Greene County Bancorp, Inc. (the “Company”) (NASDAQ:GCBC), the holding company for The Bank of Greene County and its subsidiary Greene County Commercial Bank, today reported net income for the nine and three months ended March 31, 2014, which is the third quarter of the Company’s fiscal year ending June 30, 2014. Net income for the nine and three months ended March 31, 2014 was $5.0 million, or $1.18 per basic and $1.17 per diluted share, and $1.5 million, or $0.36 per basic and $0.35 per diluted share, respectively, as compared to $5.0 million, or $1.19 per basic and $1.18 per diluted share, and $1.5 million, or $0.37 per basic and $0.36 per diluted share, for the nine and three months ended March 31, 2013, respectively. Net income increased $5,000, or 0.1% when comparing the nine months ended March 31, 2014 and 2013, and decreased $41,000, or 2.7% when comparing the three months ended March 31, 2014 and 2013. Donald Gibson, President & CEO stated, “I am pleased to report another quarter of solid earnings and asset growth. During the quarter ended March 31, 2014, we have been able to strategically acquire new customer relationships resulting from their displacement or dissatisfaction with several large national banks in our market due to the consolidation or sale of branch offices. These new customer relationships have provided us with core deposit and loan growth which, we believe is our best option to build long-term value for both our community and shareholders.” In addition, we are proud to announce that investment banking firm Keefe, Bruyette & Woods, Inc. (“KBW”) has recognized Greene County Bancorp, Inc. for its exceptional 10 year track record. This year only 31 U.S. banking institutions out of nearly 400 total companies screened made the 2013 KBW Honor Roll. Honor roll winners are publicly traded banking institutions with more than $500 million in assets that met the following conditions (excluding extraordinary items):
1) No annual loss in net income per share reported over the past 10 years;2) 2013 annual net income per share equal to or greater than the peak net income per share reported over the past 10 years; and 3) Consecutive increases in net income per share since 2009. Selected highlights for the nine and three months ended March 31, 2014 are as follows:
- Net interest income decreased $95,000 to $16.0 million for the nine months ended March 31, 2014 from $16.1 million for the nine months ended March 31, 2013 and totaled $5.4 million and $5.3 million for the three months ended March 31, 2014 and 2013, respectively. The change in net interest income resulted from the narrowing of the net interest spread and margin when comparing the nine and three months ended March 31, 2014 and 2013.
- Net interest spread decreased 21 basis points to 3.31% as compared to 3.52% when comparing the nine months ended March 31, 2014 and 2013, respectively. Net interest margin decreased 23 basis points to 3.38% for the nine months ended March 31, 2014 as compared to 3.61% for the nine months ended March 31, 2013. Net interest spread decreased 15 basis points to 3.25% as compared to 3.40% when comparing the three months ended March 31, 2014 and 2013, respectively. Net interest margin decreased 17 basis points to 3.32% for the three months ended March 31, 2014 as compared to 3.49% for the three months ended March 31, 2013. In the continuing low interest rate environment, the average rates on our interest earning assets has decreased more than the rates paid on our interest bearing-liabilities. This has been partially offset by growth in interest earning asset balances.
- The provision for loan losses amounted to $1.1 million and $1.3 million for the nine months ended March 31, 2014 and 2013, respectively, and was $288,000 and $331,000 for the three months ended March 31, 2014 and 2013, respectively. The level of allowance for loan losses to total loans receivable decreased to 1.84% as of March 31, 2014 as compared to 1.94% as of June 30, 2013.
- Net charge-offs amounted to $808,000 and $571,000 for the nine months ended March 31, 2014 and 2013, respectively, an increase of $237,000. Net charge-offs amounted to $118,000 and $173,000 for the three months ended March 31, 2014 and 2013, respectively, a decrease of $55,000.
- Nonperforming loans amounted to $6.1 million and $6.9 million at March 31, 2014 and June 30, 2013, respectively. Nonperforming loans remain high compared to our historical levels as a result of adverse changes in the economy and local unemployment, which have been compounded by the extended length of time required to complete foreclosures in New York State.
- Noninterest income increased $198,000, or 5.3%, to $3.9 million for the nine months ended March 31, 2014 as compared to $3.7 million for the nine months ended March 31, 2013. Noninterest income increased $107,000, or 9.4%, for the three months ended March 31, 2014 as compared to March 31, 2013 and totaled $1.2 million and $1.1 million, respectively. These increases were primarily due to an increase in debit card fees resulting from continued growth in the number of checking accounts with debit cards, and income generated through investment services.
- Noninterest expense increased $473,000, or 4.2%, when comparing the nine months ended March 31, 2014 and 2013 and totaled $11.8 million and $11.4 million, respectively. The increase was primarily due to an increase in salaries and employee benefits of $512,000 resulting from expenses recognized for the Company’s phantom stock option plan as well as various other employee benefits. The increase was also due to a $139,000 increase in legal and professional fees resulting from an increase in consulting services utilized during the nine months ended March 31, 2014. This increase was partially offset by a $166,000 decrease in service and data processing fees due to lower debit card processing fees resulting from the renegotiation of the contract between the Company and its vendor which provided for reduced fees during the nine months ended March 31, 2014. It is expected that these fees will increase in subsequent periods as these incentives have expired. Noninterest expense increased $329,000, or 8.3%, when comparing the three months ended March 31, 2014 and 2013 and total $4.3 million and $3.9 million, respectively. Similar to results for the nine months ended March 31, 2014, salaries and employee benefits increased $328,000 and legal and professional fees increased $25,000 and service and data processing fees decreased $11,000 when comparing the three months ended March 31, 2014 and 2013. Also, occupancy expense increased $37,000 and equipment and furniture expense decreased $47,000 when comparing the three months ended March 31, 2014 and 2013. These fluctuations were the result of higher real estate taxes paid and lower depreciation expense as older fixed assets have become fully depreciated.
- Total assets of the Company were $700.5 million at March 31, 2014 as compared to $633.6 million at June 30, 2013, an increase of $66.9 million, or 10.6%.
- Securities available for sale and held to maturity amounted to $228.4 million, or 32.6% of assets, at March 31, 2014 as compared to $246.2 million, or 38.9% of assets, at June 30, 2013, a decrease of $17.8 million, or 7.2%.
- Net loans receivable increased $33.1 million, or 9.2%, to $392.5 million at March 31, 2014 from $359.4 million at June 30, 2013. The loan growth experienced during the nine months consisted primarily of $16.5 million in nonresidential real estate loans, $13.8 million in residential mortgage loans, and $4.6 million in commercial loans, and was partially offset by a $1.4 million decrease in multi-family mortgage loans and a $468,000 decrease in construction loans.
- Total deposits increased $62.8 million, or 11.2%, to $621.2 million at March 31, 2014 from $558.4 million at June 30, 2013. The growth in deposits was primarily in checking and money market products. Noninterest bearing deposits increased $4.2 million, or 7.3%, NOW deposits increased $45.1 million, or 22.7%, and money market deposits increased $15.2 million, or 17.7%, when comparing March 31, 2014 and June 30, 2013, resulting from an increase in municipal deposits of $47.3 million.
- The Company had no short term borrowings, and $14.5 million of long-term borrowings, with the Federal Home Loan Bank at March 31, 2014 compared to $10.6 million of short term borrowings and $4.0 million of long-term borrowings at June 30, 2013.
- Total shareholders’ equity increased $3.7 million to $59.8 million, or 8.5% of total assets, at March 31, 2014, from total equity of $56.1 million, or 8.9% of total assets, at June 30, 2013. This change reflects net income of $5.0 million which was partially offset by dividends declared and paid of $1.0 million, and a $485,000 increase in accumulated other comprehensive loss associated with available for sale securities. Other changes in equity which included a $199,000 increase were the result of options exercised through the Company’s 2008 Stock Option Plan.
|At or for the Nine||At or for the Three|
|Months Ended March 31,||Months Ended March 31,|
|Dollars In thousands, except share and per share data|
|Net interest income||15,971||16,066||5,354||5,304|
|Provision for loan losses||1,109||1,316||288||331|
|Income before taxes||6,938||7,101||2,039||2,168|
|Weighted average shares outstanding||4,203,350||4,185,707||4,211,531||4,187,671|
|Weighted average diluted shares outstanding||4,239,657||4,224,814||4,243,398||4,227,166|
|Dividends declared per share 3||$0.525||$0.525||$0.175||$0.175|
|Selected Financial Ratios|
|Return on average assets1||1.02%||1.08%||0.90%||0.98%|
|Return on average equity1||11.50%||12.23%||10.13%||11.14%|
|Net interest rate spread1||3.31%||3.52%||3.25%||3.40%|
|Net interest margin1||3.38%||3.61%||3.32%||3.49%|
|Non-performing assets to total assets||0.97%||1.15%|
|Non-performing loans to net loans||1.55%||2.01%|
|Allowance for loan losses to non-performing loans||120.74%||98.31%|
|Allowance for loan losses to total loans||1.84%||1.94%|
|Shareholders’ equity to total assets||8.54%||8.59%|
|Dividend payout ratio3||44.49%||44.12%|
|Book value per share||$14.19||$13.32|
|As of March 31, 2014||As of June 30, 2013|
|(Dollars In thousands)|
|Total cash and cash equivalents||$55,599||$6,222|
|Long term certificate of deposit||250||250|
|Securities- available for sale, at fair value||51,280||69,644|
|Securities- held to maturity, at amortized cost||177,089||176,519|
|Federal Home Loan Bank stock, at cost||1,383||1,388|
|Gross loans receivable||399,007||365,839|
|Less: Allowance for loan losses||(7,341)||(7,040)|
|Unearned origination fees and costs, net||814||627|
|Net loans receivable||392,480||359,426|
|Premises and equipment||14,246||14,349|
|Accrued interest receivable||2,967||2,663|
|Foreclosed real estate||716||296|
|Prepaid expenses and other assets||4,463||2,848|
|Liabilities and shareholders’ equity|
|Noninterest bearing deposits||$62,124||$57,926|
|Interest bearing deposits||559,114||500,513|
|Borrowings from FHLB, short term||-||10,600|
|Borrowings from FHLB, long term||14,500||4,000|
|Accrued expenses and other liabilities||4,939||4,458|
|Total shareholders’ equity||59,796||56,108|
|Total liabilities and shareholders’ equity||$700,473||$633,605|
|Common shares outstanding||4,213,757||4,192,654|