Greene County Bancorp, Inc. Reports Record Net Income for the Tenth Consecutive Year, for Fiscal Year Ended June 30, 2018
July 25 2018 - 8:46AM
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
quarter and fiscal year ended June 30, 2018. Net income for
the quarter and fiscal year ended June 30, 2018 was $3.6 million,
or $0.42 per basic and diluted share, and $14.4 million, or $1.69
per basic and diluted share, respectively, as compared to $2.9
million, or $0.34 per basic and diluted share, and $11.2 million,
or $1.32 per basic and $1.31 per diluted share, for the quarter and
year ended June 30, 2017, respectively. Net income increased
$762,000, or 26.7%, when comparing the quarters ended June 30, 2018
and 2017, and increased $3.2 million, or 28.8%, when comparing the
years ended June 30, 2018 and 2017.
Donald Gibson, President & CEO, stated: “I am
very proud to report record net income for the tenth consecutive
year. The past ten years were some of the most challenging in
U.S. banking history. Despite these challenges, Greene County
Bancorp, Inc. has remained strong and has experienced tremendous
growth. The record earnings are the direct result of ten years of
growth across all three of our primary business lines which are
retail, commercial and municipal banking.”
Mr. Gibson continued: “We have achieved this growth
through the dedication and outstanding work of our employees.
I believe our employees deserve special recognition for these
accomplishments and I personally thank each one of them.”
Selected highlights for the quarter and fiscal year
ended June 30, 2018 are as follows:
Net Interest Income and Margin
- Net interest income increased $1.5 million to
$9.4 million for the three months ended June 30, 2018 from $7.9
million for the three months ended June 30, 2017. Net interest
income increased $4.5 million to $34.9 million for the year ended
June 30, 2018 from $30.4 million for the year ended June 30,
2017. These increases in net interest income were primarily
the result of the growth in the average balance of interest-earning
assets. Total average interest-earning assets increased to
$1.1 billion for the year ended June 30, 2018 as compared to $895.7
million for the year ended June 30, 2017, an increase of $160.4
million, or 17.9%. Average loans outstanding increased
$82.4 million, or 14.0%, to $670.5 million for the year ended June
30, 2018 as compared to $588.1 million for the year ended June 30,
2017. The average balance of securities increased $59.4
million to $359.7 million for the year ended June 30, 2018 as
compared to $300.3 million for the year ended June 30,
2017.
- Net interest spread and margin decreased six
and five basis points, respectively, when comparing the three
months ended June 30, 2018 and 2017. Net interest spread
decreased to 3.25% for the three months ended June 30, 2018
compared to 3.31% for the three months ended June 30, 2017.
Net interest margin decreased to 3.34% for the three months ended
June 30, 2018 compared to 3.39% for the three months ended June 30,
2017. Net interest spread and margin decreased nine and eight
basis points, respectively, when comparing the years ended June 30,
2018 and 2017. Net interest spread decreased to 3.23% for the
year ended June 30, 2018 compared to 3.32% for the year ended June
30, 2017. Net interest margin decreased to 3.31% for the year
ended June 30, 2018 compared to 3.39% for the year ended June 30,
2017. With recent increases in short-term rates, the cost of
interest-bearing liabilities has increased during the quarter and
year end June 30, 2018, which has led to the decrease in the spread
and margin. Also contributing to the decrease in spread and
margin is the change in the mix of interest earning assets with a
higher concentration of lower yielding securities and interest
bearing bank balances and a lower concentration of net loans
receivable.
- 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 3.56% and 3.64% for the three
months ended June 30, 2018 and 2017, respectively. Tax equivalent
net interest margin was 3.52% and 3.64% for the years ended June
30, 2018 and 2017, respectively. Tax equivalent net interest
margin for the quarter and year ended June 30, 2018 have been
adjusted to reflect the Federal blended statutory tax rate
applicable to our fiscal year 2018 of 28.1% resulting from the Tax
Cuts and Jobs Act (“TCJA”). As a result of utilizing this
lower statutory tax rate for the periods ended June 30, 2018, the
tax equivalent net interest margin decreased six basis points for
the quarter and year ended June 30, 2018, respectively.
Asset Quality and Loan Loss Provision
- Provision for loan losses amounted to $486,000
and $439,000 for the three months ended June 30, 2018 and 2017,
respectively. The provision for loan losses amounted to $1.5
million and $1.9 million for the years ended June 30, 2018 and
2017, respectively. The decrease in the provision for loan loss for
the fiscal year is the result of slower growth in average loan
balances. Net loans grew $80.2 million during the year ended June
30, 2018 compared to $101.4 million for the year ended June 30,
2017, as the Company continues to focus on commercial lending.
Allowance for loan losses to total loans receivable decreased
to 1.68% as of June 30, 2018 as compared to 1.74% as of June 30,
2017. Despite the significant increases in net loans over the
past two years, the level of nonperforming loans has remained
stable and the level of charge-off activity has been low, which has
led to this decrease in the allowance for loan losses to total
loans receivable.
- Net charge-offs amounted to $85,000 and
$138,000 for the three months ended June 30, 2018 and 2017,
respectively, and amounted to $528,000 and $374,000 for the years
ended June 30, 2018 and 2017, respectively. The increase in net
charges-offs for the fiscal year is due to the charge-off of two
commercial loans during the first quarter of fiscal 2018.
Commercial loan charge-offs during the fiscal year ended June 30,
2017 totaled $66,000.
- Nonperforming loans amounted to $3.6 million
at June 30, 2018 and 2017, respectively. At June 30, 2018 and June
30, 2017, respectively, nonperforming assets to total assets were
0.32% and 0.45% and nonperforming loans to net loans were 0.51% and
0.58%.
Noninterest Income and Noninterest Expense
- Noninterest income increased $314,000, or
18.7%, to $2.0 million for the three months ended June 30, 2018 as
compared to $1.7 million for the three months ended June 30,
2017. Noninterest income increased $1.1 million, or 16.5%, to
$7.5 million for the year ended June 30, 2018 as compared to $6.4
million for the year ended June 30, 2017. These increases are
primarily due to increases in debit card fees and service charges
on deposit accounts resulting from continued growth in the number
of checking accounts with debit cards, as well as increased monthly
or transactional service charges on deposit accounts.
Investment services income also increased during the period due to
higher sales volume of investment products.
- Noninterest expense increased $973,000, or
18.0%, to $6.4 million for the three months ended June 30, 2018 as
compared to $5.4 million for the three months ended June 30, 2017.
Noninterest expense increased $2.4 million, or 12.0%, to $22.4
million for the year ended June 30, 2018 as compared to $20.0
million for the year ended June 30, 2017. These increases in
noninterest expense are primarily the result of an increase in
salaries and employee benefits expenses, resulting from additional
staffing to support the Bank’s growth. New positions were
added within the Bank’s lending department, customer service
center, investment center and for the Bank’s new branches in
Copake, New York and Woodstock, New York. Also contributing to the
increase in noninterest expenses were additional costs associated
with the opening of the new branch in Copake, New York as well as
higher service and data processing fees resulting from costs
associated with offering more services to customers through online
banking. Additionally, an increase in other noninterest
expenses was the result of higher bank service charges related to
the utilization of municipal letters of credit to collateralize
uninsured municipal deposits, as well as higher charitable
donations given to The Bank of Greene County Charitable
Foundation.
Income Taxes
- Provision for income taxes directly reflects
the expected tax associated with the pre-tax income generated for
the given year and certain regulatory requirements. The
effective tax rate was 20.6% and 22.1% for the quarter and year
ended June 30, 2018, respectively compared to 24.4% and 25.1% for
the quarter and year ended June 30, 2017. The decrease
in the effective tax rate for the quarter and year ended June 30,
2018 is primarily the result of the impact of the enactment of the
TCJA in December 2017. The TCJA permanently reduces the
maximum corporate income tax rate from 35% to 21% effective for tax
years beginning after December 31, 2017. The lower corporate
income tax rate means that deferred tax assets and liabilities that
will be deductible or taxable in the future would need to be
computed at the new tax rate. Additionally, fiscal year-end
taxpayers such as Greene County Bancorp, Inc. are required to
utilize a “blended rate” in calculating the effective tax rate for
the fiscal year based on a ratio utilizing the number of days at
the 35% tax rate and the number of days at the 21% tax rate.
Greene County Bancorp, Inc.’s statutory blended rate for fiscal
2018 is approximately 28%. The Company recognized $251,000 an
income tax benefit for the three months ended December 31, 2017 as
a result of the TCJA. The statutory rate is also 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 benefit derived from premiums paid to the Company’s
pooled captive insurance subsidiary to arrive at the effective tax
rate.
Balance Sheet Summary
- Total assets of the Company were $1.2 billion
at June 30, 2018 as compared to $982.3 million at June 30, 2017, an
increase of $169.2 million, or 17.2%. This growth is the
result of the continued expansion within our existing markets,
across all three of our primary banking lines - retail, commercial,
and municipal.
- Securities available-for-sale and
held-to-maturity increased $80.3 million, or 25.5%, to
$395.6 million at June 30, 2018 as compared to $315.3 million at
June 30, 2017. Securities purchases totaled $183.3 million
during the year ended June 30, 2018 and consisted of $134.3 million
of state and political subdivision securities, $41.9 million of
mortgage backed securities, $4.2 million of U.S. government
sponsored enterprises securities, $2.0 million of corporate debt
securities, and $890,000 of other securities. Principal pay-downs
and maturities during the year amounted to $101.5 million, of which
$19.5 million were mortgage-backed securities, $79.5 million were
state and political subdivision securities, and $2.5 million were
corporate debt securities.
- Net loans receivable increased $80.2 million,
or 12.9%, to $704.4 million at June 30, 2018 from $624.2 million at
June 30, 2017. The loan growth experienced during the year
consisted primarily of $26.0 million in commercial real estate
loans, $24.3 million in commercial loans, $5.8 million in
multi-family real estate loans, $10.5 million in residential real
estate loans, and $13.7 million in construction loans. The
Company continues to focus on generating commercial real estate and
commercial loans within its market area.
- Total deposits increased to $1.0 billion at
June 30, 2018 from $859.5 million at June 30, 2017, an increase of
$165.7 million, or 19.3%. This increase was partially the result of
a $96.6 million increase in municipal deposits at Greene County
Commercial Bank, primarily from continued growth in new account
relationships as well as tax collection. NOW deposits increased
$128.6 million, or 32.7%, money market deposits increased $13.9
million, or 11.6%, savings deposits increased $18.8 million, or
9.5% and noninterest-bearing deposits increased $6.8 million, or
7.1% when comparing June 30, 2018 and 2017. These increases were
partially offset by a decrease in certificates of deposit of $2.4
million, or 4.5%, when comparing June 30, 2018 and 2017. Included
within certificates of deposits at June 30, 2018 and 2017 were
$15.0 million, in brokered certificates of deposit.
- Borrowings amounted to $18.2 million of
long-term borrowings, with the Federal Home Loan Bank of New York,
at June 30, 2018, compared to $6.9 million of overnight borrowings
and $22.7 million of long-term borrowings at June 30,
2017.
- Shareholders’ equity increased to $96.2
million at June 30, 2018 from $83.5 million at June 30, 2017, as
net income of $14.4 million was partially offset by dividends
declared and paid of $1.5 million, and a $631,000 increase in
accumulated other comprehensive loss. Other changes in equity, an
increase of $160,000, were the result of options exercised with the
Company’s 2008 Stock Option Plan. At June 30, 2018, there
were no remaining options to be exercised with the Company’s 2008
Stock Option Plan.During the three months ended March 31, 2018,
$259,000 in accumulated other comprehensive income was reclassified
to retained earnings, which represents the stranded credit
resulting from the change in Federal tax rates upon the enactment
of the TCJA and its impact on deferred taxes associated with items
reported in accumulated other comprehensive income. This
adjustment is the result of the Company adopting the amendments to
the Financial Accounting Standards Board’s Accounting Standard
Update (ASU 2018-02) “Income Statement-Reporting Comprehensive
Income (Topic 220)” issued in February 2018.
Greene County Bancorp, Inc. is the direct and
indirect holding company, respectively, for The Bank of Greene
County, a federally chartered savings bank, and Greene County
Commercial Bank, a New York-chartered commercial bank, both
headquartered in Catskill, New York. Our primary market area
is the Hudson Valley in New York State. For more information
on Greene County Bancorp, Inc., visit www.tbogc.com.
This press release contains statements about
future events that constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of
1995. Actual results could differ materially from those
projected in the forward-looking statements. Factors that
might cause such a difference include, but are not limited to,
general economic conditions, changes in interest rates, regulatory
considerations, competition, technological developments, retention
and recruitment of qualified personnel, and market acceptance of
the Company’s pricing, products and services.
In addition to presenting information in
conformity with accounting principles generally accepted in the
United States of America (GAAP), this news release contains
financial information determined by methods other than GAAP
(non-GAAP). The following measures used in this release, which are
commonly utilized by financial institutions, have not been
specifically exempted by the Securities and Exchange Commission
("SEC") and may constitute "non-GAAP financial measures" within the
meaning of the SEC's rules. The Company has provided in this news
release supplemental disclosures for the calculation of net
interest margin utilizing a fully taxable-equivalent
adjustment. Management believes that the non-GAAP financial
measures disclosed by the Company from time to time are useful in
evaluating the Company's performance and that such information
should be considered as supplemental in nature and not as a
substitute for or superior to the related financial information
prepared in accordance with GAAP. Our non-GAAP financial
measures may differ from similar measures presented by other
companies. See the reconciliation of GAAP to non-GAAP measures in
the section "Select Financial Ratios."
|
|
Greene County Bancorp, Inc. |
Consolidated Statements of Income (Unaudited) |
|
At or for the Three Months |
At or for the Years |
|
Ended June 30, |
Ended June 30, |
Dollars in thousands,
except share and per share data |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Interest income |
$ |
10,543 |
|
$ |
8,750 |
|
$ |
38,928 |
|
$ |
33,459 |
|
Interest expense |
|
1,119 |
|
|
813 |
|
|
4,014 |
|
|
3,077 |
|
Net interest
income |
|
9,424 |
|
|
7,937 |
|
|
34,914 |
|
|
30,382 |
|
Provision for loan
losses |
|
486 |
|
|
439 |
|
|
1,530 |
|
|
1,911 |
|
Noninterest income |
|
1,995 |
|
|
1,681 |
|
|
7,481 |
|
|
6,424 |
|
Noninterest
expense |
|
6,375 |
|
|
5,402 |
|
|
22,362 |
|
|
19,967 |
|
Income before
taxes |
|
4,558 |
|
|
3,777 |
|
|
18,503 |
|
|
14,928 |
|
Tax provision |
|
939 |
|
|
920 |
|
|
4,095 |
|
|
3,741 |
|
Net Income |
$ |
3,619 |
|
$ |
2,857 |
|
$ |
14,408 |
|
$ |
11,187 |
|
|
|
|
|
|
Basic EPS |
$ |
0.42 |
|
$ |
0.34 |
|
$ |
1.69 |
|
$ |
1.32 |
|
Weighted average shares
outstanding |
|
8,529,981 |
|
|
8,502,614 |
|
|
8,513,558 |
|
|
8,495,022 |
|
Diluted EPS |
$ |
0.42 |
|
$ |
0.34 |
|
$ |
1.69 |
|
$ |
1.31 |
|
Weighted average
diluted shares outstanding |
|
8,537,892 |
|
|
8,521,191 |
|
|
8,534,909 |
|
|
8,513,129 |
|
Dividends declared per
share 4 |
$ |
0.0975 |
|
$ |
0.095 |
|
$ |
0.39 |
|
$ |
0.38 |
|
|
|
|
|
|
Selected
Financial Ratios |
|
|
|
|
Return on average
assets1 |
|
1.26 |
% |
|
1.20 |
% |
|
1.34 |
% |
|
1.22 |
% |
Return on average
equity1 |
|
15.35 |
% |
|
13.94 |
% |
|
16.09 |
% |
|
14.25 |
% |
Net interest rate
spread1 |
|
3.25 |
% |
|
3.31 |
% |
|
3.23 |
% |
|
3.32 |
% |
Net interest
margin1 |
|
3.34 |
% |
|
3.39 |
% |
|
3.31 |
% |
|
3.39 |
% |
Fully
taxable-equivalent net interest margin2 |
|
3.56 |
% |
|
3.64 |
% |
|
3.52 |
% |
|
3.64 |
% |
Efficiency ratio3 |
|
55.83 |
% |
|
56.17 |
% |
|
52.75 |
% |
|
54.25 |
% |
Non-performing assets
to total assets |
|
|
|
0.32 |
% |
|
0.45 |
% |
Non-performing loans to
net loans |
|
|
|
0.51 |
% |
|
0.58 |
% |
Allowance for loan
losses to non-performing loans |
|
|
|
335.96 |
% |
|
302.72 |
% |
Allowance for loan
losses to total loans |
|
|
|
1.68 |
% |
|
1.74 |
% |
Shareholders’ equity to
total assets |
|
|
|
8.35 |
% |
|
8.50 |
% |
Dividend payout
ratio4 |
|
|
|
23.08 |
% |
|
28.79 |
% |
Actual dividends paid
to net income5 |
|
|
|
10.59 |
% |
|
17.16 |
% |
Book value per
share |
|
|
$ |
11.27 |
|
$ |
9.82 |
|
1 Ratios are annualized when necessary.2
Interest income calculated on a taxable-equivalent basis includes
the additional interest income that would have been earned if the
Company’s investment in tax-exempt securities and loans had been
subject to federal and New York State income taxes yielding the
same after-tax income. The rate used for this adjustment was
approximately 28.1% and 34% for federal income taxes and 3.62% and
3.32% for New York State income taxes for the three months and
years ended June 30, 2018 and 2017, respectively.
|
Non-GAAP reconciliation – Fully taxable equivalent net
interest margin |
|
For the three months ended June 30, |
For the years ended June 30, |
(Dollars in
thousands) |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Net interest income
(GAAP) |
$ |
9,424 |
|
$ |
7,937 |
|
$ |
34,914 |
|
$ |
30,382 |
|
Tax-equivalent
adjustment |
|
627 |
|
|
588 |
|
|
2,223 |
|
|
2,210 |
|
Net interest income
(fully taxable-equivalent basis) |
$ |
10,051 |
|
$ |
8,525 |
|
$ |
37,137 |
|
$ |
32,592 |
|
|
|
|
|
|
Average
interest-earning assets |
$ |
1,129,376 |
|
$ |
937,014 |
|
$ |
1,056,101 |
|
$ |
895,659 |
|
Net interest margin
(fully taxable-equivalent basis) |
|
3.56 |
% |
|
3.64 |
% |
|
3.52 |
% |
|
3.64 |
% |
3 The efficiency ratio has been calculated as
noninterest expense divided by the sum of net interest income and
noninterest income.4 The dividend payout ratio has been calculated
based on the dividends declared per share divided by basic earnings
per share. No adjustments have been made to account for
dividends waived by Greene County Bancorp, MHC (“MHC”), the owner
of 54.0% of the Company’s shares outstanding. 5 Dividends
declared divided by net income. Dividends were paid to the
MHC during the quarter ended June 30, 2017. The MHC waived
its right to receive dividends declared during all other quarters
within the fiscal years ended June 30, 2017 and 2018.
Current period information is preliminary and based on company
data available at the time of the press release.
|
|
Greene County Bancorp, Inc. |
Consolidated Statements of Financial Condition
(Unaudited) |
|
As ofJune 30, 2018 |
|
As ofJune 30, 2017 |
(Dollars In
thousands) |
|
|
|
Assets |
|
|
|
Total cash and cash
equivalents |
$ |
26,504 |
|
|
$ |
16,277 |
|
Long term certificate
of deposit |
|
2,385 |
|
|
|
2,145 |
|
Securities- available
for sale, at fair value |
|
121,023 |
|
|
|
91,483 |
|
Securities- held to
maturity, at amortized cost |
|
274,550 |
|
|
|
223,830 |
|
Federal Home Loan Bank
stock, at cost |
|
1,545 |
|
|
|
2,131 |
|
|
|
|
|
Gross loans
receivable |
|
715,641 |
|
|
|
634,331 |
|
Less: Allowance
for loan losses |
|
(12,024 |
) |
|
|
(11,022 |
) |
Unearned origination fees and costs, net |
|
814 |
|
|
|
878 |
|
Net loans
receivable |
|
704,431 |
|
|
|
624,187 |
|
|
|
|
|
Premises and
equipment |
|
13,304 |
|
|
|
13,615 |
|
Accrued interest
receivable |
|
5,057 |
|
|
|
4,033 |
|
Foreclosed real
estate |
|
119 |
|
|
|
799 |
|
Prepaid expenses and
other assets |
|
2,560 |
|
|
|
3,791 |
|
Total
assets |
$ |
1,151,478 |
|
|
$ |
982,291 |
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
Noninterest bearing
deposits |
$ |
102,694 |
|
|
$ |
95,929 |
|
Interest bearing
deposits |
|
922,540 |
|
|
|
763,606 |
|
Total
deposits |
|
1,025,234 |
|
|
|
859,535 |
|
|
|
|
|
Borrowings from FHLB,
short term |
|
- |
|
|
|
6,900 |
|
Borrowings from FHLB,
long term |
|
18,150 |
|
|
|
22,650 |
|
Accrued expenses and
other liabilities |
|
11,903 |
|
|
|
9,685 |
|
Total
liabilities |
|
1,055,287 |
|
|
|
898,770 |
|
Total
shareholders’ equity |
|
96,191 |
|
|
|
83,521 |
|
Total
liabilities and shareholders’ equity |
$ |
1,151,478 |
|
|
$ |
982,291 |
|
Common shares
outstanding |
|
8,537,814 |
|
|
|
8,502,614 |
|
Treasury shares |
|
73,526 |
|
|
|
108,726 |
|
Current period information is preliminary and based on company
data available at the time of the press release.
For Further Information
Contact:Donald E. GibsonPresident & CEO(518)
943-2600donaldg@tbogc.com
Michelle M. Plummer, CPAEVP, COO & CFO(518)
943-2600michellep@tbogc.com
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