Greene nty Bancorp(GCBC) - 2020 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (unaudited) The unaudited consolidated financial statements for the quarter ended September 30, 2019, show an increase in total assets to $1.41 billion, driven by growth in deposits, loans, and securities Consolidated Statements of Financial Condition As of September 30, 2019, total assets increased to $1.41 billion from $1.27 billion at June 30, 2019, an 11.0% rise, primarily fueled by a significant increase in cash and cash equivalents to $110.9 million and a $142.6 million increase in total deposits to $1.26 billion Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2019 | June 30, 2019 | | :--- | :--- | :--- | | Total Assets | $1.41B | $1.27B | | Total cash and cash equivalents | $110.9M | $29.5K | | Net loans receivable | $805.5M | $785.7M | | Total securities (AFS & HTM) | $463.8M | $426.9M | | Total Liabilities | $1.29B | $1.16B | | Total deposits | $1.26B | $1.12B | | Total Shareholders' Equity | $116.5M | $112.4M | Consolidated Statements of Income For the three months ended September 30, 2019, the company reported net income of $4.9 million, an 11.0% increase from $4.4 million in the same period of 2018, driven by an 8.7% rise in net interest income to $10.5 million Quarterly Income Statement Highlights (in thousands, except per share data) | Metric | Q3 2019 | Q3 2018 | | :--- | :--- | :--- | | Net Interest Income | $10.5M | $9.7M | | Provision for loan losses | $551 | $354 | | Total Noninterest Income | $2.3M | $2.1M | | Total Noninterest Expense | $6.4M | $6.0M | | Net Income | $4.9M | $4.4M | | Basic and Diluted EPS | $0.57 | $0.51 | Consolidated Statements of Comprehensive Income Comprehensive income for the third quarter of 2019 was $4.6 million, compared to $4.3 million for the same period in 2018, including net income of $4.9 million partially offset by a $271,000 other comprehensive loss Comprehensive Income (in thousands) | Item | Q3 2019 | Q3 2018 | | :--- | :--- | :--- | | Net Income | $4.9M | $4.4M | | Other comprehensive loss, net of taxes | ($271) | ($76) | | Comprehensive Income | $4.6M | $4.3M | Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased from $112.4 million at June 30, 2019, to $116.5 million at September 30, 2019, driven by $4.9 million in net income, partially offset by $432,000 in dividends and a $271,000 other comprehensive loss - Shareholders' equity increased by $4.16 million during the quarter, from $112.37 million to $116.53 million[14] - Key changes included net income of $4.86 million, dividends declared of $432,000, and an other comprehensive loss of $271,000[14] Consolidated Statements of Cash Flows For the three months ended September 30, 2019, cash and cash equivalents increased by $81.3 million, primarily due to $134.2 million provided by financing activities, largely from a $142.6 million increase in deposits Cash Flow Summary (in thousands) | Activity | Q3 2019 | Q3 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5.8M | $2.9M | | Net cash used by investing activities | ($58.7M) | ($28.4M) | | Net cash provided by financing activities | $134.2M | $34.2M | | Net increase in cash and cash equivalents | $81.3M | $8.6M | Notes to Consolidated Financial Statements The notes provide detailed explanations of accounting policies and financial data, including the composition of securities and loan portfolios, adoption of the new lease accounting standard, and preparation for the CECL standard - Critical accounting policies relate to the allowance for loan losses and the evaluation of securities for other-than-temporary impairment (OTTI)[21] - The company's primary business is operating The Bank of Greene County, which has 16 offices in the Hudson Valley Region of New York State[23] - On July 1, 2019, the Company adopted the new lease standard (ASU 2016-02), recognizing right-of-use assets and lease liabilities of $1.7 million[87] - The company is preparing for the Current Expected Credit Loss (CECL) model (ASU 2016-13), with an effective date for fiscal years beginning after December 15, 2022[90] - Subsequent to the quarter end, on October 15, 2019, the Board declared a quarterly cash dividend of $0.11 per share[111] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting net interest income as the primary driver, with total assets growing 11.0% to $1.4 billion, funded by a 12.7% increase in deposits Comparison of Financial Condition (Sept 30, 2019 vs. June 30, 2019) Total assets increased by $140.3 million (11.0%) to $1.4 billion, primarily due to a $142.6 million (12.7%) rise in deposits, funding growth in net loans and securities, while nonperforming assets remained low - Total assets increased by $140.3 million, or 11.0%, from June 30, 2019[122] - Net loans receivable increased by $19.8 million, or 2.5%, driven by growth in commercial construction and commercial real estate loans[126] - Deposits increased by $142.6 million, or 12.7%, primarily due to an increase in municipal deposits from tax collection[137] - Shareholders' equity increased to $116.5 million from $112.4 million, mainly from net income of $4.9 million[143] Comparison of Operating Results (Q3 2019 vs. Q3 2018) Net income for the quarter rose to $4.9 million from $4.4 million year-over-year, driven by increased net interest income despite margin compression, and partially offset by higher provision for loan losses and noninterest expense Quarterly Performance Metrics | Metric | Q3 2019 | Q3 2018 | | :--- | :--- | :--- | | Net Interest Income | $10.5M | $9.7M | | Net Interest Margin | 3.26% | 3.41% | | Provision for Loan Losses | $551 | $354 | | Net Income | $4.9M | $4.4M | | ROA (annualized) | 1.49% | 1.52% | | ROE (annualized) | 17.00% | 17.92% | - The increase in noninterest expense was primarily due to higher salaries and benefits from staffing a new branch and expanding other departments, partially offset by a credit from the FDIC, which reduced FDIC insurance premium expense by $166,000 compared to the prior year[166] - The effective tax rate decreased to 16.1% from 18.8% in the prior year, influenced by tax-exempt income and benefits from the company's pooled captive insurance subsidiary[167] Liquidity and Capital Resources The company maintains a strong liquidity position, primarily funded by deposits and cash flows from its loan and securities portfolios, with both subsidiary banks exceeding regulatory capital ratios for being 'well-capitalized' - Total unfunded loan commitments and unused lines of credit amounted to $164.3 million at September 30, 2019[169] The Bank of Greene County Capital Ratios (Sept 30, 2019) | Ratio | Actual | Required for Well-Capitalized | | :--- | :--- | :--- | | Total risk-based capital | 15.8% | 10.0% | | Tier 1 risk-based capital | 14.5% | 8.0% | | Common equity tier 1 capital | 14.5% | 6.5% | | Tier 1 leverage ratio | 8.7% | 5.0% | Quantitative and Qualitative Disclosures About Market Risk This disclosure is not required for smaller reporting companies, and therefore is not provided in this report - Not applicable to smaller reporting companies[173] Controls and Procedures The company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the last fiscal quarter - Management concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by the report[174] - There were no changes in internal control over financial reporting during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, the controls[175] PART II. OTHER INFORMATION Legal Proceedings Greene County Bancorp, Inc. and its subsidiaries are not currently involved in any material legal proceedings - The Company and its subsidiaries are not engaged in any material legal proceedings at the present time[177] Risk Factors This disclosure is not required for smaller reporting companies, and therefore is not provided in this report - Not applicable to smaller reporting companies[177] Exhibits The filing includes required certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sarbanes-Oxley Act rules, as well as financial data formatted in XBRL - Exhibits filed include CEO and CFO certifications under Rule 13a-14(a)/15d-14(a) and Section 1350, as well as XBRL data files[177]