Greene nty Bancorp(GCBC) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) The unaudited consolidated financial statements detail the company's financial position, with total assets growing to $1.80 billion and net income at $4.875 million for the quarter ended September 30, 2020 Consolidated Statements of Financial Condition Total assets increased to $1.80 billion from $1.68 billion, driven by growth in loans and securities, while deposits and shareholders' equity also rose Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2020 | June 30, 2020 | | :--- | :--- | :--- | | Assets | | | | Total cash and cash equivalents | $76,167 | $40,463 | | Net loans receivable | $1,028,782 | $993,522 | | Total securities | $659,777 | $610,366 | | Total assets | $1,799,140 | $1,676,803 | | Liabilities & Equity | | | | Total deposits | $1,618,993 | $1,501,075 | | Borrowings | $25,733 | $25,484 | | Total liabilities | $1,666,118 | $1,547,998 | | Total shareholders' equity | $133,022 | $128,805 | Consolidated Statements of Income Net income remained stable at $4.875 million for the quarter, as increased net interest income was offset by a higher provision for loan losses and rising noninterest expenses Quarterly Income Statement Highlights (in thousands) | Account | Q3 2020 | Q3 2019 | | :--- | :--- | :--- | | Net interest income | $11,816 | $10,500 | | Provision for loan losses | $1,243 | $551 | | Net interest income after provision | $10,573 | $9,949 | | Total noninterest income | $2,078 | $2,266 | | Total noninterest expense | $7,133 | $6,422 | | Net income | $4,875 | $4,863 | | Basic and diluted EPS | $0.57 | $0.57 | Consolidated Statements of Comprehensive Income Comprehensive income for Q3 2020 was $4.685 million, including net income of $4.875 million and an other comprehensive loss from unrealized securities losses Comprehensive Income (in thousands) | Item | Q3 2020 | Q3 2019 | | :--- | :--- | :--- | | Net Income | $4,875 | $4,863 | | Other comprehensive loss, net of taxes | ($190) | ($271) | | Comprehensive income | $4,685 | $4,592 | Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased to $133.0 million driven by net income, partially offset by dividends and other comprehensive loss - Shareholders' equity grew to $133.0 million at September 30, 2020, up from $116.5 million at September 30, 2019[14] Consolidated Statements of Cash Flows Net cash provided by financing activities was $117.7 million, primarily from deposits and subordinated notes, leading to a $35.7 million net increase in cash and cash equivalents Cash Flow Summary (in thousands) | Cash Flow Activity | Q3 2020 | Q3 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,496 | $5,817 | | Net cash used by investing activities | ($87,491) | ($58,712) | | Net cash provided by financing activities | $117,699 | $134,209 | | Net increase in cash and cash equivalents | $35,704 | $81,314 | Notes to Consolidated Financial Statements Notes detail accounting policies, financial instruments including $683.2 million in securities and $1.05 billion in loans, and the $17.6 million allowance for loan losses, with upcoming CECL standard impacts - The company's critical accounting policies relate to the allowance for loan losses and the evaluation of securities for other-than-temporary impairment. These involve significant management judgment and estimation[21] - The company's primary business is operating The Bank of Greene County, which has 17 offices in New York's Hudson Valley and Capital District regions, focusing on attracting deposits and making loans and investments[23] - The company adopted ASU 2018-13 regarding fair value measurement disclosures and ASU 2019-04 with various codification improvements, neither of which had a material impact. The company is preparing to adopt the CECL standard (ASU 2016-13) for fiscal years beginning after December 15, 2022, which is expected to have a significant impact on the methodology for calculating the allowance for loan losses[85][86][87] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, with total assets increasing to $1.8 billion and stable net income of $4.9 million, despite a higher provision for loan losses and compressed net interest margin Comparison of Financial Condition (Sept 30, 2020 vs. June 30, 2020) Total assets grew by $122.3 million to $1.8 billion, driven by increases in securities and net loans, while deposits rose by $117.9 million and shareholders' equity by $4.2 million - Net loans receivable increased by $35.2 million (3.5%) to $1.0 billion, with growth concentrated in commercial and residential real estate loans[129] - The company held $100.5 million in PPP loans as of September 30, 2020, which are 100% guaranteed by the SBA[131] - Deposits grew by $117.9 million (7.9%), mainly due to a $103.0 million increase in NOW accounts, reflecting typical seasonal inflows from municipal tax collection[146] - The company issued $20.0 million in subordinated notes due in 2030 with a fixed-to-floating rate of 4.75%[151] Asset Quality Asset quality remains stable with nonperforming assets at 0.24%, while the allowance for loan losses increased to $17.6 million due to COVID-19 uncertainties, and deferred loans significantly decreased Asset Quality Indicators | Metric | September 30, 2020 | June 30, 2020 | | :--- | :--- | :--- | | Nonperforming Assets | $4.3 million | $4.1 million | | Nonperforming Assets to Total Assets | 0.24% | 0.24% | | Allowance for Loan Losses | $17.6 million | $16.4 million | | ALL to Total Loans | 1.68% | 1.62% | | ALL to Total Loans (ex-PPP) | 1.85% | 1.80% | - Loans on payment deferral due to COVID-19 decreased to $67.4 million (201 loans) at Sept 30, 2020, from $193.5 million (706 loans) at June 30, 2020[63][143][144] Comparison of Operating Results (For three months ended Sept 30, 2020 vs. 2019) Net income remained flat at $4.9 million as increased net interest income was offset by a higher provision for loan losses and an 11.1% rise in noninterest expenses Net Interest Margin Analysis | Metric | Q3 2020 | Q3 2019 | | :--- | :--- | :--- | | Net Interest Income | $11,816 | $10,500 | | Net Interest Rate Spread | 2.72% | 3.13% | | Net Interest Margin | 2.79% | 3.26% | | Taxable-Equivalent NIM | 2.98% | 3.44% | - The increase in net interest income was driven by a $2.9 billion increase in volume, which was partially offset by a $1.5 billion decrease due to lower rates[162] - Noninterest expense increased by $711 thousand (11.1%), primarily due to a $465 thousand increase in salaries and benefits and a $213 thousand increase in FDIC insurance premiums[177] Liquidity and Capital Resources The company maintains a strong liquidity position with $76.2 million in cash and $295.5 million in unused credit lines, exceeding all regulatory capital requirements - The company had total available liquidity of $395.7 million, including cash, unused credit lines, and PPPLF capacity[179] The Bank of Greene County Capital Ratios (Actual) | Ratio | September 30, 2020 | Required for Well Capitalized | | :--- | :--- | :--- | | Total risk-based capital | 16.2% | 10.0% | | Tier 1 risk-based capital | 15.0% | 8.0% | | Common equity tier 1 capital | 15.0% | 6.5% | | Tier 1 leverage ratio | 8.3% | 5.0% | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies[186] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of the end of the reporting period[187] - No material changes were made to the Company's internal control over financial reporting during the last fiscal quarter[189] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company and its subsidiaries are not currently involved in any material legal proceedings - Greene County Bancorp, Inc. and its subsidiaries are not engaged in any material legal proceedings at the present time[190] Item 1A. Risk Factors This section is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies[192] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company has a stock repurchase program for up to 200,000 shares, with no repurchases made during the quarter ended September 30, 2020 - The company has a stock repurchase program to buy back up to 200,000 shares of its common stock. No shares were repurchased during the quarter ended September 30, 2020[192] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - Exhibits filed include certifications from the CEO and CFO pursuant to Rule 13a-14(a)/15d-14(a) and U.S.C. Section 1350, as well as XBRL formatted financial statements[191]