Greene nty Bancorp(GCBC) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) The unaudited consolidated financial statements present Greene County Bancorp, Inc.'s financial condition and performance as of December 31, 2021, with total assets reaching $2.35 billion and six-month net income at $14.0 million Consolidated Statements of Financial Condition Total assets increased to $2.35 billion by December 31, 2021, driven by growth in securities and loans, with shareholders' equity rising to $160.0 million Consolidated Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2021 | June 30, 2021 | | :--- | :--- | :--- | | Total Assets | $2,345,088 | $2,200,335 | | Total cash and cash equivalents | $63,528 | $149,775 | | Net loans receivable | $1,122,965 | $1,085,947 | | Total securities (AFS & HTM) | $1,067,918 | $887,804 | | Total Liabilities | $2,185,105 | $2,050,751 | | Total deposits | $2,073,357 | $2,005,108 | | Borrowings & Subordinated notes | $89,217 | $22,644 | | Total Shareholders' Equity | $159,983 | $149,584 | Consolidated Statements of Income Net income for the three months ended December 31, 2021, increased 11.0% to $6.9 million, with six-month net income rising 26.4% to $14.0 million Key Performance Indicators (Three Months Ended Dec 31) | Metric (in thousands, except per share) | 2021 | 2020 | | :--- | :--- | :--- | | Net Interest Income | $14,453 | $13,609 | | Provision for loan losses | $1,280 | $1,262 | | Total Noninterest Income | $3,238 | $2,394 | | Net Income | $6,877 | $6,195 | | Basic and Diluted EPS | $0.81 | $0.73 | Key Performance Indicators (Six Months Ended Dec 31) | Metric (in thousands, except per share) | 2021 | 2020 | | :--- | :--- | :--- | | Net Interest Income | $28,852 | $25,425 | | Provision for loan losses | $2,268 | $2,505 | | Total Noninterest Income | $6,167 | $4,472 | | Net Income | $13,991 | $11,070 | | Basic and Diluted EPS | $1.64 | $1.30 | Consolidated Statements of Comprehensive Income Comprehensive income for the six months ended December 31, 2021, was $11.4 million, reflecting net income partially offset by a $2.6 million other comprehensive loss from unrealized securities losses - Total other comprehensive loss, net of taxes, was $(2,572,000) for the six months ended December 31, 2021, a significant increase from the $(198,000) loss in the same period of 2020. This was driven by unrealized losses on available-for-sale securities[12] Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased to $160.0 million by December 31, 2021, driven by net income, partially offset by dividends and other comprehensive loss - For the six months ended December 31, 2021, retained earnings increased by $12.97 million (net income of $13.99 million less dividends of $1.02 million)[17] Consolidated Statements of Cash Flows Cash and cash equivalents decreased by $86.2 million for the six months ended December 31, 2021, primarily due to investing activities funded by financing and operating cash flows Net Cash Flow Summary (Six Months Ended Dec 31, 2021, in thousands) | Activity | Amount | | :--- | :--- | | Net cash provided by operating activities | $13,358 | | Net cash used by investing activities | $(233,335) | | Net cash provided by financing activities | $133,730 | | Net decrease in cash and cash equivalents | $(86,247) | Notes to Consolidated Financial Statements The notes detail accounting policies and financial statement items, including securities, loans, and the critical allowance for loan losses, which requires significant management judgment - The company's primary business is operating The Bank of Greene County, which attracts deposits and invests them in loans and securities within the Hudson Valley and Capital District Regions of New York State[24] - The allowance for loan losses is a critical accounting policy, based on management's estimation of inherent risk, portfolio composition, and economic conditions[23] - The company will adopt the new CECL model for credit losses for the fiscal year beginning after December 15, 2022[92][93] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and operating results, noting total assets grew to $2.3 billion and six-month net income increased 26.4% to $14.0 million, driven by asset growth and PPP loan fee recognition Comparison of Financial Condition (at Dec 31, 2021 and June 30, 2021) Total assets increased 6.6% to $2.3 billion, primarily from growth in securities and loans funded by deposits and borrowings, while shareholders' equity grew to $160.0 million - Securities available-for-sale and held-to-maturity increased $180.1 million, or 20.3%, to $1.1 billion, as excess cash from deposit growth was invested[123][125] - Net loans receivable increased $37.0 million, or 3.4%, driven by growth in commercial real estate, while commercial loans decreased due to $52.4 million in SBA PPP loan forgiveness[127] - Deposits increased by $68.2 million, or 3.4%, to $2.1 billion, led by growth in municipal deposits and new account relationships[141] - The company issued $30.0 million in new 3.00% Fixed-to-Floating Rate subordinated notes in September 2021[147] Asset Quality Asset quality metrics show nonperforming assets increased to $3.9 million, with the allowance for loan losses rising to $21.7 million, reflecting loan growth and economic uncertainty Asset Quality Ratios | Metric | Dec 31, 2021 | June 30, 2021 | | :--- | :--- | :--- | | Nonperforming assets | $3,875,000 | $2,365,000 | | Nonperforming assets to total assets | 0.17% | 0.11% | | Allowance for loan losses to total loans | 1.89% | 1.77% | | Allowance for loan losses to total loans (ex-PPP) | 1.92% | 1.89% | - The increase in nonaccrual loans was primarily due to $2.4 million of loans placed into nonaccrual status due to delinquency, offset by repayments and charge-offs[55] - Loans on COVID-19 related payment deferral decreased significantly to $264,000 (2 loans) at Dec 31, 2021, from $8.0 million (8 loans) at June 30, 2021[172] Comparison of Operating Results (for the three and six months ended Dec 31, 2021 and 2020) Net income for the six months ended December 31, 2021, rose 26.4% to $14.0 million, driven by increased net interest and noninterest income, partially offset by higher noninterest expense Operating Results Summary (Six Months Ended Dec 31) | Metric (in thousands) | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $28,852 | $25,425 | +13.5% | | Provision for Loan Losses | $2,268 | $2,505 | -9.5% | | Noninterest Income | $6,167 | $4,472 | +37.9% | | Noninterest Expense | $16,298 | $14,673 | +11.1% | | Net Income | $13,991 | $11,070 | +26.4% | - Net interest margin decreased to 2.61% for the six-month period from 2.88% a year ago, primarily due to lower yields on new loans and securities in the low-rate environment[157][168] - The increase in noninterest income was primarily due to a $616,000 contribution from bank-owned life insurance, a $487,000 increase in service charges, and a $380,000 increase in debit card fees[176] Liquidity and Capital Resources The company maintains strong liquidity with $63.5 million in cash and robust capital levels, with all Bank regulatory ratios significantly exceeding 'well-capitalized' thresholds The Bank of Greene County Capital Ratios (as of Dec 31, 2021) | Ratio | Actual | Required for Well-Capitalized | | :--- | :--- | :--- | | Total risk-based capital | 16.9% | 10.0% | | Tier 1 risk-based capital | 15.6% | 8.0% | | Common equity tier 1 capital | 15.6% | 6.5% | | Tier 1 leverage ratio | 8.2% | 5.0% | - The company's estimate of credit exposure associated with its risk participations-in (guarantees on interest rate swaps for other banks' customers) was $2.8 million[183] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company is a smaller reporting company - Disclosure is not applicable to smaller reporting companies[188] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of December 31, 2021, with no material changes to internal control over financial reporting during the last quarter - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report[189] - There has been no change in the Company's internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting[190] PART II. OTHER INFORMATION 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[191] Risk Factors This section is not applicable as the company is a smaller reporting company - Disclosure is not applicable to smaller reporting companies[191] 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 December 31, 2021 - The Company has a stock repurchase program to buy back up to 200,000 shares of its common stock. No repurchases were made during the quarter ended December 31, 2021[192] Exhibits The report includes required CEO and CFO certifications and financial data formatted in iXBRL - Exhibits filed with the report include CEO/CFO certifications pursuant to Rule 13a-14(a) and Section 1350, as well as iXBRL formatted financial statements[192]