Greene County Bancorp, Inc. Reports Record High Income for the Nine Months Ended March 31, 2022 and Assets Cross the $2.5 Billion Threshold

CATSKILL, N.Y., April 21, 2022 (GLOBE NEWSWIRE) — Greene County Bancorp, Inc. (the “Company”) (NASDAQ: GCBC), the holding company for The Bank of Greene County and its subsidiary Greene County Commercial Bank, today reported net income for the three and nine months ended March 31, 2022, which is the third quarter of the Company’s fiscal year ending June 30, 2022. Net income for the three and nine months ended March 31, 2022 was $7.2 million, or $0.84 per basic and diluted share, and $21.2 million, or $2.49 per basic and diluted share, respectively, as compared to $5.3 million, or $0.62 per basic and diluted share, and $16.3 million, or $1.92 per basic and diluted share, for the three and nine months ended March 31, 2021, respectively.

Highlights:

  • Net Income: $21.2 million for the nine months ended March 31, 2022
  • Total Assets: $2.5 billion at March 31, 2022
  • Return on Average Assets: 1.21% for the nine months ended March 31, 2022
  • Return on Average Equity: 18.09% for the nine months ended March 31, 2022

Donald Gibson, President & CEO, stated: “Our long term strategy has been to position Greene County Bancorp, Inc. as the premier bank in the communities we serve. I am pleased to report continued record performance, which I believe demonstrates the success of our strategy, and reflects upon the outstanding work of our team. Net income increased by 37% when comparing the quarters ended March 31, 2022 and March 31, 2021. During the quarter, we also continued to build on our deposit growth momentum. As a result, I am proud to announce that we crossed the $2.5 billion asset threshold at March 31, 2022, a new milestone.”

Total consolidated assets for the Company were $2.5 billion at March 31, 2022, primarily consisting of $1.1 billion of net loans and $1.1 billion of total securities available-for-sale and held-to-maturity. Consolidated deposits totaled $2.3 billion at March 31, 2022, consisting of retail, business and municipal banking relationships.

Selected highlights for the three and nine months ended March 31, 2022 are as follows:

Net Interest Income and Margin

  • Net interest income increased $517,000 to $14.1 million for the three months ended March 31, 2022 from $13.6 million for the three months ended March 31, 2021. Net interest income increased $3.9 million to $42.9 million for the nine months ended March 31, 2022 from $39.0 million for the nine months ended March 31, 2021. The increase in net interest income was primarily the result of the growth in the average balance of interest-earning assets, which increased $369.6 million and $420.4 million when comparing the three and nine months ended March 31, 2022 and 2021, offset by a decrease in the average interest rate on interest-earning assets, which decreased 39 and 36 basis points when comparing the three and nine months ended March 31, 2022 and 2021, respectively.

    Average loan balances increased $88.6 million and $81.6 million and the yield on loans decreased 45 and 10 basis points for the three and nine months ended March 31, 2022 and 2021, respectively. Included in interest-earning assets at March 31, 2022, are $6.7 million of SBA Paycheck Protection Program (PPP) loans at a rate of 1.00%. The yield on loans was supported by $366,000 and $2.8 million in SBA PPP fee income for the three and nine months ended March 31, 2022, which was realized through a deferred origination fee and recognized within interest income. Average securities increased $320.4 million and $315.7 million, and the yield on such securities decreased 17 and 31 basis points when comparing the three and nine months ended March 31, 2022 and 2021, as the yield on securities purchased are lower than securities maturing during the period. Average interest-bearing bank balances and federal funds decreased $39.6 million and increased $23.2 million, and the yields increased 6 and 5 basis points when comparing the three and nine months ended March 31, 2022 and 2021, respectively.

    Cost of interest-bearing liabilities decreased 5 and 9 basis points when comparing the three and nine months ended March 31, 2022 and 2021, respectively. The cost of NOW deposits decreased 7 and 13 basis points, the cost of savings and money market deposits decreased 8 and 9 basis points, and the cost of certificates of deposit decreased 22 and 27 basis points when comparing the three and nine months ending March 31, 2022, and 2021, respectively. The decrease in cost of interest-bearing liabilities was offset by growth in the average balance of interest-bearing liabilities of $347.0 million and $404.5 million when comparing the three and nine months ended March 31, 2022 and 2021, respectively. The increase resulted most notably due to an increase in average NOW deposits of $259.4 million and $319.5 million, an increase in average savings and money market deposits of $59.7 million and $65.8 million, and an increase in average borrowings of $28.1 million and $19.6 million when comparing the three and nine months ended March 31, 2022 and 2021, respectively, due to the continued focus on new municipal and large commercial cash management customers. The cost on borrowings decreased 110 and increased 21 basis points when comparing the three and nine months ended March 31, 2022 and 2021. The change in cost of borrowings was due to the Company entering into Subordinated Note Purchase Agreements in September 2021 and September 2020. Yields on interest-earning assets and costs of interest-bearing deposits continued to decline during the quarter ended March 31, 2021, but is expected to stabilize as the Federal Reserve Board started to raise rates during the current quarter.

  • Net interest rate spread and margin both decreased when comparing the three and nine months ended March 31, 2022 and 2021. Net interest rate spread decreased 34 basis points to 2.38% for the three months ended March 31, 2022 compared to 2.72% for the three months ended March 31, 2021. Net interest rate spread decreased 27 basis points to 2.51% for the nine months ended March 31, 2022 compared to 2.78% for the nine months ended March 31, 2021. Net interest margin decreased 35 basis points and 30 basis points to 2.41% and 2.54%, respectively, for the three and nine months ended March 31, 2022 compared to 2.76% and 2.84%, respectively, for the three and nine months ended March 31, 2021. Decreases in net interest rate spread and net interest margin resulted primarily from lower-yielding securities and loans offset by lower rates on deposits as well as growth in loan and securities balances.
  • Net interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if the Company’s investment in tax-exempt securities and loans had been subject to federal and New York State income taxes yielding the same after-tax income. Tax equivalent net interest margin was 2.56% and 2.91% for the three months ended March 31, 2022 and 2021, respectively, and was 2.69% and 3.00% for the nine months ended March 31, 2022 and 2021, respectively.  

Asset Quality and Loan Loss Provision

  • Provision for loan losses amounted to $163,000 and $1.4 million for the three months ended March 31, 2022 and 2021, and to $2.4 million and $3.9 million for the nine months ended March 31, 2022 and 2021, respectively. The provision for loan losses for the three months ended March 31, 2021 and for the nine months ended March 31, 2022 and 2021 was due to the impact of the COVID-19 pandemic as well as growth in gross loans and an increase in loans adversely classified. The Company instituted a loan deferral program in response to the COVID-19 pandemic whereby deferral of principal and/or interest payments have been provided and correspond to the length of the National Emergency as defined under the CARES Act and extended under the Consolidated Appropriations Act which was signed into law on December 27, 2020.   At March 31, 2022, the Company had zero loans on payment deferral compared to eight loans aggregating $8.0 million as of June 30, 2021. Loans classified as substandard or special mention totaled $50.0 million at March 31, 2022, compared to $49.7 million at June 30, 2021, an increase of $300,000, and compared to $43.0 million at March 31, 2021, an increase of $7.0 million. Loans classified as substandard or special mention slightly increased as compared to June 30, 2021 but remained elevated compared to March 31, 2021, due to insufficient cash flows and revenues related to the COVID-19 pandemic.    As a result, reserves on loans classified as substandard or special mention totaled $9.6 million at March 31, 2022 compared to $7.8 million at June 30, 2021, an increase of $1.8 million. No loans were classified as doubtful or loss at March 31, 2022 or June 30, 2021. Allowance for loan losses to total loans receivable was 1.88% at March 31, 2022 compared to 1.77% at June 30, 2021.   Total loans receivable included $6.7 million and $67.4 million of SBA Paycheck Protection Program (PPP) loans at March 31, 2022 and June 30, 2021, respectively. Excluding these SBA guaranteed loans, the allowance for loan losses to total loans receivable would have been 1.89% at March 31, 2022 and June 30, 2021, respectively.
  • Net charge-offs amounted to $108,000 and $36,000 for the three months ended March 31, 2022 and 2021, respectively, an increase of $72,000. Net charge-offs totaled $360,000 and $662,000 for the nine months ended March 31, 2022 and 2021, respectively. The primary net charge off activity was a commercial loan charge off that occurred during the quarter ended December 31, 2020.
  • Nonperforming loans amounted to $3.9 million and $2.3 million at March 31, 2022 and June 30, 2021, respectively. The increase in nonperforming loans during the period was primarily due to $2.6 million of loans placed into nonperforming status due to delinquency, $920,000 in loan repayments, and $134,000 in charge-offs. At March 31, 2022 nonperforming assets were 0.16% of total assets compared to 0.11% at June 30, 2021. Nonperforming loans were 0.34% and 0.21% of net loans at March 31, 2022 and June 30, 2021, respectively.

Noninterest Income and Noninterest Expense

  • Noninterest income increased $544,000, or 23.0%, to $2.9 million for the three months ended March 31, 2022 compared to $2.4 million for the three months ended March 31, 2021. Noninterest income increased $2.2 million, or 32.8%, to $9.1 million for the nine months ended March 31, 2022 compared to $6.8 million for the nine months ended March 31, 2021. The increase was primarily due to an increase in debit card fees resulting from continued growth in the number of checking accounts with debit cards, the income from bank owned life insurance, and increases in service charges on deposit accounts.
  • Noninterest expense decreased $53,000, or 0.6%, to $8.3 million for the three months ended March 31, 2022 compared to $8.4 million for the three months ended March 31, 2021. Noninterest expense increased $1.6 million, or 6.8%, to $24.6 million for the nine months ended March 31, 2022, compared to $23.0 million for the nine months ended March 31, 2021. The increase in noninterest expense during the nine months ended March 31, 2022 was primarily due to an increase in salaries and employee benefits expense resulting from creating new positions during the previous fiscal year. The new positions were required to support growth in the bank’s lending department, customer service center and finance department. There was also an increase in computer software and professional fees during the current period.

Income Taxes

  • Provision for income taxes reflects the expected tax associated with the pre-tax income generated for the given year and certain regulatory requirements. The effective tax rate was 15.6% and 15.2% for the three and nine months ended March 31, 2022 and 14.2% and 13.4% for the three and nine months ended March 31, 2021, respectively. 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, income received on the bank owned life insurance, 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. The increase in the current quarter was attributable to the increase in income before taxes for March 31, 2022 compared to March 31, 2021.

Balance Sheet Summary

  • Total assets of the Company were $2.5 billion at March 31, 2022 and $2.2 billion at June 30, 2021, an increase of $321.4 million, or 14.6%.  
  • Securities available-for-sale and held-to-maturity increased $253.4 million, or 28.5%, to $1.1 billion at March 31, 2022 as compared to $887.8 million at June 30, 2021. This increase was the result of utilizing excess cash on hand due to an increase in deposits. Securities purchases totaled $510.5 million during the nine months ended March 31, 2022 and consisted of $360.3 million of state and political subdivision securities, $106.1 million of mortgage-backed securities, $22.9 million of corporate securities, $18.2 million of US Treasury securities, and $3.0 million of collateralized mortgage obligations. Principal pay-downs and maturities during the nine months amounted to $237.9 million, primarily consisting of $32.4 million of mortgage-backed securities, $203.8 million of state and political subdivision securities, and $1.7 million of collateralized mortgage obligations.
  • Net loans receivable increased $47.6 million, or 4.4%, to $1.1 billion at March 31, 2022 from $1.1 billion at June 30, 2021. The loan growth experienced during the nine months consisted primarily of $62.7 million in commercial real estate loans, $14.5 million in commercial construction loans, $17.0 million in residential real estate loans, $3.8 million in residential construction, $9.1 million in multi-family loans, and a $2.6 million net decrease in deferred fees due to the forgiveness of SBA PPP loans. This growth was partially offset by a $60.0 million decrease in commercial loans, driven by the decrease in SBA PPP loans, and a $2.1 million dollar increase in allowance for loan losses. SBA PPP loans decreased $60.7 million to $6.7 million at March 31, 2022 from $67.4 million at June 30, 2021, due to the receipt of forgiveness proceeds.  
  • Deposits totaled $2.3 billion at March 31, 2022 and $2.0 billion at June 30, 2021, an increase of $286.8 million, or 14.3%. Noninterest-bearing deposits increased $13.9 million, or 8.0%, NOW deposits increased $228.8 million, or 17.0%, savings deposits increased $31.9 million, or 10.6%, and money market deposits increased 12.8 million, or 8.7% when comparing March 31, 2022 and June 30, 2021. These increases were offset by a decrease in certificates of deposits of $693,000, or 2.0%, when comparing March 31, 2022 and June 30, 2021. Deposits continued to increase during the nine months ended March 31, 2022 as a result of an increase in new account relationships, including new corporate cash management deposit relationships, and an increase in municipal deposits at Greene County Commercial Bank, primarily from New York State funding and tax collection.
  • Borrowings of the Company amounted to $49.3 million at March 31, 2022 compared to $22.6 million at June 30, 2021, an increase of $26.7 million.   At March 31, 2022, borrowings consisted of $49.3 million of Fixed-to-Floating Rate Subordinated Notes. During the nine months ended March 31, 2022, the Company repaid $3.0 million of short-term borrowings with Atlantic Central Bankers Bank. The Company entered into Subordinated Note Purchase Agreements on September 15, 2021, issued at 3.00% Fixed-to-Floating Rate, due September 15, 2031, in the aggregate principal amount of $30.0 million. These notes are callable on September 15, 2026.
  • Shareholders’ equity increased to $156.9 million at March 31, 2022 from $149.6 million at June 30, 2021, resulting primarily from net income of $21.2 million, partially offset by dividends declared and paid of $1.5 million and an increase in other accumulated comprehensive loss of $12.3 million.

Greene County Bancorp, Inc. is the direct and indirect holding company, 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 Region and Capital District Region 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, financial and regulatory changes, the COVID-19 pandemic, 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. The extent to which the COVID-19 pandemic impacts the Company, results of operations and the Company’s customers will depend on future developments, which are uncertain and unknown, including the duration of the pandemic, and variants of COVID-19.

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. The Company has also provided in this news release supplemental disclosures for the calculation of the allowance for loan loss to gross loans, adjusted to exclude SBA Paycheck Protection Program loans. 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, and Selected Financial Ratios (Unaudited)
 
  At or for the Three Months At or for the Nine Months
  Ended March 31, Ended March 31,
Dollars in thousands, except share and per share data   2022     2021     2022     2021  
Interest income $ 15,305   $ 14,788   $ 46,729   $ 43,075  
Interest expense   1,218     1,218     3,790     4,080  
Net interest income   14,087     13,570     42,939     38,995  
Provision for loan losses   163     1,434     2,431     3,939  
Noninterest income   2,905     2,361     9,072     6,833  
Noninterest expense   8,314     8,367     24,612     23,040  
Income before taxes   8,515     6,130     24,968     18,849  
Tax provision   1,327     872     3,789     2,521  
Net income $ 7,188   $ 5,258   $ 21,179   $ 16,328  
         
Basic and diluted EPS $ 0.84   $ 0.62   $ 2.49   $ 1.92  
Weighted average shares outstanding   8,513,414     8,513,414     8,513,414     8,513,414  
Dividends declared per share4 $ 0.13   $ 0.12   $ 0.39   $ 0.36  
         
Selected Financial Ratios        
Return on average assets1   1.19 %   1.04 %   1.21 %   1.17 %
Return on average equity1   18.10 %   15.13 %   18.09 %   16.12 %
Net interest rate spread1   2.38 %   2.72 %   2.51 %   2.78 %
Net interest margin1   2.41 %   2.76 %   2.54 %   2.84 %
Fully taxable-equivalent net interest margin2   2.56 %   2.91 %   2.69 %   3.00 %
Efficiency ratio3   48.93 %   52.52 %   47.32 %   50.27 %
Non-performing assets to total assets       0.16 %   0.13 %
Non-performing loans to net loans       0.34 %   0.25 %
Allowance for loan losses to non-performing loans       562.46 %   737.73 %
Allowance for loan losses to total loans       1.88 %   1.80 %
Shareholders’ equity to total assets       6.22 %   6.49 %
Dividend payout ratio4       15.66 %   18.75 %
Actual dividends paid to net income5       7.21 %   12.02 %
Book value per share     $ 18.43   $ 16.34  

Ratios are annualized when necessary.
Interest income calculated on a taxable-equivalent basis includes the additional interest income that would have been earned if the Company’s investment in tax-exempt securities and loans had been subject to federal and New York State income taxes yielding the same after-tax income. The rate used for this adjustment was 21% for federal income taxes for the three and nine months ended March 31, 2022 and 2021, 4.44% and 3.98% for New York State income taxes for the three and nine months ended March 31, 2022 and 2021, respectively. The following table summarizes the adjustments made to arrive at the fully taxable-equivalent net interest margins.

  For the three months ended
March 31,
For the nine months ended
March 31,
(Dollars in thousands)   2022     2021     2022     2021  
Net interest income (GAAP) $ 14,087   $ 13,570   $ 42,939   $ 38,995  
Tax-equivalent adjustment   865     751     2,440     2,207  
Net interest income (fully taxable-equivalent basis) $ 14,952   $ 14,321   $ 45,379   $ 41,202  
         
Average interest-earning assets $ 2,336,019   $ 1,966,451   $ 2,252,913   $ 1,832,465  
Net interest margin (fully taxable-equivalent basis)   2.56 %   2.91 %   2.69 %   3.00 %

The efficiency ratio has been calculated as noninterest expense divided by the sum of net interest income and noninterest income.
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 Company’s majority shareholder, owning 54.1% of the shares outstanding.
Dividends declared divided by net income. The MHC waived its right to receive dividends declared during the three months ended; June 30, 2020; September 30, 2020; December 31, 2020; June 30, 2021; September 30, 2021; December 31, 2021 and March 31, 2022. Dividends declared during the three months ended December 31, 2019 and March 31, 2021 were paid to the MHC. The MHC’s ability to waive the receipt of dividends is dependent upon annual approval of its members as well as receiving the non-objection of the Federal Reserve Board.

The above information is preliminary and based on the Company’s data available at the time of presentation.

 
Greene County Bancorp, Inc.
Consolidated Statements of Financial Condition (Unaudited)
 
  At
March 31, 2022
  At
June 30, 2021
(Dollars In thousands, except share data)      
Assets      
Total cash and cash equivalents $ 150,615     $ 149,775  
Long term certificate of deposit   4,112       4,553  
Securities- available for sale, at fair value   411,442       390,890  
Securities- held to maturity, at amortized cost   729,739       496,914  
Equity securities, at fair value   296       307  
Federal Home Loan Bank stock, at cost   1,091       1,091  
       
Gross loans receivable   1,155,399       1,108,408  
Less: Allowance for loan losses   (21,739 )     (19,668 )
Unearned origination fees and costs, net   (140 )     (2,793 )
Net loans receivable   1,133,520       1,085,947  
       
Premises and equipment   14,273       14,137  
Bank owned life insurance   53,364       40,425  
Accrued interest receivable   9,495       7,781  
Foreclosed real estate   68       64  
Prepaid expenses and other assets   13,674       8,451  
Total assets $ 2,521,689     $ 2,200,335  
       
Liabilities and shareholders’ equity      
Noninterest bearing deposits $ 188,043     $ 174,114  
Interest bearing deposits   2,103,827       1,830,994  
Total deposits   2,291,870       2,005,108  
       
Borrowings from other banks, short-term         3,000  
Subordinated notes payable   49,263       19,644  
Accrued expenses and other liabilities   23,624       22,999  
Total liabilities   2,364,757       2,050,751  
Total shareholders’ equity   156,932       149,584  
Total liabilities and shareholders’ equity $ 2,521,689     $ 2,200,335  
Common shares outstanding   8,513,414       8,513,414  
Treasury shares   97,926       97,926  

The above information is preliminary and based on the Company’s data available at the time of presentation.

For Further Information Contact:
Donald E. Gibson
President & CEO
(518) 943-2600
donaldg@tbogc.com

Michelle M. Plummer, CPA, CGMA
SEVP, COO & CFO
(518) 943-2600
michellep@tbogc.com

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