believe,” “expect,” “anticipate,” “project,” and similar expressions identify forward-looking statements. Greene County Bancorp, Inc.’s ability to predict results or the effect of future plans or strategies or qualitative or
quantitative changes based on market risk exposure is inherently uncertain. Factors that could affect actual results include but are not limited to:
|
(a)
|
changes in general market interest rates,
|
|
(b)
|
general economic conditions, including unemployment rates and real estate values,
|
|
(c)
|
legislative and regulatory changes,
|
|
(d)
|
monetary and fiscal policies of the U.S. Treasury and the Federal Reserve,
|
|
(e)
|
changes in the quality or composition of The Bank of Greene County’s loan portfolio or the consolidated investment portfolios of The Bank of Greene County and Greene
County Bancorp, Inc.,
|
|
(h)
|
demand for financial services in Greene County Bancorp, Inc.’s market area.
|
These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements, since
results in future periods may differ materially from those currently expected because of various risks and uncertainties.
Non-GAAP Financial Measures
Regulation G, a rule adopted by the Securities and Exchange Commission (SEC), applies to certain SEC filings, including earnings releases, made by
registered companies that contain “non-GAAP financial measures.” GAAP is generally accepted accounting principles in the United States of America. Under Regulation G, companies making public disclosures containing non-GAAP financial measures
must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure (if a comparable GAAP measure exists)
and a statement of the Company’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures. The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that
are not based on GAAP. When these exempted measures are included in public disclosures, supplemental information is not required. Financial institutions like the Company and its subsidiary banks are subject to an array of bank regulatory
capital measures that are financial in nature but are not based on GAAP and are not easily reconcilable to the closest comparable GAAP financial measures, even in those cases where a comparable measure exists. The Company follows industry
practice in disclosing its financial condition under these various regulatory capital measures in its periodic reports filed with the SEC, including period-end regulatory capital ratios for itself and its subsidiary banks, and does so without
compliance with Regulation G, on the widely-shared assumption that the SEC regards such non-GAAP measures to be exempt from Regulation G. The Company uses in this Report additional non-GAAP financial measures that are commonly utilized by
financial institutions and have not been specifically exempted by the SEC from Regulation G. The Company provides, as supplemental information, such non-GAAP measures included in this Report as described immediately below.
Tax-Equivalent Net Interest Income and Net Interest Margin:
Net interest income, as a component of the tabular presentation by financial institutions of Selected Financial Information regarding their recently completed operations, as well as disclosures based on that tabular presentation, is commonly
presented on a tax-equivalent basis. That is, to the extent that some component of the institution's net interest income, which is presented on a before-tax basis, is exempt from taxation (e.g., is received by the institution as a result of
its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added to the actual before-tax net interest income total. This adjustment is considered helpful in comparing one financial
institution's net interest income to that of another institution or in analyzing any institution’s net interest income trend line over time, to correct any analytical distortion that might otherwise arise from the fact that financial
institutions vary widely in the proportions of their portfolios that are invested in tax-exempt securities, and that even a single institution may significantly alter over time the proportion of its own portfolio that is invested in tax-exempt
obligations. Moreover, net interest income is itself a component of a second financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average earning assets. For purposes of
this measure as well, tax-equivalent net interest income is generally used by financial institutions, again to provide a better basis of comparison from institution to institution and to better demonstrate a single institution’s performance
over time. While we present net interest income and net interest margin utilizing GAAP measures (no tax-equivalent adjustments) as a component of the tabular presentation within our disclosures, we do provide as supplemental information net
interest income and net interest margin on a tax-equivalent basis.
Comparison of Financial Condition at September 30, 2018 and June 30, 2018
ASSETS
Total assets of the Company were $1.2 billion at September 30, 2018 and at June 30, 2018, an increase of $36.4 million, or 3.2%. Securities
available-for-sale and held-to-maturity amounted to $400.4 million at September 30, 2018 as compared to $395.4 million at June 30, 2018, an increase of $5.0 million, or 1.3%. Net loans grew by $20.1 million, or 2.9%, to $724.5 million at
September 30, 2018 as compared to $704.4 million at June 30, 2018.
CASH AND CASH EQUIVALENTS
Total cash and cash equivalents increased $8.6 million to $35.1 million at September 30, 2018 from $26.5 million at June 30, 2018. The level of cash
and cash equivalents is a function of the daily account clearing needs and deposit levels as well as activities associated with securities transactions and loan funding. All of these items can cause cash levels to fluctuate significantly on a
daily basis.
SECURITIES
Securities available-for-sale and held-to-maturity increased $5.0 million, or 1.3%, to $400.4 million at September 30, 2018 as compared to $395.4
million at June 30, 2018. Securities purchases totaled $56.8 million during the three months ended September 30, 2018 and consisted of $43.8 million of state and political subdivision securities and $13.0 million of mortgage-backed securities.
Principal pay-downs and maturities during the three months amounted to $51.6 million, of which $14.3 million were mortgage-backed securities, and $37.3 million were state and political subdivision securities. At September 30, 2018, 58.7% of our
securities portfolio consisted of state and political subdivision securities to take advantage of tax savings and to promote Greene County Bancorp, Inc.’s participation in the communities in which it operates. Mortgage-backed securities and
asset-backed securities held within the portfolio do not contain sub-prime loans and are not exposed to the credit risk associated with such lending.
|
|
September 30, 2018
|
|
|
June 30, 2018
|
|
(Dollars in thousands)
|
|
Balance
|
|
|
Percentage of
portfolio
|
|
|
Balance
|
|
|
Percentage of
portfolio
|
|
Securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government sponsored enterprises
|
|
$
|
5,496
|
|
|
|
1.4
|
%
|
|
$
|
5,531
|
|
|
|
1.4
|
%
|
State and political subdivisions
|
|
|
92,320
|
|
|
|
23.1
|
|
|
|
92,255
|
|
|
|
23.4
|
|
Mortgage-backed securities-residential
|
|
|
2,985
|
|
|
|
0.7
|
|
|
|
3,247
|
|
|
|
0.8
|
|
Mortgage-backed securities-multifamily
|
|
|
17,095
|
|
|
|
4.3
|
|
|
|
18,069
|
|
|
|
4.6
|
|
Corporate debt securities
|
|
|
1,704
|
|
|
|
0.4
|
|
|
|
1,704
|
|
|
|
0.4
|
|
Total securities available-for-sale
|
|
|
119,600
|
|
|
|
29.9
|
|
|
|
120,806
|
|
|
|
30.6
|
|
Securities held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government sponsored enterprises
|
|
|
9,247
|
|
|
|
2.3
|
|
|
|
9,245
|
|
|
|
2.3
|
|
State and political subdivisions
|
|
|
142,647
|
|
|
|
35.6
|
|
|
|
136,335
|
|
|
|
34.5
|
|
Mortgage-backed securities-residential
|
|
|
5,698
|
|
|
|
1.4
|
|
|
|
6,472
|
|
|
|
1.6
|
|
Mortgage-backed securities-multifamily
|
|
|
120,333
|
|
|
|
30.1
|
|
|
|
118,780
|
|
|
|
30.0
|
|
Corporate debt securities
|
|
|
1,469
|
|
|
|
0.4
|
|
|
|
1,466
|
|
|
|
0.4
|
|
Other securities
|
|
|
1,380
|
|
|
|
0.3
|
|
|
|
2,252
|
|
|
|
0.6
|
|
Total securities held-to-maturity
|
|
|
280,774
|
|
|
|
70.1
|
|
|
|
274,550
|
|
|
|
69.4
|
|
Total securities
|
|
$
|
400,374
|
|
|
|
100.0
|
%
|
|
$
|
395,356
|
|
|
|
100.0
|
%
|
LOANS
Net loans receivable increased $20.1 million, or 2.9%, to $724.5 million at September 30, 2018 from $704.4 million at June 30, 2018. The loan growth
experienced during the three months consisted primarily of $5.5 million in commercial real estate loans, $3.1 million in commercial loans, $6.4 million in residential real estate loans, and $6.1 million in multi-family real estate loans. We
believe that the continued low interest rate environment and strong customer satisfaction from personal service continued to enhance loan growth. If long term rates begin to rise, the Company anticipates some slowdown in new loan demand as well
as refinancing activities. The Bank of Greene County continues to use a conservative underwriting policy in regard to all loan originations, and does not engage in sub-prime lending or other exotic loan products. A significant decline in home
values, however, in the Company’s markets could have a negative effect on the consolidated results of operations, as any such decline in home values would likely lead to a decrease in residential real estate loans and new home equity loan
originations and increased delinquencies and defaults in both the consumer home equity loan and the residential real estate loan portfolios and result in increased losses in these portfolios. Updated appraisals are obtained on loans when there
is a reason to believe that there has been a change in the borrower’s ability to repay the loan principal and interest, generally, when a loan is in a delinquent status. Additionally, if an existing loan is to be modified or refinanced,
generally, an appraisal is ordered to ensure continued collateral adequacy.
(Dollars in thousands)
|
|
September 30, 2018
|
|
|
June 30, 2018
|
|
|
|
Balance
|
|
|
Percentage of
Portfolio
|
|
|
Balance
|
|
|
Percentage of
Portfolio
|
|
Residential real estate
|
|
$
|
262,264
|
|
|
|
35.6
|
%
|
|
$
|
255,848
|
|
|
|
35.7
|
%
|
Residential construction and land
|
|
|
9,803
|
|
|
|
1.3
|
|
|
|
9,951
|
|
|
|
1.4
|
|
Multi-family
|
|
|
21,076
|
|
|
|
2.9
|
|
|
|
14,961
|
|
|
|
2.1
|
|
Commercial real estate
|
|
|
289,425
|
|
|
|
39.3
|
|
|
|
283,935
|
|
|
|
39.7
|
|
Commercial construction
|
|
|
38,836
|
|
|
|
5.3
|
|
|
|
39,366
|
|
|
|
5.5
|
|
Home equity
|
|
|
21,744
|
|
|
|
3.0
|
|
|
|
21,919
|
|
|
|
3.1
|
|
Consumer installment
|
|
|
5,217
|
|
|
|
0.7
|
|
|
|
5,017
|
|
|
|
0.7
|
|
Commercial loans
|
|
|
87,711
|
|
|
|
11.9
|
|
|
|
84,644
|
|
|
|
11.8
|
|
Total gross loans
|
|
|
736,076
|
|
|
|
100.0
|
%
|
|
|
715,641
|
|
|
|
100.0
|
%
|
Allowance for loan losses
|
|
|
(12,308
|
)
|
|
|
|
|
|
|
(12,024
|
)
|
|
|
|
|
Deferred fees and costs
|
|
|
758
|
|
|
|
|
|
|
|
814
|
|
|
|
|
|
Total net loans
|
|
$
|
724,526
|
|
|
|
|
|
|
$
|
704,431
|
|
|
|
|
|
ALLOWANCE FOR LOAN LOSSES
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 loan portfolio, specific impaired loans and current economic conditions. Such evaluation, which includes a review of certain identified loans on 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, payment status of the loan, historical loan loss experience and other factors that warrant recognition in
providing for an allowance for loan loss. In addition, various regulatory agencies, as an integral part of their examination process, periodically review The Bank of Greene County’s allowance for loan losses. Such agencies may require The
Bank of Greene County to recognize additions to the allowance based on their judgment about information available to them at the time of their examination. The Bank of Greene County considers smaller balance residential mortgages, home equity
loans and installment loans to customers as small, homogeneous loans, which are evaluated for impairment collectively based on historical loss experience. Larger balance residential and commercial mortgage and business loans are viewed
individually and considered impaired if it is probable that The Bank of Greene County will not be able to collect scheduled payments of principal and interest when due, according to the contractual terms of the loan agreements. The measurement
of impaired loans is generally based on the fair value of the underlying collateral. The Bank of Greene County charges loans off against the allowance for loan losses when it becomes evident that a loan cannot be collected within a reasonable
amount of time or that it will cost the Bank more than it will receive, and all possible avenues of repayment have been analyzed, including the potential of future cash flow, the value of the underlying collateral, and strength of any
guarantors or co-borrowers. Generally, consumer loans and smaller business loans (not secured by real estate) in excess of 90 days are charged-off against the allowance for loan losses, unless equitable arrangements are made. For loans
secured by real estate, a charge-off is recorded when it is determined that the collection of all or a portion of a loan may not be collected and the amount of that loss can be reasonably estimated. The allowance for loan losses is increased by
a provision for loan losses (which results in a charge to expense) and recoveries of loans previously charged off and is reduced by charge-offs.
Analysis of allowance for loan losses activity
|
|
At or for the three months
ended September 30,
|
|
(Dollars in thousands)
|
|
2018
|
|
|
2017
|
|
Balance at the beginning of the period
|
|
$
|
12,024
|
|
|
$
|
11,022
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
|
21
|
|
|
|
44
|
|
Consumer installment
|
|
|
99
|
|
|
|
88
|
|
Commercial loans
|
|
|
-
|
|
|
|
157
|
|
Total loans charged off
|
|
|
120
|
|
|
|
289
|
|
|
|
|
|
|
|
|
|
|
Recoveries:
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
|
13
|
|
|
|
-
|
|
Consumer installment
|
|
|
37
|
|
|
|
18
|
|
Total recoveries
|
|
|
50
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
|
|
|
70
|
|
|
|
271
|
|
|
|
|
|
|
|
|
|
|
Provisions charged to operations
|
|
|
354
|
|
|
|
347
|
|
Balance at the end of the period
|
|
$
|
12,308
|
|
|
$
|
11,098
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to average loans outstanding (annualized)
|
|
|
0.04
|
%
|
|
|
0.17
|
%
|
Net charge-offs to nonperforming assets (annualized)
|
|
|
8.08
|
%
|
|
|
26.25
|
%
|
Allowance for loan losses to nonperforming loans
|
|
|
363.39
|
%
|
|
|
328.54
|
%
|
Allowance for loan losses to total loans receivable
|
|
|
1.67
|
%
|
|
|
1.71
|
%
|
Nonaccrual Loans and Nonperforming Assets
Loans are reviewed on a regular basis to assess collectability of all principal and interest payments due. Management determines that a loan is
impaired or nonperforming when it is probable at least a portion of the principal or interest will not be collected in accordance with contractual terms of the note. When a loan is determined to be impaired, the measurement of the loan is
based on present value of estimated future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral.
Generally, management places loans on nonaccrual status once the loans have become 90 days or more delinquent or sooner if there is a significant
reason for management to believe the collectability is questionable and, therefore, interest on the loan will no longer be recognized on an accrual basis. The Company identifies impaired loans and measures the impairment in accordance with
FASB ASC subtopic “
Receivables – Loan Impairment.”
Management may consider a loan impaired once it is classified as nonaccrual and when it is probable
that the borrower will be unable to repay the loan according to the original contractual terms of the loan agreement or the loan is restructured in a troubled debt restructuring. It should be noted that management does not evaluate all loans
individually for impairment. Generally, The Bank of Greene County considers residential mortgages, home equity loans and installment loans as small, homogeneous loans, which are evaluated for impairment collectively based on historical loan
experience and other factors. In contrast, large commercial mortgage, construction, multi-family, business loans and select larger balance residential mortgage loans are viewed individually and considered impaired if it is probable that The
Bank of Greene County will not be able to collect scheduled payments of principal and interest when due, according to the contractual terms of the loan agreement. The measurement of impaired loans is generally based on the fair value of the
underlying collateral. The majority of The Bank of Greene County loans, including most nonaccrual loans, are small homogenous loan types adequately supported by collateral. Management considers the payment status of loans in the process of
evaluating the adequacy of the allowance for loan losses among other factors. Based on this evaluation, a delinquent loan’s risk rating may be downgraded to either pass-watch, special mention, or substandard, and the allocation of the
allowance for loan loss is based upon the risk associated with such designation. A loan does not have to be 90 days delinquent in order to be classified as nonperforming. Foreclosed real estate is considered to be a nonperforming asset.
Analysis of Nonaccrual Loans and Nonperforming Assets
(Dollars in thousands)
|
|
September 30,
2018
|
|
|
June 30,
2018
|
|
Nonaccruing loans:
|
|
|
|
|
|
|
Residential real estate
|
|
$
|
1,634
|
|
|
$
|
1,778
|
|
Commercial real estate
|
|
|
1,119
|
|
|
|
1,147
|
|
Home equity
|
|
|
529
|
|
|
|
298
|
|
Consumer installment
|
|
|
17
|
|
|
|
18
|
|
Commercial
|
|
|
88
|
|
|
|
276
|
|
Total nonaccruing loans
|
|
|
3,387
|
|
|
|
3,517
|
|
90 days & accruing
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
|
-
|
|
|
|
62
|
|
Total 90 days & accruing
|
|
|
-
|
|
|
|
62
|
|
Total nonperforming loans
|
|
|
3,387
|
|
|
|
3,579
|
|
Foreclosed real estate:
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
|
79
|
|
|
|
119
|
|
Total foreclosed real estate
|
|
|
79
|
|
|
|
119
|
|
Total nonperforming assets
|
|
$
|
3,466
|
|
|
$
|
3,698
|
|
|
|
|
|
|
|
|
|
|
Troubled debt restructuring:
|
|
|
|
|
|
|
|
|
Nonperforming (included above)
|
|
$
|
768
|
|
|
$
|
774
|
|
Performing (accruing and excluded above)
|
|
|
1,551
|
|
|
|
1,557
|
|
|
|
|
|
|
|
|
|
|
Total nonperforming assets as a percentage of total assets
|
|
|
0.29
|
%
|
|
|
0.32
|
%
|
Total nonperforming loans to net loans
|
|
|
0.47
|
%
|
|
|
0.51
|
%
|
|
|
|
|
|
|
|
|
|
The table below details additional information related to nonaccrual loans for the three months ended September 30:
(In thousands)
|
|
2018
|
|
|
2017
|
|
Interest income that would have been recorded if loans had been performing in accordance with original
terms
|
|
$
|
71
|
|
|
$
|
78
|
|
Interest income that was recorded on nonaccrual loans
|
|
|
32
|
|
|
|
34
|
|
Nonperforming assets amounted to $3.5 million at September 30, 2018 and $3.7 million at June 30, 2018, a decrease of $232,000, or 6.3%. Nonaccrual
loans consisted primarily of loans secured by real estate at September 30, 2018 and June 30, 2018. Loans on nonaccrual status totaled $3.4 million at September 30, 2018 of which $1.8 million were in the process of foreclosure. At September 30,
2018, there were 10 residential loans in the process of foreclosure totaling $1.2 million. Included in nonaccrual loans were $1.6
million of loans which were less than 90
days past due at September 30, 2018, but have a recent history of delinquency greater than 90 days past due. These loans will be returned to accrual status once they have demonstrated a history of timely payments. Included in total loans past
due were $62,000 of loans which were making payments pursuant to forbearance agreements. Under the forbearance agreements, the customers have made arrangements with the Bank to bring the loans current over a specified period of time (resulting
in an insignificant delay in repayment). During this term of the forbearance agreement, the Bank has agreed not to continue foreclosure proceedings. Loans on nonaccrual status totaled $3.5 million at June 30, 2018 of which $1.9 million were
in the process of foreclosure. At June 30, 2018, there were 11 residential loans in the process of foreclosure totaling $1.2 million. Included in nonaccrual loans were $1.3 million of loans which were less than 90 days past due at June 30,
2018, but have a recent history of delinquency greater than 90 days past due.
Impaired Loans
The Company identifies impaired loans and measures the impairment in accordance with FASB ASC subtopic “
Receivables – Loan Impairment”
. A loan is considered impaired when it is probable that the borrower will be unable to repay the loan according to the original contractual terms of the loan
agreement or the loan is restructured in a troubled debt restructuring.
The table below details additional information on impaired loans at September 30, 2018 and June 30, 2018:
(In thousands)
|
|
September 30, 2018
|
|
|
June 30, 2018
|
|
Balance of impaired loans, with a valuation allowance
|
|
$
|
2,658
|
|
|
$
|
2,799
|
|
Allowances relating to impaired loans included in allowance for loan losses
|
|
|
439
|
|
|
|
482
|
|
Balance of impaired loans, without a valuation allowance
|
|
|
1,258
|
|
|
|
1,349
|
|
Total impaired loans
|
|
|
3,916
|
|
|
|
4,148
|
|
|
|
For the three months ended
September 30,
|
|
(In thousands)
|
|
2018
|
|
|
2017
|
|
Average balance of impaired loans for the periods ended
|
|
$
|
3,902
|
|
|
$
|
3,702
|
|
Interest income recorded on impaired loans during the periods ended
|
|
|
38
|
|
|
|
22
|
|
DEPOSITS
Deposits totaled $1.0 billion at September 30, 2018 and at June 30, 2018, a decrease of $22.8 million, or 2.2%. Noninterest-bearing deposits increased
$6.7 million, or 6.5%, and NOW deposits increased $12.2 million, or 2.3%, when comparing September 30, 2018 and June 30, 2018. These increases were offset by a decrease in money market deposits of $21.3 million, or 16.0%, a decrease in savings
deposits of $4.3 million, or 2.0%, and a decrease in certificates of deposits of $16.0 million, or 31.2%, when comparing September 30, 2018 and June 30, 2018. Typically deposits increase during the first quarter of the Company’s fiscal year as
a result of an increase in municipal deposits at Greene County Commercial Bank, primarily from tax collection. However, several taxing authorities experienced delays in sending out tax bills to property owners and as a result extended the due
date for payments into October 2018. As a result of this delay, the Company did not experience the normal growth in deposits at September 30, 2018. Included within certificates of deposits at June 30, 2018 were $15.0 million in brokered
certificates of deposit. These brokered certificates of deposit matured during the three months ended September 30, 2018 and were not renewed.
(In thousands)
|
|
September 30, 2018
|
|
|
Percentage
of Portfolio
|
|
|
June 30, 2018
|
|
|
Percentage
of Portfolio
|
|
Noninterest-bearing deposits
|
|
$
|
109,358
|
|
|
|
10.9
|
%
|
|
$
|
102,694
|
|
|
|
10.0
|
%
|
Certificates of deposit
|
|
|
35,326
|
|
|
|
3.5
|
|
|
|
51,317
|
|
|
|
5.0
|
|
Savings deposits
|
|
|
211,844
|
|
|
|
21.2
|
|
|
|
216,103
|
|
|
|
21.1
|
|
Money market deposits
|
|
|
112,407
|
|
|
|
11.2
|
|
|
|
133,753
|
|
|
|
13.0
|
|
NOW deposits
|
|
|
533,526
|
|
|
|
53.2
|
|
|
|
521,367
|
|
|
|
50.9
|
|
Total deposits
|
|
$
|
1,002,461
|
|
|
|
100.0
|
%
|
|
$
|
1,025,234
|
|
|
|
100.0
|
%
|
BORROWINGS
At September 30, 2018, The Bank of Greene County had pledged approximately $296.0 million of its residential and commercial mortgage portfolio as
collateral for borrowing and irrevocable stand-by letters of credit at the Federal Home Loan Bank of New York (“FHLB”). The maximum amount of funding available from the FHLB was $236.0 million at September 30, 2018, of which $76.0 million in
borrowings and $55.0 million in irrevocable stand-by letters of credit were outstanding at September 30, 2018. There were $58.8 million of short-term or overnight borrowings outstanding at September 30, 2018. The $17.2 million consisted of
long-term fixed rate advances with a weighted average rate of 1.63% and a weighted average maturity of 20 months. The $55.0 million of irrevocable stand-by letters of credit with the FHLB have been issued to secure municipal transactional
deposit accounts, on behalf of Greene County Commercial Bank.
The Bank of Greene County also pledges securities as collateral at the Federal Reserve Bank discount window for overnight borrowings. At September 30,
2018, approximately $1.7 million of collateral was available to be pledged against potential borrowings at the Federal Reserve Bank discount window. There were no balances outstanding with the Federal Reserve Bank at September 30, 2018 or June
30, 2018.
The Bank of Greene County has established unsecured lines of credit with Atlantic Community Bankers Bank and another financial institution for $6.0
million and $10.0 million, respectively. At September 30, 2018 and June 30, 2018, there were no balances outstanding on either of these lines of credit. Greene County Bancorp, Inc. has also established an unsecured line of credit with Atlantic
Community Bankers Bank for $7.5 million. At September 30, 2018 and June 30, 2018, there were no balances outstanding on this line of credit. All of these lines of credit provide for overnight borrowing and the interest rate is determined at
the time of the borrowing.
Scheduled maturities of long-term borrowings at September 30, 2018 were as follows:
(In thousands)
|
|
|
|
Within the twelve months ended September 30,
|
|
2019
|
|
$
|
4,500
|
|
2020
|
|
|
6,000
|
|
2021
|
|
|
1,800
|
|
2022
|
|
|
4,850
|
|
|
|
$
|
17,150
|
|
EQUITY
Shareholders’ equity increased to $99.6 million at September 30, 2018 from $96.2 million at June 30, 2018, resulting primarily from net income of $4.4
million, partially offset by dividends declared and paid of $854,000 and an increase in other accumulated comprehensive loss of $76,000.
Selected Equity Data:
|
|
|
|
|
|
September 30, 2018
|
|
|
June 30, 2018
|
|
Shareholders’ equity to total assets, at end of period
|
|
|
8.39
|
%
|
|
|
8.35
|
%
|
|
|
|
|
|
|
|
|
|
Book value per share
|
|
$
|
11.67
|
|
|
$
|
11.27
|
|
Closing market price of common stock
|
|
$
|
32.10
|
|
|
$
|
33.90
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30,
|
|
|
|
|
2018
|
|
|
|
2017
|
|
Average shareholders’ equity to average assets
|
|
|
8.49
|
%
|
|
|
8.57
|
%
|
Dividend payout ratio
1
|
|
|
19.61
|
%
|
|
|
23.78
|
%
|
Actual dividends paid to net income
2
|
|
|
19.50
|
%
|
|
|
10.92
|
%
|
1
|
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 for dividends waived by Greene County Bancorp, MHC (“MHC”), the owner of 54.0% of the Company’s shares outstanding.
|
2
|
Dividends declared divided by net income. The MHC waived its right to receive dividends declared during the three months ended September 30,
2017. 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.
|
Comparison of Operating Results for the Three Months Ended September 30, 2018 and 2017
Average Balance Sheet
The following table sets forth certain information relating to Greene County Bancorp, Inc. for the three months ended September 30, 2018 and 2017. For
the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, are expressed both in dollars and rates.
No tax equivalent adjustments were made. Average balances were based on daily averages. Average loan balances include nonperforming loans. The loan yields include net amortization of certain deferred fees and costs that are considered
adjustments to yields.
|
|
2018
|
|
|
2017
|
|
(Dollars in thousands)
|
|
Average
Outstanding
Balance
|
|
|
Interest
Earned
/ Paid
|
|
|
Average
Yield /
Rate
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
Earned
/ Paid
|
|
|
Average
Yield /
Rate
|
|
Interest-earning Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable, net
1
|
|
$
|
725,143
|
|
|
$
|
8,298
|
|
|
|
4.58
|
%
|
|
$
|
639,251
|
|
|
$
|
7,059
|
|
|
|
4.42
|
%
|
Securities
2
|
|
|
398,867
|
|
|
|
2,640
|
|
|
|
2.65
|
|
|
|
328,888
|
|
|
|
1,989
|
|
|
|
2.42
|
|
Interest-bearing bank balances and federal funds
|
|
|
6,779
|
|
|
|
31
|
|
|
|
1.83
|
|
|
|
4,911
|
|
|
|
12
|
|
|
|
0.98
|
|
FHLB stock
|
|
|
3,313
|
|
|
|
28
|
|
|
|
3.38
|
|
|
|
1,986
|
|
|
|
29
|
|
|
|
5.84
|
|
Total interest-earning assets
|
|
|
1,134,102
|
|
|
|
10,997
|
|
|
|
3.88
|
%
|
|
|
975,036
|
|
|
|
9,089
|
|
|
|
3.73
|
%
|
Cash and due from banks
|
|
|
9,624
|
|
|
|
|
|
|
|
|
|
|
|
9,296
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses
|
|
|
(12,116
|
)
|
|
|
|
|
|
|
|
|
|
|
(11,066
|
)
|
|
|
|
|
|
|
|
|
Other noninterest-earning assets
|
|
|
19,155
|
|
|
|
|
|
|
|
|
|
|
|
18,789
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,150,765
|
|
|
|
|
|
|
|
|
|
|
$
|
992,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings and money market deposits
|
|
$
|
342,998
|
|
|
$
|
293
|
|
|
|
0.34
|
%
|
|
$
|
318,309
|
|
|
$
|
256
|
|
|
|
0.32
|
%
|
NOW deposits
|
|
|
499,699
|
|
|
|
641
|
|
|
|
0.51
|
|
|
|
412,856
|
|
|
|
463
|
|
|
|
0.45
|
|
Certificates of deposit
|
|
|
39,571
|
|
|
|
102
|
|
|
|
1.03
|
|
|
|
43,637
|
|
|
|
90
|
|
|
|
0.83
|
|
Borrowings
|
|
|
57,425
|
|
|
|
304
|
|
|
|
2.12
|
|
|
|
28,349
|
|
|
|
110
|
|
|
|
1.55
|
|
Total interest-bearing liabilities
|
|
|
939,693
|
|
|
|
1,340
|
|
|
|
0.57
|
%
|
|
|
803,151
|
|
|
|
919
|
|
|
|
0.46
|
%
|
Noninterest-bearing deposits
|
|
|
102,215
|
|
|
|
|
|
|
|
|
|
|
|
96,052
|
|
|
|
|
|
|
|
|
|
Other noninterest-bearing liabilities
|
|
|
11,110
|
|
|
|
|
|
|
|
|
|
|
|
7,801
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
97,747
|
|
|
|
|
|
|
|
|
|
|
|
85,051
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
1,150,765
|
|
|
|
|
|
|
|
|
|
|
$
|
992,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
|
|
|
$
|
9,657
|
|
|
|
|
|
|
|
|
|
|
$
|
8,170
|
|
|
|
|
|
Net interest rate spread
|
|
|
|
|
|
|
|
|
|
|
3.31
|
%
|
|
|
|
|
|
|
|
|
|
|
3.27
|
%
|
Net earnings assets
|
|
$
|
194,409
|
|
|
|
|
|
|
|
|
|
|
$
|
171,885
|
|
|
|
|
|
|
|
|
|
Net interest margin
|
|
|
|
|
|
|
|
|
|
|
3.41
|
%
|
|
|
|
|
|
|
|
|
|
|
3.35
|
%
|
Average interest-earning assets to average interest-bearing liabilities
|
|
|
120.69
|
|
|
|
|
|
|
|
|
|
|
|
121.40
|
|
|
|
|
|
|
|
|
|
1
|
Calculated net of deferred loan fees and costs, loan discounts, and loans in
process.
|
2
|
Includes tax-free securities, mortgage-backed securities, and asset-backed
securities
.
|
Taxable-equivalent net interest income and net interest margin
|
|
For the three months ended
September 30,
|
|
(Dollars in thousands)
|
|
2018
|
|
|
2017
|
|
Net interest income (GAAP)
|
|
$
|
9,657
|
|
|
$
|
8,170
|
|
Tax-equivalent adjustment
(1)
|
|
|
473
|
|
|
|
647
|
|
Net interest income (fully taxable-equivalent)
|
|
$
|
10,130
|
|
|
$
|
8,817
|
|
|
|
|
|
|
|
|
|
|
Average interest-earning assets
|
|
$
|
1,134,102
|
|
|
$
|
975,036
|
|
Net interest margin (fully taxable-equivalent)
|
|
|
3.57
|
%
|
|
|
3.62
|
%
|
1
|
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. The rate used for
this adjustment was 21% and 34% for federal income taxes and 3.98% and 3.32% for New York State income taxes for the period ended September 30, 2018 and 2017 respectively
.
|
Rate / Volume Analysis
The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing
liabilities have affected Greene County Bancorp, Inc.’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to:
|
(i)
|
Change attributable to changes in volume (changes in volume multiplied by prior rate);
|
|
(ii)
|
Change attributable to changes in rate (changes in rate multiplied by prior volume); and
|
The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due
to rate.
|
|
Three months ended September 30,
2018 versus 2017
|
|
|
|
Increase/(Decrease)
Due To
|
|
|
Total
Increase/
|
|
(Dollars in thousands)
|
|
Volume
|
|
|
Rate
|
|
|
(Decrease)
|
|
Interest-earning Assets:
|
|
|
|
|
|
|
|
|
|
Loans receivable, net
1
|
|
$
|
976
|
|
|
$
|
263
|
|
|
$
|
1,239
|
|
Securities
2
|
|
|
450
|
|
|
|
201
|
|
|
|
651
|
|
Interest-bearing bank balances and federal funds
|
|
|
6
|
|
|
|
13
|
|
|
|
19
|
|
FHLB stock
|
|
|
14
|
|
|
|
(15
|
)
|
|
|
(1
|
)
|
Total interest-earning assets
|
|
|
1,446
|
|
|
|
462
|
|
|
|
1,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings and money market deposits
|
|
|
20
|
|
|
|
17
|
|
|
|
37
|
|
NOW deposits
|
|
|
109
|
|
|
|
69
|
|
|
|
178
|
|
Certificates of deposit
|
|
|
(9
|
)
|
|
|
21
|
|
|
|
12
|
|
Borrowings
|
|
|
143
|
|
|
|
51
|
|
|
|
194
|
|
Total interest-bearing liabilities
|
|
|
263
|
|
|
|
158
|
|
|
|
421
|
|
Net change in net interest income
|
|
$
|
1,183
|
|
|
$
|
304
|
|
|
$
|
1,487
|
|
1
|
Calculated net of deferred loan fees, loan discounts, and loans in process.
|
2
|
Includes tax-free securities, mortgage-backed securities, and asset-backed securities.
|
GENERAL
Return on average assets and return on average equity are common methods of measuring operating results. Annualized return on average assets increased
to 1.52% from 1.40% for the three months ended September 30, 2018 and 2017, respectively. Annualized return on average equity increased to 17.92% for the three months ended September 30, 2018 as compared to 16.33% for the three months ended
September 30, 2017. The increase in return on average assets and average equity was primarily the result of an increase in net interest income resulting from growth in earning assets, resulting in higher net income. Net income amounted to
$4.4 million and $3.5 million for the three months ended September 30, 2018 and 2017, respectively. Average assets increased $159.0 million, or 16.0%, to $1.2 billion for the three months ended September 30, 2018 as compared to $992.1 million
for the three months ended September 30, 2017. Average equity increased $12.6 million, or 14.8%, to $97.7 million for the three months ended September 30, 2018 as compared to $85.1 million for the three months ended September 30, 2017.
INTEREST INCOME
Interest income amounted to $11.0 million for the three months ended September 30, 2018 as compared to $9.1 million for the three months ended
September 30, 2017, an increase of $1.9 million, or 20.9%. The increase in average loan and securities balances had the greatest impact on interest income when comparing the three months ended September 30, 2018 and 2017, which was
complemented by an increase in the yield on loans during the September 30, 2018 quarter. Average loan balances increased $85.8 million and the yield on loans increased 16 basis points when comparing the three months ended September 30, 2018 and
2017. Average securities increased $70.0 million and the yield on such securities increased 23 basis points when comparing the three months ended September 30, 2018 and 2017.
INTEREST EXPENSE
Interest expense amounted to $1.3 million for the three months ended September 30, 2018 as compared to $919,000 for the three months ended September
30, 2017, an increase of $421,000 or 45.8%. Increases in the average balances on interest-bearing liabilities and an increase in the rate paid contributed to the increase in interest expense. As illustrated in the rate/volume table, interest
expense increased $263,000 due to a $136.5 million increase in the average balances on interest-bearing liabilities. Interest expense also increased $158,000 due to an 11 basis point increase in the rate paid on interest-bearing liabilities to
0.57% for the three months ended September 30, 2018 compared to 0.46% for the three months ended September 30, 2017. The average balance of NOW deposits grew by $86.8 million when comparing the three months ended September 30, 2018 and 2017.
The average balance of savings and money market deposits increased $24.7 million and average balance of certificates of deposit decreased $4.1 million when comparing the three months ended September 30, 2018 and 2017. The average balance on
borrowings increased $29.1 million, and the rate increased 57 basis points when comparing the three months ended September 30, 2018 and 2017.
NET INTEREST INCOME
Net interest income increased $1.5 million to $9.7 million for the three months ended September 30, 2018 from $8.2 million for the three months ended
September 30, 2017. Net interest spread increased four basis points to 3.31% as compared to 3.27% when comparing the three months ended September 30, 2018 and 2017, respectively. Net interest margin increased six basis points to 3.41% for the
three months ended September 30, 2018 as compared to 3.35% for the three months ended September 30, 2017. The growth in average loan and securities balances, led to an increase in net interest income when comparing the three months ended
September 30, 2018 and 2017.
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 3.57% and 3.62% for the three months ended September 30, 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 months ended September 30, 2018 compared to September 30, 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.
Due to the large portion of fixed-rate residential mortgages in the Company’s portfolio, interest rate risk is a concern and the Company will continue
to monitor and adjust the asset and liability mix as much as possible to take advantage of the benefits and reduce the risks or potential negative effects of a rising rate environment. Management attempts to mitigate the interest rate risk
through balance sheet composition. Several strategies are used to help manage interest rate risk such as maintaining a high level of liquid assets such as short-term federal funds sold and various investment securities and maintaining a high
concentration of less interest-rate sensitive and lower-costing core deposits.
PROVISION FOR LOAN LOSSES
Management continues to closely monitor asset quality and adjust the level of the allowance for loan losses when necessary. The amount recognized for
the provision for loan losses is determined by management based on its ongoing analysis of the adequacy of the allowance for loan losses. The provision for loan losses amounted to $354,000 and $347,000 for the three months ended September 30,
2018 and 2017, respectively. Net charge-offs amounted to $70,000 and $271,000 for the three months ended September 30, 2018 and 2017, respectively, a decrease of $201,000.
Allowance for loan losses to total loans receivable was 1.67% at September 30, 2018, and 1.68% at June 30, 2018. Nonperforming loans amounted to $3.4
million and $3.6 million at September 30, 2018 and June 30, 2018, respectively. At September 30, 2018 and June 30, 2018, respectively, nonperforming assets were 0.29% and 0.32% of total assets and nonperforming loans were 0.47% and 0.51% of net
loans. The Company has not been an originator of “no documentation” mortgage loans, and the loan portfolio does not include any mortgage loans that the Company classifies as sub-prime.
NONINTEREST INCOME
|
|
For the three months
ended September 30,
|
|
|
Change from
Prior Year
|
|
Noninterest income:
|
|
2018
|
|
|
2017
|
|
|
Amount
|
|
|
Percent
|
|
Service charges on deposit accounts
|
|
$
|
1,037
|
|
|
$
|
851
|
|
|
$
|
186
|
|
|
|
21.86
|
%
|
Debit card fees
|
|
|
640
|
|
|
|
566
|
|
|
|
74
|
|
|
|
13.07
|
|
Investment services
|
|
|
115
|
|
|
|
72
|
|
|
|
43
|
|
|
|
59.72
|
|
E-commerce fees
|
|
|
37
|
|
|
|
38
|
|
|
|
(1
|
)
|
|
|
(2.63
|
)
|
Other operating income
|
|
|
223
|
|
|
|
213
|
|
|
|
10
|
|
|
|
4.69
|
|
Total noninterest income
|
|
$
|
2,052
|
|
|
$
|
1,740
|
|
|
$
|
312
|
|
|
|
17.93
|
%
|
Noninterest income increased $312,000, or 17.9%, and totaled $2.0 million and $1.7 million for the three months ended September 30, 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
|
|
For the three months
ended September 30,
|
|
|
Change from Prior
Year
|
|
Noninterest expense:
|
|
2018
|
|
|
2017
|
|
|
Amount
|
|
|
Percent
|
|
Salaries and employee benefits
|
|
$
|
3,478
|
|
|
$
|
2,882
|
|
|
$
|
596
|
|
|
|
20.68
|
%
|
Occupancy expense
|
|
|
402
|
|
|
|
356
|
|
|
|
46
|
|
|
|
12.92
|
|
Equipment and furniture expense
|
|
|
214
|
|
|
|
113
|
|
|
|
101
|
|
|
|
89.38
|
|
Service and data processing fees
|
|
|
495
|
|
|
|
487
|
|
|
|
8
|
|
|
|
1.64
|
|
Computer software, supplies and support
|
|
|
223
|
|
|
|
143
|
|
|
|
80
|
|
|
|
55.94
|
|
Advertising and promotion
|
|
|
120
|
|
|
|
55
|
|
|
|
65
|
|
|
|
118.18
|
|
FDIC insurance premiums
|
|
|
127
|
|
|
|
93
|
|
|
|
34
|
|
|
|
36.56
|
|
Legal and professional fees
|
|
|
329
|
|
|
|
231
|
|
|
|
98
|
|
|
|
42.42
|
|
Other
|
|
|
573
|
|
|
|
533
|
|
|
|
40
|
|
|
|
7.50
|
|
Total noninterest expense
|
|
$
|
5,961
|
|
|
$
|
4,893
|
|
|
$
|
1,068
|
|
|
|
21.83
|
%
|
Noninterest expense increased $1.1 million, or 21.8%, to $6.0 million for the three months ended September 30, 2018 as compared to $4.9 million for the
three months ended September 30, 2017. This increase was primarily due to an increase in salaries and employee benefits expenses, resulting from additional staffing for the addition of two new branches located in Copake and Woodstock, New York.
Staffing was also increased within our lending department, customer service center and investment center.
The increase is also due to costs associated with the opening of
the newest branch in Woodstock, New York during the three months ended September 30, 2018, and an increase in professional fees.
INCOME TAXES
The 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 18.8% for the three months ended September 30, 2018, compared to 25.7% for the three months ended September 30, 2017. The decrease in the effective tax rate for the three months ended
September 30, 2018 is primarily the result of the impact of the enactment of the Tax Cut and Jobs Act of 2017 (“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.
LIQUIDITY AND CAPITAL RESOURCES
Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates or prices such as interest rates, foreign
currency exchange rates, commodity prices, and equity prices. Greene County Bancorp, Inc.’s most significant form of market risk is interest rate risk since the majority of Greene County Bancorp, Inc.’s assets and liabilities are sensitive to
changes in interest rates. Greene County Bancorp, Inc.’s primary sources of funds are deposits and proceeds from principal and interest payments on loans, mortgage-backed securities and debt securities, with lines of credit available through
the Federal Home Loan Bank and Atlantic Central Bankers Bank as needed. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit outflows, mortgage prepayments, and lending activities are
greatly influenced by general interest rates, economic conditions and competition.
The Bank of Greene County’s unfunded loan commitments and unused lines of credit are as follows at September 30, 2018:
(In thousands)
|
|
2018
|
|
Unfunded loan commitments
|
|
$
|
36,487
|
|
Unused lines of credit
|
|
|
62,747
|
|
Total commitments
|
|
$
|
99,234
|
|
Greene County Bancorp, Inc. anticipates that it will have sufficient funds available to meet current loan commitments based on the level of cash and
cash equivalents as well as the available-for-sale investment portfolio and borrowing capacity.
The Bank of Greene County and Greene County Commercial Bank met all applicable regulatory capital requirements at September 30, 2018 and June 30,
2018. Consolidated shareholders’ equity represented 8.4% of total assets at September 30, 2018 and at June 30, 2018.
(Dollars in thousands)
|
|
Actual
|
|
|
For Capital
Adequacy Purposes
|
|
|
To Be Well
Capitalized
Prompt
Action
|
|
|
Capital Conservation
Buffer
|
|
The
Bank of Greene County
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Actual
|
|
|
Required
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-based capital
|
|
$
|
106,918
|
|
|
|
15.7
|
%
|
|
$
|
54,354
|
|
|
|
8.0
|
%
|
|
$
|
67,942
|
|
|
|
10.0
|
%
|
|
|
7.737
|
%
|
|
|
1.875
|
%
|
Tier 1 risk-based capital
|
|
|
98,379
|
|
|
|
14.5
|
|
|
|
40,765
|
|
|
|
6.0
|
|
|
|
54,354
|
|
|
|
8.0
|
|
|
|
8.480
|
|
|
|
1.875
|
|
Common equity tier 1 capital
|
|
|
98,379
|
|
|
|
14.5
|
|
|
|
30,574
|
|
|
|
4.5
|
|
|
|
44,162
|
|
|
|
6.5
|
|
|
|
9.980
|
|
|
|
1.875
|
|
Tier 1 leverage ratio
|
|
|
98,379
|
|
|
|
8.6
|
|
|
|
45,942
|
|
|
|
4.0
|
|
|
|
57,428
|
|
|
|
5.0
|
|
|
|
4.565
|
|
|
|
1.875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-based capital
|
|
$
|
102,549
|
|
|
|
15.5
|
%
|
|
$
|
53,024
|
|
|
|
8.0
|
%
|
|
$
|
66,280
|
|
|
|
10.0
|
%
|
|
|
7.472
|
%
|
|
|
1.875
|
%
|
Tier 1 risk-based capital
|
|
|
94,148
|
|
|
|
14.2
|
|
|
|
39,768
|
|
|
|
6.0
|
|
|
|
53,024
|
|
|
|
8.0
|
|
|
|
8.205
|
|
|
|
1.875
|
|
Common equity tier 1 capital
|
|
|
94,148
|
|
|
|
14.2
|
|
|
|
29,826
|
|
|
|
4.5
|
|
|
|
43,082
|
|
|
|
6.5
|
|
|
|
9.705
|
|
|
|
1.875
|
|
Tier 1 leverage ratio
|
|
|
94,148
|
|
|
|
8.2
|
|
|
|
45,789
|
|
|
|
4.0
|
|
|
|
57,236
|
|
|
|
5.0
|
|
|
|
4.225
|
|
|
|
1.875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greene
County Commercial Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-based capital
|
|
$
|
41,841
|
|
|
|
46.7
|
%
|
|
$
|
7,174
|
|
|
|
8.0
|
%
|
|
$
|
8,968
|
|
|
|
10.0
|
%
|
|
|
38.656
|
%
|
|
|
1.875
|
%
|
Tier 1 risk-based capital
|
|
|
41,841
|
|
|
|
46.7
|
|
|
|
5,381
|
|
|
|
6.0
|
|
|
|
7,174
|
|
|
|
8.0
|
|
|
|
40,656
|
|
|
|
1.875
|
|
Common equity tier 1 capital
|
|
|
41,841
|
|
|
|
46.7
|
|
|
|
4,036
|
|
|
|
4.5
|
|
|
|
5,829
|
|
|
|
6.5
|
|
|
|
42,156
|
|
|
|
1.875
|
|
Tier 1 leverage ratio
|
|
|
41,841
|
|
|
|
10.1
|
|
|
|
16,571
|
|
|
|
4.0
|
|
|
|
20,713
|
|
|
|
5.0
|
|
|
|
6.100
|
|
|
|
1.875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-based capital
|
|
$
|
40,286
|
|
|
|
47.1
|
%
|
|
$
|
6,837
|
|
|
|
8.0
|
%
|
|
$
|
8,546
|
|
|
|
10.0
|
%
|
|
|
39.139
|
%
|
|
|
1.875
|
%
|
Tier 1 risk-based capital
|
|
|
40,286
|
|
|
|
47.1
|
|
|
|
5,128
|
|
|
|
6.0
|
|
|
|
6,837
|
|
|
|
8.0
|
|
|
|
41.139
|
|
|
|
1.875
|
|
Common equity tier 1 capital
|
|
|
40,286
|
|
|
|
47.1
|
|
|
|
3,846
|
|
|
|
4.5
|
|
|
|
5,555
|
|
|
|
6.5
|
|
|
|
42.639
|
|
|
|
1.875
|
|
Tier 1 leverage ratio
|
|
|
40,286
|
|
|
|
9.1
|
|
|
|
17,747
|
|
|
|
4.0
|
|
|
|
22,184
|
|
|
|
5.0
|
|
|
|
5.080
|
|
|
|
1.875
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Not applicable to smaller reporting companies.
Under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, the
Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective to ensure that information required to be
disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and in timely
altering them to material information relating to the Company (or its consolidated subsidiaries) required to be filed in its periodic SEC filings.
There has been no change in the Company's internal control over financial reporting in connection with the quarterly evaluation that occurred during
the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
Part II. Other Information
Greene County Bancorp, Inc. and its subsidiaries are not engaged in any material legal proceedings at the present time.
Not applicable to smaller reporting companies.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
Item 3.
|
Defaults Upon Senior Securities
|
Not applicable
Not applicable
|
b)
|
There were no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors during the period covered by this
Form 10-Q.
|
Exhibits
|
|
Certification of Chief Executive Officer, adopted pursuant to Rule 13a-14(a)/15d-14(a)
|
|
|
Certification of Chief Financial Officer, adopted pursuant to Rule 13a-14(a)/15d-14(a)
|
|
|
Statement of Chief Executive Officer, furnished pursuant to U.S.C. Section 1350
|
|
|
Statement of Chief Financial Officer, furnished pursuant to U.S.C. Section 1350
|
|
101
|
The following materials from Greene County Bancorp, Inc. Form 10-Q for the quarter ended September 30, 2018, formatted in Extensible Business
Reporting Language (XBRL): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Financial Condition, (iii) Consolidated Statements of Cash Flows and (iv) related notes, tagged as blocks of text.
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.
Greene County Bancorp, Inc.
Date: November 8, 2018
By:
/s/ Donald E. Gibson
Donald E. Gibson
President and Chief Executive Officer
Date: November 8, 2018
By:
/s/ Michelle M. Plummer
Michelle M. Plummer, CPA, CGMA
Executive Vice President, Chief Financial Officer, and Chief Operating Officer
45