Greene nty Bancorp(GCBC) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Unaudited consolidated financial statements for Greene County Bancorp, Inc. as of and for the periods ended December 31, 2020 Consolidated Statements of Financial Condition Total assets increased to $1.86 billion at December 31, 2020, from $1.68 billion at June 30, 2020, driven by growth in net loans and securities, with liabilities growing to $1.73 billion and shareholders' equity rising to $138.7 million Consolidated Statements of Financial Condition (Unaudited) | (In thousands) | December 31, 2020 | June 30, 2020 | | :--- | :--- | :--- | | Total Assets | $1,864,929 | $1,676,803 | | Total cash and cash equivalents | $57,024 | $40,463 | | Net loans receivable | $1,031,519 | $993,522 | | Total securities | $741,165 | $610,633 | | Total Liabilities | $1,726,193 | $1,547,998 | | Total deposits | $1,679,718 | $1,501,075 | | Borrowings | $6,100 | $25,484 | | Subordinated notes payable, net | $19,601 | $- | | Total Shareholders' Equity | $138,736 | $128,805 | Consolidated Statements of Income Net income increased to $6.2 million ($0.73 per share) for the three months and $11.1 million ($1.30 per share) for the six months ended December 31, 2020, driven by higher net interest income Financial Performance Highlights (Unaudited) | (In thousands, except per share data) | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $13,609 | $10,911 | $25,425 | $21,411 | | Provision for loan losses | $1,262 | $690 | $2,505 | $1,241 | | Noninterest Income | $2,394 | $2,316 | $4,472 | $4,582 | | Noninterest Expense | $7,540 | $6,535 | $14,673 | $12,957 | | Net Income | $6,195 | $5,113 | $11,070 | $9,976 | | Basic and diluted EPS | $0.73 | $0.60 | $1.30 | $1.17 | Consolidated Statements of Comprehensive Income Comprehensive income for the six months ended December 31, 2020, was $10.9 million, comprising net income offset by an other comprehensive loss from unrealized holding losses on available-for-sale securities Comprehensive Income (Unaudited, in thousands) | | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :--- | :--- | :--- | | Net Income | $11,070 | $9,976 | | Other comprehensive loss, net of taxes | $(198) | $(385) | | Comprehensive income | $10,872 | $9,591 | Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased from $128.8 million to $138.7 million at December 31, 2020, primarily due to net income, partially offset by dividends and other comprehensive loss Changes in Shareholders' Equity (Six Months Ended Dec 31, 2020, in thousands) | | Amount | | :--- | :--- | | Balance at June 30, 2020 | $128,805 | | Net income | $11,070 | | Dividends declared | $(941) | | Other comprehensive loss, net of taxes | $(198) | | Balance at December 31, 2020 | $138,736 | Consolidated Statements of Cash Flows Net cash provided by operating activities was $11.3 million, while investing activities used $172.7 million, and financing activities provided $177.9 million, resulting in a $16.6 million net increase in cash and cash equivalents Cash Flow Summary (Six Months Ended Dec 31, in thousands) | | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $11,323 | $11,251 | | Net cash used by investing activities | $(172,681) | $(168,822) | | Net cash provided by financing activities | $177,919 | $162,575 | | Net increase in cash and cash equivalents | $16,561 | $5,004 | Notes to Consolidated Financial Statements This section provides detailed explanations of the company's accounting policies and financial data, including COVID-19 impacts, portfolio composition, and subsequent events - The company's critical accounting policies relate to the allowance for loan losses and the evaluation of securities for other-than-temporary impairment (OTTI), involving significant management judgment and estimation, with no significant changes made during the period[22][23] - 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[24] - On January 19, 2021, the Board declared a quarterly cash dividend of $0.12 per share, and in January 2021, the company purchased $40.0 million of Bank Owned Life Insurance (BOLI) to help defray employee benefit costs[118][119] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance and condition, highlighting asset and net income growth, key risks, and the impact of the COVID-19 pandemic Comparison of Financial Condition (Dec 31, 2020 vs. June 30, 2020) Total assets grew by $188.1 million (11.2%) to $1.9 billion, funded by a $178.6 million (11.9%) increase in deposits, with shareholders' equity rising by $9.9 million - Total assets increased by $188.1 million, or 11.2%, to $1.9 billion at Dec 31, 2020, from $1.7 billion at June 30, 2020[132] - Net loans receivable increased by $38.0 million (3.8%) to $1.0 billion, including $62.1 million in SBA PPP loans, a decrease from $99.8 million at June 30, 2020, due to loan forgiveness[136] - Total deposits increased by $178.6 million (11.9%) to $1.7 billion, driven by growth in new account relationships and municipal deposits[153] - In September 2020, the Company issued $20.0 million in subordinated notes with a 4.75% fixed-to-floating rate, due in 2030[158] Asset Quality Asset quality remained strong despite COVID-19 impacts, with the allowance for loan losses increasing to $18.3 million and nonperforming assets decreasing to $3.1 million, while loan deferrals significantly reduced Allowance for Loan Losses Activity (Six Months Ended Dec 31, 2020) | (In thousands) | Amount | | :--- | :--- | | Balance at June 30, 2020 | $16,391 | | Net charge-offs | $(626) | | Provisions charged to operations | $2,505 | | Balance at Dec 31, 2020 | $18,270 | - The provision for loan losses for the six months ended Dec 31, 2020 was $2.5 million, up from $1.2 million in the prior year, reflecting the economic impact of the COVID-19 pandemic[141] - Nonperforming assets decreased to $3.1 million (0.17% of total assets) at Dec 31, 2020, from $4.1 million (0.24% of total assets) at June 30, 2020[145][146] - COVID-19 loan payment deferrals decreased significantly to $14.5 million (66 loans) at Dec 31, 2020, down from $193.5 million (706 loans) at June 30, 2020[184] Comparison of Operating Results (For periods ended Dec 31, 2020 and 2019) Net income increased by 11.0% to $11.1 million for the six months ended December 31, 2020, driven by higher net interest income and PPP fee income, partially offset by increased provision for loan losses and noninterest expense Net Interest Income and Margin (Six Months Ended Dec 31) | (Dollars in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Net Interest Income | $25,425 | $21,411 | | Net Interest Rate Spread | 2.81% | 3.06% | | Net Interest Margin | 2.88% | 3.18% | - Net interest income for the six months ended Dec 31, 2020 increased by $4.0 million, primarily due to a $5.7 billion increase in volume, partially offset by a $1.7 billion decrease due to lower rates[173] - Noninterest income for the six months decreased by $110,000, mainly due to lower service charges on deposit accounts, while noninterest expense increased by $1.7 million, driven by higher salaries and FDIC insurance premiums[187][188] Liquidity and Capital Resources The company maintained strong liquidity with $57.0 million in cash and $347.4 million in unused credit lines, and both banks exceeded all regulatory capital requirements to be considered 'well capitalized' - At December 31, 2020, the Company had $57.0 million in cash and cash equivalents and $347.4 million in unused lines of credit[191] The Bank of Greene County Capital Ratios (Dec 31, 2020) | Ratio | Actual | To Be Well Capitalized | | :--- | :--- | :--- | | Total risk-based capital | 16.5% | 10.0% | | Tier 1 risk-based capital | 15.2% | 8.0% | | Common equity tier 1 capital | 15.2% | 6.5% | | Tier 1 leverage ratio | 8.2% | 5.0% | - The company's credit exposure from risk participation agreements (RPAs) was $6.1 million at December 31, 2020, up from $3.3 million at June 30, 2020[194] 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[198] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020, with no material changes to internal control over financial reporting - Based on an evaluation as of the end of the reporting period, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective[199] - 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, these controls[200] 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[204] Item 1A. Risk Factors This section is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies[203] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company has a stock repurchase program authorizing the buyback of up to 200,000 shares, but no shares were repurchased during the quarter ended December 31, 2020 - The Company has a stock repurchase program authorizing the repurchase of up to 200,000 shares, and there were no share repurchases during the quarter ended December 31, 2020[204] Item 3. Defaults Upon Senior Securities This section is not applicable - Not applicable[204] Item 4. Mine Safety Disclosures This section is not applicable - Not applicable[204] Item 5. Other Information There were no material changes to the procedures by which security holders may recommend nominees to the Company's Board of Directors during the reporting period - There were no material changes to the procedures for security holders to recommend nominees to the Board of Directors[204] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL interactive data files - Exhibits filed include CEO and CFO certifications pursuant to Rule 13a-14(a)/15d-14(a) and U.S.C. Section 1350, as well as XBRL data[204]