Greene Bancorp, Inc 10-Q for FY2020 Q2
Greene Bancorp, Inc. (GCBC)
10-Q
2020-02-06
For: 2019-12-31
View Original
Added on
April 06, 2026
About this 10-Q
Greene Bancorp, Inc filed this 10-Q on February 6, 2020, covering the quarter ended December 31, 2019 (FY2020 Q2).
Headline figures
Quarter ended December 31, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net income
- $5.11M
- up 11.5% from net income of $4.58M a year earlier
- Diluted EPS
- $0.60
- up 11.1% from $0.54 a year earlier
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2019
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT
GREENE COUNTY BANCORP, INC.
(Exact name of registrant as specified in its charter)
Commission file number 0-25165
|
United States
|
14-1809721
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification Number)
|
|
302 Main Street, Catskill, New York
|
12414
|
|
|
(Address of principal executive office)
|
(Zip code)
|
Registrant's telephone number, including area code: (518) 943-2600
Securities registered pursuant to Section 12(b) of the Act:
|
Title of class
|
Trading symbol
|
Name of exchange on which registered
|
|
Common Stock, $0.10 par value
|
GCBC
|
The Nasdaq Stock Market
|
Securities Registered Pursuant to Section 12(g) of the Act:
None
(Title of Class)
Check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). YES ☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large
accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer ☐
|
Accelerated filer ☒
|
Emerging Growth Company ☐
|
|
Non-accelerated filer ☐
|
Smaller reporting company ☒
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒
As of February 6, 2020, the registrant had 8,536,414 shares of common stock outstanding at $ 0.10 par value per share.
|
GREENE COUNTY BANCORP, INC.
|
||
|
|
||
|
PART I.
|
FINANCIAL INFORMATION
|
|
|
Page
|
||
|
Item 1.
|
Financial Statements (unaudited)
|
|
|
3
|
||
|
4
|
||
|
5
|
||
|
6
|
||
|
7
|
||
|
8-31
|
||
|
Item 2.
|
32-46
|
|
|
Item 3.
|
47
|
|
|
Item 4.
|
47
|
|
|
PART II.
|
OTHER INFORMATION
|
|
|
Item 1.
|
48
|
|
|
Item 1A.
|
48
|
|
|
Item 2.
|
48
|
|
|
Item 3.
|
48
|
|
|
Item 4.
|
48 | |
|
Item 5.
|
48 | |
|
Item 6.
|
48 | |
|
49
|
||
Greene County Bancorp, Inc.
At December 31, 2019 and June 30, 2019
(Unaudited)
(In thousands, except share and per share amounts)
|
ASSETS
|
December 31, 2019
|
June 30, 2019
|
||||||
|
Total cash and cash equivalents
|
$
|
34,542
|
$
|
29,538
|
||||
|
Long term certificates of deposit
|
3,626
|
2,875
|
||||||
|
Securities available-for-sale, at fair value
|
192,999
|
122,728
|
||||||
|
Securities held-to-maturity, at amortized cost (fair value $343,896 at December 31, 2019; $313,613 at June 30, 2019)
|
331,989
|
304,208
|
||||||
|
Equity securities, at fair value
|
265
|
253
|
||||||
|
Federal Home Loan Bank stock, at cost
|
3,554
|
1,759
|
||||||
|
Loans
|
864,186
|
798,105
|
||||||
|
Allowance for loan losses
|
(13,984
|
)
|
(13,200
|
)
|
||||
|
Unearned origination fees and costs, net
|
863
|
833
|
||||||
|
Net loans receivable
|
851,065
|
785,738
|
||||||
|
Premises and equipment, net
|
13,273
|
13,255
|
||||||
|
Accrued interest receivable
|
6,810
|
5,853
|
||||||
|
Foreclosed real estate
|
303
|
53
|
||||||
|
Prepaid expenses and other assets
|
5,525
|
3,202
|
||||||
|
Total assets
|
$
|
1,443,951
|
$
|
1,269,462
|
||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
|
Noninterest-bearing deposits
|
$
|
110,100
|
$
|
107,469
|
||||
|
Interest-bearing deposits
|
1,134,558
|
1,013,100
|
||||||
|
Total deposits
|
1,244,658
|
1,120,569
|
||||||
|
Borrowings from Federal Home Loan Bank, short-term
|
48,900
|
8,000
|
||||||
|
Borrowings from Federal Home Loan Bank, long-term
|
12,600
|
13,600
|
||||||
|
Accrued expenses and other liabilities
|
17,247
|
14,924
|
||||||
|
Total liabilities
|
1,323,405
|
1,157,093
|
||||||
|
SHAREHOLDERS' EQUITY
|
||||||||
|
Preferred stock, Authorized - 1,000,000 shares; Issued - None
|
-
|
-
|
||||||
|
Common stock, par value $.10 per share; Authorized - 12,000,000 shares; Issued – 8,611,340; Outstanding – 8,536,414 shares at December 31, 2019, and 8,537,814 at June 30, 2019
|
861
|
861
|
||||||
|
Additional paid-in capital
|
11,017
|
11,017
|
||||||
|
Retained earnings
|
110,374
|
101,774
|
||||||
|
Accumulated other comprehensive loss
|
(1,391
|
)
|
(1,006
|
)
|
||||
|
Treasury stock, at cost 74,926 shares at December 31, 2019, and 73,526 shares at June 30, 2019
|
(315
|
)
|
(277
|
)
|
||||
|
Total shareholders’ equity
|
120,546
|
112,369
|
||||||
|
Total liabilities and shareholders’ equity
|
$
|
1,443,951
|
$
|
1,269,462
|
||||
See notes to consolidated financial statements
Greene County Bancorp, Inc.
For the Three and Six Months Ended December 31, 2019 and 2018
(Unaudited)
(In thousands, except share and per share amounts)
|
For the three months ended
December 31,
|
For the six months ended
December 31,
|
|||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
|||||||||||||
|
Interest income:
|
||||||||||||||||
|
Loans
|
$
|
9,801
|
$
|
8,696
|
$
|
19,206
|
$
|
16,994
|
||||||||
|
Investment securities - taxable
|
172
|
217
|
331
|
411
|
||||||||||||
|
Mortgage-backed securities
|
1,261
|
1,059
|
2,505
|
2,173
|
||||||||||||
|
Investment securities - tax exempt
|
1,756
|
1,406
|
3,358
|
2,766
|
||||||||||||
|
Interest-bearing deposits and federal funds sold
|
207
|
28
|
405
|
59
|
||||||||||||
|
Total interest income
|
13,197
|
11,406
|
25,805
|
22,403
|
||||||||||||
|
Interest expense:
|
||||||||||||||||
|
Interest on deposits
|
2,205
|
1,271
|
4,255
|
2,307
|
||||||||||||
|
Interest on borrowings
|
81
|
140
|
139
|
444
|
||||||||||||
|
Total interest expense
|
2,286
|
1,411
|
4,394
|
2,751
|
||||||||||||
|
Net interest income
|
10,911
|
9,995
|
21,411
|
19,652
|
||||||||||||
|
Provision for loan losses
|
690
|
354
|
1,241
|
708
|
||||||||||||
|
Net interest income after provision for loan losses
|
10,221
|
9,641
|
20,170
|
18,944
|
||||||||||||
|
Noninterest income:
|
||||||||||||||||
|
Service charges on deposit accounts
|
1,111
|
1,106
|
2,236
|
2,143
|
||||||||||||
|
Debit card fees
|
755
|
685
|
1,498
|
1,325
|
||||||||||||
|
Investment services
|
168
|
136
|
313
|
251
|
||||||||||||
|
E-commerce fees
|
31
|
34
|
66
|
71
|
||||||||||||
|
Other operating income
|
251
|
180
|
469
|
403
|
||||||||||||
|
Total noninterest income
|
2,316
|
2,141
|
4,582
|
4,193
|
||||||||||||
|
Noninterest expense:
|
||||||||||||||||
|
Salaries and employee benefits
|
3,992
|
3,677
|
7,934
|
7,155
|
||||||||||||
|
Occupancy expense
|
441
|
414
|
907
|
816
|
||||||||||||
|
Equipment and furniture expense
|
126
|
127
|
407
|
341
|
||||||||||||
|
Service and data processing fees
|
638
|
542
|
1,212
|
1,037
|
||||||||||||
|
Computer software, supplies and support
|
264
|
200
|
506
|
423
|
||||||||||||
|
Advertising and promotion
|
142
|
76
|
258
|
196
|
||||||||||||
|
FDIC insurance premiums
|
12
|
100
|
(27
|
)
|
227
|
|||||||||||
|
Legal and professional fees
|
325
|
283
|
604
|
612
|
||||||||||||
|
Other
|
595
|
828
|
1,156
|
1,401
|
||||||||||||
|
Total noninterest expense
|
6,535
|
6,247
|
12,957
|
12,208
|
||||||||||||
|
Income before provision for income taxes
|
6,002
|
5,535
|
11,795
|
10,929
|
||||||||||||
|
Provision for income taxes
|
889
|
951
|
1,819
|
1,965
|
||||||||||||
|
Net income
|
$
|
5,113
|
$
|
4,584
|
$
|
9,976
|
$
|
8,964
|
||||||||
|
Basic and diluted earnings per share
|
$
|
0.60
|
$
|
0.54
|
$
|
1.17
|
$
|
1.05
|
||||||||
|
Basic and diluted average shares outstanding
|
8,537,010
|
8,537,814
|
8,537,412
|
8,537,814
|
||||||||||||
|
Dividends per share
|
$
|
0.11
|
$
|
0.10
|
$
|
0.22
|
$
|
0.20
|
||||||||
See notes to consolidated financial statements
Greene County Bancorp, Inc.
For the Three and Six Months Ended December 31, 2019 and 2018
(Unaudited)
(In thousands)
|
For the three months ended
December 31,
|
For the six months ended
December 31,
|
|||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
|||||||||||||
|
Net Income
|
$
|
5,113
|
$
|
4,584
|
$
|
9,976
|
$
|
8,964
|
||||||||
|
Other comprehensive (loss) income:
|
||||||||||||||||
|
Unrealized holding (losses) gains on available-for-sale securities, net of income tax (benefit) expense of ($40) and $104, for the three months, and ($136) and $77, for the six months ended
December 31, 2019 and 2018, respectively
|
(114
|
)
|
293
|
(385
|
)
|
217
|
||||||||||
|
Total other comprehensive (loss) income, net of taxes
|
(114
|
)
|
293
|
(385
|
)
|
217
|
||||||||||
|
Comprehensive income
|
$
|
4,999
|
$
|
4,877
|
$
|
9,591
|
$
|
9,181
|
||||||||
See notes to consolidated financial statements.
Greene County Bancorp, Inc.
For the Three Months Ended December 31, 2019 and 2018
(Unaudited)
(In thousands)
|
Common
Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Treasury
Stock
|
Total
Shareholders'
Equity
|
|||||||||||||||||||
|
Balance at September 30, 2018
|
$
|
861
|
$
|
11,017
|
$
|
89,853
|
$
|
(1,813
|
)
|
$
|
(277
|
)
|
$
|
99,641
|
||||||||||
|
Dividends declared
|
(397
|
)
|
(397
|
)
|
||||||||||||||||||||
|
Net income
|
4,584
|
4,584
|
||||||||||||||||||||||
|
Other comprehensive gain, net of taxes
|
293
|
293
|
||||||||||||||||||||||
|
Balance at December 31, 2018
|
$
|
861
|
$
|
11,017
|
$
|
94,040
|
$
|
(1,520
|
)
|
$
|
(277
|
)
|
$
|
104,121
|
||||||||||
|
Common
Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Treasury
Stock
|
Total
Shareholders'
Equity
|
|||||||||||||||||||
|
Balance at September 30, 2019
|
$
|
861
|
$
|
11,017
|
$
|
106,205
|
$
|
(1,277
|
)
|
$
|
(277
|
)
|
$
|
116,529
|
||||||||||
|
Stock repurchases
|
(38
|
)
|
(38
|
)
|
||||||||||||||||||||
|
Dividends declared
|
(944
|
)
|
(944
|
)
|
||||||||||||||||||||
|
Net income
|
5,113
|
5,113
|
||||||||||||||||||||||
|
Other comprehensive loss, net of taxes
|
(114
|
)
|
(114
|
)
|
||||||||||||||||||||
|
Balance at December 31, 2019
|
$
|
861
|
$
|
11,017
|
$
|
110,374
|
$
|
(1,391
|
)
|
$
|
(315
|
)
|
$
|
120,546
|
||||||||||
Greene County Bancorp, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
For the Six Months Ended December 31, 2019 and 2018
(Unaudited)
(In thousands)
|
Common
Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Treasury
Stock
|
Total
Shareholders'
Equity
|
|||||||||||||||||||
|
Balance at June 30, 2018
|
$
|
861
|
$
|
11,017
|
$
|
86,213
|
$
|
(1,623
|
)
|
$
|
(277
|
)
|
$
|
96,191
|
||||||||||
|
Impact of Adopting ASU 2016-01(1)
|
114
|
(114
|
)
|
-
|
||||||||||||||||||||
|
Dividends declared
|
(1,251
|
)
|
(1,251
|
)
|
||||||||||||||||||||
|
Net income
|
8,964
|
8,964
|
||||||||||||||||||||||
|
Other comprehensive gain, net of taxes
|
217
|
217
|
||||||||||||||||||||||
|
Balance at December 31, 2018
|
$
|
861
|
$
|
11,017
|
$
|
94,040
|
$
|
(1,520
|
)
|
$
|
(277
|
)
|
$
|
104,121
|
||||||||||
|
Common
Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Treasury
Stock
|
Total
Shareholders'
Equity
|
|||||||||||||||||||
|
Balance at June 30, 2019
|
$
|
861
|
$
|
11,017
|
$
|
101,774
|
$
|
(1,006
|
)
|
$
|
(277
|
)
|
$
|
112,369
|
||||||||||
|
Stock repurchases
|
(38
|
)
|
(38
|
)
|
||||||||||||||||||||
|
Dividends declared
|
(1,376
|
)
|
(1,376
|
)
|
||||||||||||||||||||
|
Net income
|
9,976
|
9,976
|
||||||||||||||||||||||
|
Other comprehensive loss, net of taxes
|
(385
|
)
|
(385
|
)
|
||||||||||||||||||||
|
Balance at December 31, 2019
|
$
|
861
|
$
|
11,017
|
$
|
110,374
|
$
|
(1,391
|
)
|
$
|
(315
|
)
|
$
|
120,546
|
||||||||||
| (1) |
Cumulative effect of change in measurement of equity securities (ASU 2016-01).
|
See notes to consolidated financial statements.
Greene County Bancorp, Inc.
For the Six Months Ended December 31, 2019 and 2018
(Unaudited)
(In thousands)
|
2019
|
2018
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net Income
|
$
|
9,976
|
$
|
8,964
|
||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
|
Depreciation
|
362
|
318
|
||||||
|
Deferred income tax expense (benefit)
|
317
|
(240
|
)
|
|||||
|
Net amortization of premiums and discounts
|
339
|
119
|
||||||
|
Net amortization of deferred loan costs and fees
|
241
|
235
|
||||||
|
Provision for loan losses
|
1,241
|
708
|
||||||
|
Net (gain) loss on equity securities
|
(12
|
)
|
2
|
|||||
|
Net (gain) loss on sale of foreclosed real estate
|
(76
|
)
|
9
|
|||||
|
Net (decrease) increase in accrued income taxes
|
(318
|
)
|
155
|
|||||
|
Net increase in accrued interest receivable
|
(957
|
)
|
(708
|
)
|
||||
|
Net increase in prepaid and other assets
|
(2,185
|
)
|
(648
|
)
|
||||
|
Net increase (decrease) in accrued expenses and other liabilities
|
2,323
|
(7
|
)
|
|||||
|
Net cash provided by operating activities
|
11,251
|
8,907
|
||||||
|
Cash flows from investing activities:
|
||||||||
|
Securities available-for-sale:
|
||||||||
|
Proceeds from maturities
|
48,092
|
56,351
|
||||||
|
Purchases of securities
|
(124,023
|
)
|
(44,462
|
)
|
||||
|
Principal payments on securities
|
5,054
|
2,003
|
||||||
|
Securities held-to-maturity:
|
||||||||
|
Proceeds from maturities
|
18,629
|
8,286
|
||||||
|
Purchases of securities
|
(60,251
|
)
|
(27,916
|
)
|
||||
|
Principal payments on securities
|
13,586
|
17,138
|
||||||
|
Net purchase of Federal Home Loan Bank Stock
|
(1,795
|
)
|
(2,328
|
)
|
||||
|
Purchase of long term certificate of deposit
|
(751
|
)
|
-
|
|||||
|
Net increase in loans receivable
|
(67,024
|
)
|
(46,916
|
)
|
||||
|
Proceeds from sale of foreclosed real estate
|
41
|
65
|
||||||
|
Purchases of premises and equipment
|
(380
|
)
|
(322
|
)
|
||||
|
Net cash used by investing activities
|
(168,822
|
)
|
(38,101
|
)
|
||||
|
Cash flows from financing activities
|
||||||||
|
Net increase in short-term advances
|
40,900
|
54,900
|
||||||
|
Repayment of long-term FHLB advances
|
(1,000
|
)
|
(3,000
|
)
|
||||
|
Payment of cash dividends
|
(1,376
|
)
|
(1,251
|
)
|
||||
|
Purchase of treasury stock
|
(38
|
)
|
-
|
|||||
|
Net increase (decrease) in deposits
|
124,089
|
(16,014
|
)
|
|||||
|
Net cash provided by financing activities
|
162,575
|
34,635
|
||||||
|
Net increase in cash and cash equivalents
|
5,004
|
5,441
|
||||||
|
Cash and cash equivalents at beginning of period
|
29,538
|
26,504
|
||||||
|
Cash and cash equivalents at end of period
|
$
|
34,542
|
$
|
31,945
|
||||
|
Non-cash investing activities:
|
||||||||
|
Foreclosed loans transferred to foreclosed real estate
|
$
|
215
|
$
|
34
|
||||
|
Cash paid during period for:
|
||||||||
|
Interest
|
$
|
4,371
|
$
|
2,693
|
||||
|
Income taxes
|
$
|
1,820
|
$
|
2,049
|
||||
See notes to consolidated financial statements
Greene County Bancorp, Inc.
At and for the Three and Six Months Ended December 31, 2019 and 2018
| (1) |
Basis of Presentation
|
Within the accompanying unaudited consolidated statement of financial condition, and related notes to the consolidated financial statements, June 30, 2019 data was derived from the audited consolidated financial
statements of Greene County Bancorp, Inc. (the “Company”) and its wholly owned subsidiaries, The Bank of Greene County (the “Bank”) and Greene Risk Management, Inc., and the Bank’s wholly owned subsidiaries, Greene County Commercial Bank and
Greene Property Holdings, Ltd. The consolidated financial statements at and for the three and six months ended December 31, 2019 and 2018 are unaudited.
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form
10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. To the extent that information and notes required by GAAP for complete financial
statements are contained in or are consistent with the audited financial statements incorporated by reference to Greene County Bancorp, Inc.’s Annual Report on Form 10-K for the year ended June 30, 2019, such information and notes have not been
duplicated herein. In the opinion of management, all adjustments (consisting of only normal recurring items) necessary for a fair presentation of the financial position and results of operations and cash flows at and for the periods presented
have been included. The Company had no reclassifications from amounts in the prior year’s consolidated financial statements to conform to the current year’s presentation. All material inter-company accounts and transactions have been
eliminated in the consolidation. The results of operations and other data for the three and six months ended December 31, 2019 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2020. These
consolidated financial statements consider events that occurred through the date the consolidated financial statements were issued.
CRITICAL ACCOUNTING POLICIES
Greene County Bancorp, Inc.’s critical accounting policies relate to the allowance for loan losses and the evaluation of securities for other-than-temporary impairment. The allowance for loan losses is based on
management’s estimation of an amount that is intended to absorb losses in the existing portfolio. The allowance for loan losses is established through a provision for loan losses based on management’s evaluation of the risk inherent in the loan
portfolio, the composition of the portfolio, specific impaired loans and current economic conditions. Such evaluation, which includes a review of all loans for which full collectability may not be reasonably assured, considers among other
matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, historical loan loss experience, management’s estimate of probable credit losses and other factors that warrant recognition in
providing for the allowance of loan losses. However, this evaluation involves a high degree of complexity and requires management to make subjective judgments that often require assumptions or estimates about highly uncertain matters. This
critical accounting policy and its application are periodically reviewed with the Audit Committee and the Board of Directors. There have been no significant changes in the application of this critical accounting policy during the three and six
months ended December 31, 2019.
Securities are evaluated for other-than-temporary impairment by performing periodic reviews of individual securities in the investment portfolio. Greene County Bancorp, Inc. makes an assessment to determine
whether there have been any events or economic circumstances to indicate that a security, on which there is an unrealized loss, is impaired on an other-than-temporary basis. The Company considers many factors, including the severity and duration
of the impairment; the intent and ability of the Company to hold the equity security for a period of time sufficient for a recovery in value; recent events specific to the issuer or industry; and for debt securities, the intent to sell the
security, the likelihood to be required to sell the security before it recovers the entire amortized cost, external credit ratings and recent downgrades. The Company is required to record other-than-temporary impairment charges through earnings,
if it has the intent to sell, or will more likely than not be required to sell an impaired debt security before a recovery of its amortized cost basis. In addition, the Company is required to record other-than-temporary impairment charges
through earnings for the amount of credit losses, regardless of the intent or requirement to sell. Credit loss is measured as the difference between the present value of an impaired debt security’s cash flows and its amortized cost basis.
Non-credit related write-downs to fair value must be recorded as decreases to accumulated other comprehensive income as long as the Company has no intent or requirement to sell an impaired security before a recovery of amortized cost basis.
| (2) |
Nature of Operations
|
Greene County Bancorp, Inc.’s primary business is the ownership and operation of its subsidiaries, The Bank of Greene County and Greene Risk Management, Inc. The Bank of Greene County has 16 full-service offices,
an operations center and lending center located in its market area within the Hudson Valley Region of New York State. The Bank of Greene County is primarily engaged in the business of attracting deposits from the general public in The Bank of
Greene County’s market area, and investing such deposits, together with other sources of funds, in loans and investment securities. Greene Risk Management, Inc. is a pooled captive insurance company, which provides additional insurance coverage
for the Company and its subsidiaries related to the operations of the Company for which insurance may not be economically feasible. The Bank of Greene County also owns and operates two subsidiaries, Greene County Commercial Bank and Greene
Property Holdings, Ltd. Greene County Commercial Bank’s primary business is to attract deposits from and provide banking services to local municipalities. Greene Property Holdings, Ltd. is a real estate investment trust, which holds mortgages and
notes which were originated through and serviced by The Bank of Greene County.
| (3) |
Use of Estimates
|
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially
differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the assessment of other-than-temporary security impairment.
While management uses available information to recognize losses on loans, future additions to the allowance for loan losses (the “Allowance”) may be necessary, based on changes in economic conditions, asset quality
or other factors. In addition, various regulatory authorities, as an integral part of their examination process, periodically review the Allowance. Such authorities may require the Company to recognize additions to the Allowance based on their
judgments of information available to them at the time of their examination.
Greene County Bancorp, Inc. makes an assessment to determine whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is impaired on an
other-than-temporary basis. The Company considers many factors including the severity and duration of the impairment; the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value; recent
events specific to the issuer or industry; and for debt securities, intent to sell the security, whether it is more likely than not we will be required to sell the security before recovery, whether loss is expected, external credit ratings and
recent downgrades. Securities on which there is an unrealized loss that is deemed to be other-than-temporary are written down to fair value through earnings.
| (4) |
Securities
|
Securities at December 31, 2019 consisted of the following:
|
(In thousands)
|
Amortized Cost
|
Gross Unrealized
Gains
|
Gross Unrealized
Losses
|
Estimated
Fair Value
|
||||||||||||
|
Securities available-for-sale:
|
||||||||||||||||
|
U.S. government sponsored enterprises
|
$
|
4,511
|
$
|
19
|
$
|
-
|
$
|
4,530
|
||||||||
|
State and political subdivisions
|
147,915
|
417
|
-
|
148,332
|
||||||||||||
|
Mortgage-backed securities-residential
|
10,283
|
50
|
17
|
10,316
|
||||||||||||
|
Mortgage-backed securities-multi-family
|
25,174
|
182
|
74
|
25,282
|
||||||||||||
|
Corporate debt securities
|
4,511
|
62
|
34
|
4,539
|
||||||||||||
|
Total securities available-for-sale
|
192,394
|
730
|
125
|
192,999
|
||||||||||||
|
Securities held-to-maturity:
|
||||||||||||||||
|
U.S. government sponsored enterprises
|
2,000
|
-
|
3
|
1,997
|
||||||||||||
|
State and political subdivisions
|
174,165
|
8,883
|
159
|
182,889
|
||||||||||||
|
Mortgage-backed securities-residential
|
11,302
|
153
|
1
|
11,454
|
||||||||||||
|
Mortgage-backed securities-multi-family
|
137,193
|
3,093
|
119
|
140,167
|
||||||||||||
|
Corporate debt securities
|
1,993
|
21
|
8
|
2,006
|
||||||||||||
|
Other securities
|
5,336
|
47
|
-
|
5,383
|
||||||||||||
|
Total securities held-to-maturity
|
331,989
|
12,197
|
290
|
343,896
|
||||||||||||
|
Total securities
|
$
|
524,383
|
$
|
12,927
|
$
|
415
|
$
|
536,895
|
||||||||
Securities at June 30, 2019 consisted of the following:
|
(In thousands)
|
Amortized Cost
|
Gross Unrealized
Gains
|
Gross Unrealized
Losses
|
Estimated
Fair Value
|
||||||||||||
|
Securities available-for-sale:
|
||||||||||||||||
|
U.S. government sponsored enterprises
|
$
|
5,522
|
$
|
31
|
$
|
-
|
$
|
5,553
|
||||||||
|
State and political subdivisions
|
95,782
|
788
|
-
|
96,570
|
||||||||||||
|
Mortgage-backed securities-residential
|
2,634
|
31
|
20
|
2,645
|
||||||||||||
|
Mortgage-backed securities-multi-family
|
16,151
|
259
|
-
|
16,410
|
||||||||||||
|
Corporate debt securities
|
1,513
|
37
|
-
|
1,550
|
||||||||||||
|
Total securities available-for-sale
|
121,602
|
1,146
|
20
|
122,728
|
||||||||||||
|
Securities held-to-maturity:
|
||||||||||||||||
|
U.S. government sponsored enterprises
|
9,249
|
1
|
14
|
9,236
|
||||||||||||
|
State and political subdivisions
|
152,358
|
6,212
|
23
|
158,547
|
||||||||||||
|
Mortgage-backed securities-residential
|
4,570
|
97
|
-
|
4,667
|
||||||||||||
|
Mortgage-backed securities-multi-family
|
134,970
|
3,122
|
17
|
138,075
|
||||||||||||
|
Corporate debt securities
|
1,478
|
18
|
25
|
1,471
|
||||||||||||
|
Other securities
|
1,583
|
34
|
-
|
1,617
|
||||||||||||
|
Total securities held-to-maturity
|
304,208
|
9,484
|
79
|
313,613
|
||||||||||||
|
Total securities
|
$
|
425,810
|
$
|
10,630
|
$
|
99
|
$
|
436,341
|
||||||||
Greene County Bancorp, Inc.’s current policies generally limit securities investments to U.S. Government and securities of government sponsored enterprises, federal funds sold, municipal bonds, corporate debt
obligations and certain mutual funds. In addition, the Company’s policies permit investments in mortgage-backed securities, including securities issued and guaranteed by Fannie Mae, Freddie Mac, and GNMA, and collateralized mortgage obligations
issued by these entities. At December 31, 2019, all mortgage-backed securities including collateralized mortgage obligations were securities of government sponsored enterprises, no private-label mortgage-backed securities or collateralized
mortgage obligations were held in the securities portfolio. The Company’s investments in state and political subdivisions securities generally are municipal obligations that are general obligations supported by the
general taxing authority of the issuer, and in some cases are insured. The obligations issued by school districts are supported by state aid. Primarily, these investments are issued by municipalities within New York State.
The Company’s current securities investment strategy utilizes a risk management approach of diversified investing among three categories: short-, intermediate- and long-term. The emphasis of this approach is to
increase overall investment securities yields while managing interest rate risk. The Company will only invest in high quality securities as determined by management’s analysis at the time of purchase. The Company generally does not engage in
any derivative or hedging transactions, such as interest rate swaps or caps.
The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at December 31,
2019.
|
Less Than 12 Months
|
More Than 12 Months
|
Total
|
||||||||||||||||||||||||||||||||||
|
(In thousands, except number of securities)
|
Fair
Value
|
Unrealized
Losses
|
Number
of
Securities
|
Fair
Value
|
Unrealized
Losses
|
Number
of
Securities
|
Fair
Value
|
Unrealized
Losses
|
Number
of
Securities
|
|||||||||||||||||||||||||||
|
Securities available-for-sale:
|
||||||||||||||||||||||||||||||||||||
|
Mortgage-backed securities-residential
|
$
|
3,026
|
$
|
2
|
1
|
$
|
726
|
$
|
15
|
1
|
$
|
3,752
|
$
|
17
|
2
|
|||||||||||||||||||||
|
Mortgage-backed securities-multi-family
|
8,137
|
74
|
4
|
-
|
-
|
-
|
8,137
|
74
|
4
|
|||||||||||||||||||||||||||
|
Corporate debt securities
|
1,966
|
34
|
2
|
-
|
-
|
-
|
1,966
|
34
|
2
|
|||||||||||||||||||||||||||
|
Total securities available-for-sale
|
13,129
|
110
|
7
|
726
|
15
|
1
|
13,855
|
125
|
8
|
|||||||||||||||||||||||||||
|
Securities held-to-maturity:
|
||||||||||||||||||||||||||||||||||||
|
U.S. government sponsored enterprises
|
-
|
-
|
-
|
1,997
|
3
|
1
|
1,997
|
3
|
1
|
|||||||||||||||||||||||||||
|
State and political subdivisions
|
13,475
|
155
|
86
|
1,117
|
4
|
14
|
14,592
|
159
|
100
|
|||||||||||||||||||||||||||
|
Mortgage-backed securities-residential
|
1,094
|
1
|
1
|
-
|
-
|
-
|
1,094
|
1
|
1
|
|||||||||||||||||||||||||||
|
Mortgage-backed securities-multi-family
|
12,938
|
119
|
7
|
-
|
-
|
-
|
12,938
|
119
|
7
|
|||||||||||||||||||||||||||
|
Corporate debt securities
|
-
|
-
|
-
|
475
|
8
|
1
|
475
|
8
|
1
|
|||||||||||||||||||||||||||
|
Total securities held-to-maturity
|
27,507
|
275
|
94
|
3,589
|
15
|
16
|
31,096
|
290
|
110
|
|||||||||||||||||||||||||||
|
Total securities
|
$
|
40,636
|
$
|
385
|
101
|
$
|
4,315
|
$
|
30
|
17
|
$
|
44,951
|
$
|
415
|
118
|
|||||||||||||||||||||
The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2019.
|
Less Than 12 Months
|
More Than 12 Months
|
Total
|
||||||||||||||||||||||||||||||||||
|
(In thousands, except number of securities)
|
Fair
Value
|
Unrealized
Losses |
Number
of
Securities
|
Fair
Value
|
Unrealized
Losses
|
Number
of
Securities
|
Fair
Value
|
Unrealized
Losses
|
Number
of
Securities
|
|||||||||||||||||||||||||||
|
Securities available-for-sale:
|
||||||||||||||||||||||||||||||||||||
|
Mortgage-backed securities-residential
|
$
|
856
|
$
|
20
|
1
|
$
|
-
|
$
|
-
|
-
|
$
|
856
|
$
|
20
|
1
|
|||||||||||||||||||||
|
Total securities available-for-sale
|
856
|
20
|
1
|
-
|
-
|
-
|
856
|
20
|
1
|
|||||||||||||||||||||||||||
|
Securities held-to-maturity:
|
||||||||||||||||||||||||||||||||||||
|
U.S. government sponsored enterprises
|
-
|
-
|
-
|
1,986
|
14
|
1
|
1,986
|
14
|
1
|
|||||||||||||||||||||||||||
|
State and political subdivisions
|
3,541
|
17
|
22
|
2,111
|
6
|
13
|
5,652
|
23
|
35
|
|||||||||||||||||||||||||||
|
Mortgage-backed securities-multi-family
|
1,250
|
6
|
1
|
3,799
|
11
|
3
|
5,049
|
17
|
4
|
|||||||||||||||||||||||||||
|
Corporate debt securities
|
-
|
-
|
-
|
452
|
25
|
1
|
452
|
25
|
1
|
|||||||||||||||||||||||||||
|
Total securities held-to-maturity
|
4,791
|
23
|
23
|
8,348
|
56
|
18
|
13,139
|
79
|
41
|
|||||||||||||||||||||||||||
|
Total securities
|
$
|
5,647
|
$
|
43
|
24
|
$
|
8,348
|
$
|
56
|
18
|
$
|
13,995
|
$
|
99
|
42
|
|||||||||||||||||||||
When the fair value of a held-to-maturity or available-for-sale security is less than its amortized cost basis, an assessment is made as to whether other-than-temporary impairment (“OTTI”) is present. The Company
considers numerous factors when determining whether a potential OTTI exists and the period over which the debt security is expected to recover. The principal factors considered are (1) the length of time and the extent to which the fair value
has been less than the amortized cost basis, (2) the financial condition of the issuer (and guarantor, if any) and adverse conditions specifically related to the security, industry or geographic area, (3) failure of the issuer of the security to
make scheduled interest or principal payments, (4) any changes to the rating of the security by a rating agency, and (5) the presence of credit enhancements, if any, including the guarantee of the federal government or any of its agencies.
For debt securities, OTTI is considered to have occurred if (1) the Company intends to sell the security before recovery of its amortized cost basis, (2) it is more likely than not the Company will be required to
sell the security before recovery of its amortized cost basis, or (3) if the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. In determining the present value of expected cash flows, the Company
discounts the expected cash flows at the effective interest rate implicit in the security at the date of acquisition. In estimating cash flows expected to be collected, the Company uses available information with respect to security prepayment
speeds, default rates and severity. In determining whether OTTI has occurred for equity securities, the Company considers the applicable factors described above and the intent and ability of the Company to retain its investment in the issuer for
a period of time sufficient to allow for any anticipated recovery in fair value.
For debt securities, credit-related OTTI is recognized in earnings while noncredit-related OTTI on securities not expected to be sold is recognized in other comprehensive income/loss (“OCI”). Credit-related OTTI
is measured as the difference between the present value of an impaired security’s expected cash flows and its amortized cost basis. Noncredit-related OTTI is measured as the difference between the fair value of the security and its amortized
cost less any credit-related losses recognized. For securities classified as held-to-maturity, the amount of OTTI recognized in OCI is accreted to the credit-adjusted expected cash flow amounts of the securities over future periods. Management
evaluated securities considering the factors as outlined above, and based on this evaluation the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2019. Management believes that the reasons for the
decline in fair value are due to interest rates, widening credit spreads and market illiquidity at the reporting date.
There were no transfers of securities available-for-sale to held-to-maturity during the three and six months ended December 31, 2019 or 2018. During the three and six months ended December 31, 2019 and 2018, there
were no sales of securities and no gains or losses were recognized. There was no other-than-temporary impairment loss recognized during the three and six months ended December 31, 2019 and 2018.
The estimated fair values of debt securities at December 31, 2019, by contractual maturity are shown below. Expected maturities may differ from contractual maturities, because issuers may have the right to call or
prepay obligations with or without call or prepayment penalties.
(In thousands)
|
Available-for-sale debt securities
|
Amortized Cost
|
Fair Value
|
||||||
|
Within one year
|
$
|
151,934
|
$
|
152,370
|
||||
|
After one year through five years
|
1,001
|
1,019
|
||||||
|
After five years through ten years
|
2,002
|
2,046
|
||||||
|
After ten years
|
2,000
|
1,966
|
||||||
|
Total available-for-sale debt securities
|
156,937
|
157,401
|
||||||
|
Mortgage-backed securities
|
35,457
|
35,598
|
||||||
|
Total available-for-sale securities
|
192,394
|
192,999
|
||||||
|
Held-to-maturity debt securities
|
||||||||
|
Within one year
|
31,439
|
31,793
|
||||||
|
After one year through five years
|
81,615
|
83,961
|
||||||
|
After five years through ten years
|
47,539
|
50,463
|
||||||
|
After ten years
|
22,901
|
26,058
|
||||||
|
Total held-to-maturity debt securities
|
183,494
|
192,275
|
||||||
|
Mortgage-backed securities
|
148,495
|
151,621
|
||||||
|
Total held-to-maturity securities
|
331,989
|
343,896
|
||||||
|
Total debt securities
|
$
|
524,383
|
$
|
536,895
|
||||
At December 31, 2019 and June 30, 2019, respectively, debt securities with an aggregate fair value of $524.2 million and $425.7 million were pledged as collateral for deposits
in excess of FDIC insurance limits for various municipalities placing deposits with Greene County Commercial Bank. At December 31, 2019 and June 30, 2019, debt securities with an aggregate fair value of $4.5 million and $1.5 million,
respectively, were pledged as collateral for potential borrowings at the Federal Reserve Bank discount window. Greene County Bancorp, Inc. did not participate in any securities lending programs during the three or six months ended December 31,
2019 or 2018.
Federal Home Loan Bank Stock
Federal law requires a member institution of the Federal Home Loan Bank (“FHLB”) system to hold stock of its district FHLB according to a predetermined formula. This stock is restricted in that it can only be sold
to the FHLB or to another member institution, and all sales of FHLB stock must be at par. As a result of these restrictions, FHLB stock is carried at cost. FHLB stock is held as a long-term investment and its value is determined based on the
ultimate recoverability of the par value. Impairment of this investment is evaluated quarterly and is a matter of judgment that reflects management’s view of the FHLB’s long-term performance, which includes factors such as the following: its
operating performance; the severity and duration of declines in the fair value of its net assets related to its capital stock amount; its commitment to make payments required by law or regulation and the level of such payments in relation to its
operating performance; the impact of legislative and regulatory changes on the FHLB, and accordingly, on the members of the FHLB; and its liquidity and funding position. After evaluating these considerations, Greene County Bancorp, Inc.
concluded that the par value of its investment in FHLB stock will be recovered and, therefore, no other-than-temporary impairment charge was recorded during the three and six months ended December 31, 2019 or 2018.
| (5) |
Loans and Allowance for Loan Losses
|
Loan segments and classes at December 31, 2019 and June 30, 2019 are summarized as follows:
|
(In thousands)
|
December 31, 2019
|
June 30, 2019
|
||||||
|
Residential real estate:
|
||||||||
|
Residential real estate
|
$
|
269,925
|
$
|
267,802
|
||||
|
Residential construction and land
|
8,667
|
7,462
|
||||||
|
Multi-family
|
25,789
|
24,592
|
||||||
|
Commercial real estate:
|
||||||||
|
Commercial real estate
|
360,424
|
329,668
|
||||||
|
Commercial construction
|
56,648
|
36,361
|
||||||
|
Consumer loan:
|
||||||||
|
Home equity
|
22,744
|
23,185
|
||||||
|
Consumer installment
|
5,769
|
5,481
|
||||||
|
Commercial loans
|
114,220
|
103,554
|
||||||
|
Total gross loans
|
864,186
|
798,105
|
||||||
|
Allowance for loan losses
|
(13,984
|
)
|
(13,200
|
)
|
||||
|
Unearned origination fees and costs, net
|
863
|
833
|
||||||
|
Loans receivable, net
|
$
|
851,065
|
$
|
785,738
|
||||
Management closely monitors the quality of the loan portfolio and has established a loan review process designed to help grade the quality and profitability of the Company’s loan portfolio. The credit quality
grade helps management make a consistent assessment of each loan relationship’s credit risk. Consistent with regulatory guidelines, The Bank of Greene County provides for the classification of loans considered being of lesser quality. Such
ratings coincide with the “Substandard,” “Doubtful” and “Loss” classifications used by federal regulators in their examination of financial institutions. Generally, an asset is considered Substandard if it is inadequately protected by the current
net worth and paying capacity of the obligors and/or the collateral pledged. Substandard assets include those characterized by the distinct possibility that the insured financial institution will sustain some loss if the deficiencies are not
corrected. Assets classified as Doubtful have all the weaknesses inherent in assets classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts,
highly questionable and improbable. Assets classified as Loss are those considered uncollectible and of such little value that their continuance as assets without the establishment of a full loss reserve and/or charge-off is not warranted. Assets
that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories but otherwise possess weaknesses are designated “Special Mention.” Management also maintains a listing of loans
designated “Watch.” These loans represent borrowers with declining earnings, strained cash flow, increasing leverage and/or weakening market fundamentals that indicate above average risk.
When The Bank of Greene County classifies problem assets as either Substandard or Doubtful, it generally establishes a specific valuation allowance or “loss reserve” in an amount deemed prudent by management.
General allowances represent loss allowances that have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular loans. When The Bank of
Greene County identifies problem loans as being impaired, it is required to evaluate whether the Bank will be able to collect all amounts due either through repayments or the liquidation of the underlying collateral. If it is determined that
impairment exists, the Bank is required either to establish a specific allowance for losses equal to the amount of impairment of the assets, or to charge-off such amount. The Bank of Greene County’s determination as to the classification of its
loans and the amount of its valuation allowance is subject to review by its regulatory agencies, which can order the establishment of additional general or specific loss allowances. The Bank of Greene County reviews its portfolio monthly to
determine whether any assets require classification in accordance with applicable regulations.
The Bank primarily has four segments within its loan portfolio that it considers when measuring credit quality: residential real estate loans, commercial real estate loans, consumer loans and commercial loans. The
residential real estate portfolio consists of residential, construction, and multi-family loan classes. Commercial real estate loans consist of commercial real estate and commercial construction loan classes. Consumer loans consist of home equity
loan and consumer installment loan classes. The inherent risk within the loan portfolio varies depending upon each of these loan types.
The Bank of Greene County’s primary lending activity historically has been the origination of residential mortgage loans, including home equity loans, which are collateralized by residences. Generally,
residential mortgage loans are made in amounts up to 89.9% of the appraised value of the property. However, The Bank of Greene County will originate residential mortgage loans with loan-to-value ratios of up to 95.0%, with private mortgage
insurance. In the event of default by the borrower, The Bank of Greene County will acquire and liquidate the underlying collateral. By originating the loan at a loan-to-value ratio of 89.9% or less or obtaining private mortgage insurance, The
Bank of Greene County limits its risk of loss in the event of default. However, the market values of the collateral may be adversely impacted by declines in the economy. Home equity loans may have an additional inherent risk if The Bank of
Greene County does not hold the first mortgage. The Bank of Greene County may stand in a secondary position in the event of collateral liquidation resulting in a greater chance of insufficiency to meet all obligations.
Construction lending generally involves a greater degree of risk than other residential mortgage lending. The repayment of the construction loan is, to a great degree, dependent upon the successful and timely
completion of the construction of the subject property within specified cost limits. The Bank of Greene County completes inspections during the construction phase prior to any disbursements. The Bank of Greene County limits its risk during the
construction as disbursements are not made until the required work for each advance has been completed. Construction delays may further impair the borrower’s ability to repay the loan.
Loans collateralized by commercial real estate, and multi-family dwellings, such as apartment buildings generally are larger than residential loans and involve a greater degree of risk. Commercial real estate loans
often involve large loan balances to single borrowers or groups of related borrowers. Payments on these loans depend to a large degree on the results of operations and management of the properties or underlying businesses, and may be affected to
a greater extent by adverse conditions in the real estate market or the economy in general. Accordingly, the nature of commercial real estate loans makes them more difficult for management to monitor and evaluate.
Consumer loans generally have shorter terms and higher interest rates than residential mortgage loans. In addition, consumer loans expand the products and services offered by The Bank of Greene County to better
meet the financial services needs of its customers. Consumer loans generally involve greater credit risk than residential mortgage loans because of the difference in the nature of the underlying collateral. Repossessed collateral for a
defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance because of the greater likelihood of damage, loss or depreciation in the underlying collateral. The remaining deficiency often does not
warrant further substantial collection efforts against the borrower beyond obtaining a deficiency judgment. In addition, consumer loan collections depend on the borrower’s personal financial stability. Furthermore, the application of various
federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.
Commercial lending generally involves greater risk than residential mortgage lending and involves risks that are different from those associated with residential and commercial real estate mortgage lending. Real
estate lending is generally considered to be collateral-based, with loan amounts based on fixed loan-to-collateral values, and liquidation of the underlying real estate collateral is viewed as the primary source of repayment in the event of
borrower default. Although commercial loans may be collateralized by equipment or other business assets, the liquidation of collateral in the event of a borrower default is often an insufficient source of repayment because equipment and other
business assets may be obsolete or of limited use, among other things. Accordingly, the repayment of a commercial loan depends primarily on the creditworthiness of the borrower (and any guarantors), while liquidation of collateral is a secondary
and often insufficient source of repayment. Over the past few years, The Bank of Greene County has shifted more focus on the origination of commercial loans including commercial real estate. The Bank of Greene County has also formed
relationships with other community banks within our region to participate in larger commercial loan relationships. These types of loans are generally considered to be riskier due to the size and complexity of the loan relationship. By entering
into a participation agreement with the other bank, The Bank of Greene County can obtain the loan relationship while limiting its exposure to credit loss. Management completes its due diligence in underwriting these loans and monitors the
servicing of these loans.
Loan balances by internal credit quality indicator at December 31, 2019 are shown below.
|
(In thousands)
|
Performing
|
Watch
|
Special Mention
|
Substandard
|
Total
|
|||||||||||||||
|
Residential real estate
|
$
|
265,229
|
$
|
1,613
|
$
|
1,137
|
$
|
1,946
|
$
|
269,925
|
||||||||||
|
Residential construction and land
|
8,667
|
-
|
-
|
-
|
8,667
|
|||||||||||||||
|
Multi-family
|
23,976
|
-
|
1,682
|
131
|
25,789
|
|||||||||||||||
|
Commercial real estate
|
349,604
|
-
|
7,559
|
3,261
|
360,424
|
|||||||||||||||
|
Commercial construction
|
51,586
|
-
|
4,960
|
102
|
56,648
|
|||||||||||||||
|
Home equity
|
22,068
|
18
|
26
|
632
|
22,744
|
|||||||||||||||
|
Consumer installment
|
5,743
|
26
|
-
|
-
|
5,769
|
|||||||||||||||
|
Commercial loans
|
111,003
|
-
|
2,896
|
321
|
114,220
|
|||||||||||||||
|
Total gross loans
|
$
|
837,876
|
$
|
1,657
|
$
|
18,260
|
$
|
6,393
|
$
|
864,186
|
||||||||||
Loan balances by internal credit quality indicator at June 30, 2019 are shown below.
|
(In thousands)
|
Performing
|
Watch
|
Special
Mention
|
Substandard
|
Total
|
|||||||||||||||
|
Residential real estate
|
$
|
264,138
|
$
|
874
|
$
|
86
|
$
|
2,704
|
$
|
267,802
|
||||||||||
|
Residential construction and land
|
7,462
|
-
|
-
|
-
|
7,462
|
|||||||||||||||
|
Multi-family
|
22,544
|
137
|
1,835
|
76
|
24,592
|
|||||||||||||||
|
Commercial real estate
|
318,703
|
616
|
7,435
|
2,914
|
329,668
|
|||||||||||||||
|
Commercial construction
|
36,259
|
-
|
-
|
102
|
36,361
|
|||||||||||||||
|
Home equity
|
22,392
|
20
|
-
|
773
|
23,185
|
|||||||||||||||
|
Consumer installment
|
5,461
|
14
|
-
|
6
|
5,481
|
|||||||||||||||
|
Commercial loans
|
102,103
|
261
|
1,082
|
108
|
103,554
|
|||||||||||||||
|
Total gross loans
|
$
|
779,062
|
$
|
1,922
|
$
|
10,438
|
$
|
6,683
|
$
|
798,105
|
||||||||||
The Company had no loans classified doubtful or loss at December 31, 2019 or June 30, 2019. During the six months ended December 31, 2019, the Company downgraded a construction loan to special mention as a result
of project cost overruns and several delinquent payments. At December 31, 2019, this loan was performing. Management continues to monitor this loan relationship closely.
Nonaccrual Loans
Management places loans on nonaccrual status once the loans have become 90 days or more delinquent. A nonaccrual loan is defined as a loan in which collectability is questionable and therefore interest on the loan
will no longer be recognized on an accrual basis. A loan is not placed back on accrual status until the borrower has demonstrated the ability and willingness to make timely payments on the loan. A loan does not have to be 90 days delinquent in
order to be classified as nonaccrual. Nonaccrual loans consisted primarily of loans secured by real estate at December 31, 2019 and June 30, 2019. Loans on nonaccrual status totaled $3.4 million at December 31, 2019 of which $1.1 million were
in the process of foreclosure. At December 31, 2019, there were 10 residential loans in the process of foreclosure totaling $801,000. Included in nonaccrual loans were $1.2 million of loans which were less
than 90 days past due at December 31, 2019, but have a recent history of delinquency greater than 90 days past due. These loans will be returned to accrual status once they have demonstrated a history of timely payments. Included in total loans
past due were $151,000 of loans which were making payments pursuant to forbearance agreements. Under the forbearance agreements, the customers have made arrangements with the Bank to bring the loans current over a specified period of time
(resulting in an insignificant delay in repayment). During this term of the forbearance agreement, the Bank has agreed not to continue foreclosure proceedings. Loans on nonaccrual status totaled $3.6 million at June 30, 2019 of which $1.6
million were in the process of foreclosure. At June 30, 2019, there were 12 residential loans in the process of foreclosure totaling $1.5 million. Included in nonaccrual loans were $1.8 million of loans which were less than 90 days past due at
June 30, 2019, but have a recent history of delinquency greater than 90 days past due.
The following table sets forth information regarding delinquent and/or nonaccrual loans at December 31, 2019:
|
(In thousands)
|
30-59 days
past due
|
60-89 days
past due
|
90 days or
more past
due
|
Total past
due
|
Current
|
Total Loans
|
Loans on
Non-accrual
|
|||||||||||||||||||||
|
Residential real estate
|
$
|
1,861
|
$
|
1,482
|
$
|
1,040
|
$
|
4,383
|
$
|
265,542
|
$
|
269,925
|
$
|
1,691
|
||||||||||||||
|
Residential construction and land
|
-
|
-
|
-
|
-
|
8,667
|
8,667
|
-
|
|||||||||||||||||||||
|
Multi-family
|
-
|
30
|
131
|
161
|
25,628
|
25,789
|
131
|
|||||||||||||||||||||
|
Commercial real estate
|
789
|
356
|
674
|
1,819
|
358,605
|
360,424
|
984
|
|||||||||||||||||||||
|
Commercial construction
|
-
|
-
|
-
|
-
|
56,648
|
56,648
|
-
|
|||||||||||||||||||||
|
Home equity
|
152
|
18
|
128
|
298
|
22,446
|
22,744
|
311
|
|||||||||||||||||||||
|
Consumer installment
|
32
|
26
|
-
|
58
|
5,711
|
5,769
|
-
|
|||||||||||||||||||||
|
Commercial loans
|
163
|
29
|
212
|
404
|
113,816
|
114,220
|
262
|
|||||||||||||||||||||
|
Total gross loans
|
$
|
2,997
|
$
|
1,941
|
$
|
2,185
|
$
|
7,123
|
$
|
857,063
|
$
|
864,186
|
$
|
3,379
|
||||||||||||||
The following table sets forth information regarding delinquent and/or nonaccrual loans at June 30, 2019:
|
(In thousands)
|
30-59
days
past due
|
60-89
days
past due
|
90 days
or more
past due
|
Total
past due
|
Current
|
Total
Loans
|
Loans on
Non-
accrual
|
|||||||||||||||||||||
|
Residential real estate
|
$
|
2,144
|
$
|
870
|
$
|
1,385
|
$
|
4,399
|
$
|
263,403
|
$
|
267,802
|
$
|
2,474
|
||||||||||||||
|
Residential construction and land
|
-
|
-
|
-
|
-
|
7,462
|
7,462
|
-
|
|||||||||||||||||||||
|
Multi-family
|
1
|
137
|
-
|
138
|
24,454
|
24,592
|
-
|
|||||||||||||||||||||
|
Commercial real estate
|
280
|
1,108
|
102
|
1,490
|
328,178
|
329,668
|
598
|
|||||||||||||||||||||
|
Commercial construction
|
-
|
-
|
-
|
-
|
36,361
|
36,361
|
-
|
|||||||||||||||||||||
|
Home equity
|
16
|
136
|
309
|
461
|
22,724
|
23,185
|
452
|
|||||||||||||||||||||
|
Consumer installment
|
32
|
14
|
6
|
52
|
5,429
|
5,481
|
6
|
|||||||||||||||||||||
|
Commercial loans
|
430
|
342
|
28
|
800
|
102,754
|
103,554
|
108
|
|||||||||||||||||||||
|
Total gross loans
|
$
|
2,903
|
$
|
2,607
|
$
|
1,830
|
$
|
7,340
|
$
|
790,765
|
$
|
798,105
|
$
|
3,638
|
||||||||||||||
The Bank of Greene County had no accruing loans delinquent more than 90 days at December 31, 2019 or June 30, 2019, respectively. The loans delinquent more than 90 days and accruing consist of loans that are well
collateralized and the borrowers have demonstrated the ability and willingness to pay. The borrower has made arrangements with the Bank to bring the loan current within a specified time period and has made a series of payments as agreed.
The table below details additional information related to nonaccrual loans for the three and six months ended December 31:
|
For the three months
ended December 31,
|
For the six months
ended December 31
|
|||||||||||||||
|
(In thousands)
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
|
Interest income that would have been recorded if loans had been performing in accordance with original terms
|
$
|
53
|
$
|
58
|
$
|
154
|
$
|
129
|
||||||||
|
Interest income that was recorded on nonaccrual loans
|
42
|
23
|
92
|
55
|
||||||||||||
Impaired Loan Analysis
The Company identifies impaired loans and measures the impairment in accordance with FASB ASC subtopic “Receivables – Loan Impairment.” Management may consider a loan
impaired once it is classified as nonaccrual and when it is probable that the borrower will be unable to repay the loan according to the original contractual terms of the loan agreement or the loan is restructured in a troubled debt
restructuring. It should be noted that management does not evaluate all loans individually for impairment. Generally, The Bank of Greene County considers residential mortgages, home equity loans and installment loans as small, homogeneous
loans, which are evaluated for impairment collectively based on historical loan experience and other factors. In contrast, large commercial mortgage, construction, multi-family, business loans and select larger balance residential mortgage loans
are reviewed individually and considered impaired if it is probable that The Bank of Greene County will not be able to collect scheduled payments of principal and interest when due, according to the contractual terms of the loan agreement. The
measurement of impaired loans is generally based on the fair value of the underlying collateral. The majority of The Bank of Greene County loans, including most nonaccrual loans, are small homogenous loan types adequately supported by
collateral. Management considers the payment status of loans in the process of evaluating the adequacy of the allowance for loan losses among other factors. Based on this evaluation, a delinquent loan’s risk rating may be downgraded to either
pass-watch, special mention, or substandard, and the allocation of the allowance for loan loss is based upon the risk associated with such designation. Loans that have been modified as a troubled debt restructuring are included in impaired
loans. The measurement of impairment is generally based on the discounted cash flows based on the original rate of the loan before the restructuring, unless it is determined that the restructured loan is collateral dependent. If the
restructured loan is deemed to be collateral dependent, impairment is based on the fair value of the underlying collateral.
The tables below detail additional information on impaired loans at the date or periods indicated:
|
At December 31, 2019
|
For the three months ended
December 31, 2019
|
For the six months ended
December 31, 2019
|
||||||||||||||||||||||||||
|
(In thousands)
|
Recorded
Investment
|
Unpaid
Principal
|
Related
Allowance
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||||||||
|
With no related allowance recorded:
|
||||||||||||||||||||||||||||
|
Residential real estate
|
$
|
537
|
$
|
537
|
$
|
-
|
$
|
542
|
$
|
11
|
$
|
617
|
$
|
41
|
||||||||||||||
|
Commercial real estate
|
370
|
370
|
-
|
375
|
5
|
383
|
12
|
|||||||||||||||||||||
|
Home equity
|
128
|
128
|
-
|
128
|
-
|
197
|
-
|
|||||||||||||||||||||
|
Commercial loans
|
173
|
173
|
-
|
146
|
1
|
141
|
1
|
|||||||||||||||||||||
|
Impaired loans with no allowance
|
1,208
|
1,208
|
-
|
1,191
|
17
|
1,338
|
54
|
|||||||||||||||||||||
|
With an allowance recorded:
|
||||||||||||||||||||||||||||
|
Residential real estate
|
1,226
|
1,226
|
119
|
1,124
|
8
|
1,051
|
32
|
|||||||||||||||||||||
|
Multi-family
|
131
|
131
|
1
|
131
|
1
|
66
|
1
|
|||||||||||||||||||||
|
Commercial real estate
|
105
|
105
|
5
|
105
|
3
|
53
|
3
|
|||||||||||||||||||||
|
Commercial construction
|
102
|
102
|
7
|
102
|
-
|
102
|
-
|
|||||||||||||||||||||
|
Home equity
|
460
|
460
|
73
|
460
|
9
|
395
|
14
|
|||||||||||||||||||||
|
Commercial loans
|
159
|
159
|
12
|
159
|
3
|
145
|
4
|
|||||||||||||||||||||
|
Impaired loans with allowance
|
2,183
|
2,183
|
217
|
2,081
|
24
|
1,812
|
54
|
|||||||||||||||||||||
|
Total impaired:
|
||||||||||||||||||||||||||||
|
Residential real estate
|
1,763
|
1,763
|
119
|
1,666
|
19
|
1,668
|
73
|
|||||||||||||||||||||
|
Multi-family
|
131
|
131
|
1
|
131
|
1
|
66
|
1
|
|||||||||||||||||||||
|
Commercial real estate
|
475
|
475
|
5
|
480
|
8
|
436
|
15
|
|||||||||||||||||||||
|
Commercial construction
|
102
|
102
|
7
|
102
|
-
|
102
|
-
|
|||||||||||||||||||||
|
Home equity
|
588
|
588
|
73
|
588
|
9
|
592
|
14
|
|||||||||||||||||||||
|
Commercial loans
|
332
|
332
|
12
|
305
|
4
|
286
|
5
|
|||||||||||||||||||||
|
Total impaired loans
|
$
|
3,391
|
$
|
3,391
|
$
|
217
|
$
|
3,272
|
$
|
41
|
$
|
3,150
|
$
|
108
|
||||||||||||||
|
At June 30, 2019
|
For the three months ended
December 31, 2018
|
For the six months ended
December 31, 2018
|
||||||||||||||||||||||||||
|
(In thousands)
|
Recorded
Investment
|
Unpaid
Principal
|
Related
Allowance
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||||||||
|
With no related allowance recorded:
|
||||||||||||||||||||||||||||
|
Residential real estate
|
$
|
727
|
$
|
727
|
$
|
-
|
$
|
158
|
$
|
-
|
$
|
83
|
$
|
3
|
||||||||||||||
|
Commercial real estate
|
717
|
717
|
-
|
1,145
|
7
|
970
|
15
|
|||||||||||||||||||||
|
Home equity
|
309
|
309
|
-
|
309
|
-
|
266
|
-
|
|||||||||||||||||||||
|
Commercial loans
|
141
|
141
|
-
|
153
|
-
|
155
|
-
|
|||||||||||||||||||||
|
Impaired loans with no allowance
|
1,894
|
1,894
|
-
|
1,765
|
7
|
1,474
|
18
|
|||||||||||||||||||||
|
With an allowance recorded:
|
||||||||||||||||||||||||||||
|
Residential real estate
|
1,420
|
1,420
|
188
|
1,614
|
13
|
1,757
|
36
|
|||||||||||||||||||||
|
Commercial real estate
|
-
|
-
|
-
|
-
|
-
|
182
|
-
|
|||||||||||||||||||||
|
Commercial construction
|
102
|
102
|
2
|
176
|
-
|
176
|
-
|
|||||||||||||||||||||
|
Home equity
|
348
|
348
|
59
|
321
|
5
|
327
|
9
|
|||||||||||||||||||||
|
Commercial loans
|
130
|
130
|
13
|
44
|
-
|
22
|
-
|
|||||||||||||||||||||
|
Impaired loans with allowance
|
2,000
|
2,000
|
262
|
2,155
|
18
|
2,464
|
45
|
|||||||||||||||||||||
|
Total impaired:
|
||||||||||||||||||||||||||||
|
Residential real estate
|
2,147
|
2,147
|
188
|
1,772
|
13
|
1,840
|
39
|
|||||||||||||||||||||
|
Commercial real estate
|
717
|
717
|
-
|
1,145
|
7
|
1,152
|
15
|
|||||||||||||||||||||
|
Commercial construction
|
102
|
102
|
2
|
176
|
-
|
176
|
-
|
|||||||||||||||||||||
|
Home equity
|
657
|
657
|
59
|
630
|
5
|
593
|
9
|
|||||||||||||||||||||
|
Commercial loans
|
271
|
271
|
13
|
197
|
-
|
177
|
-
|
|||||||||||||||||||||
|
Total impaired loans
|
$
|
3,894
|
$
|
3,894
|
$
|
262
|
$
|
3,920
|
$
|
25
|
$
|
3,938
|
$
|
63
|
||||||||||||||
The table below details loans that have been modified as a troubled debt restructuring during the six months ended December 31, 2018.
|
(Dollars in thousands)
|
Number of Contracts
|
Pre-Modification
Outstanding Recorded
Investment
|
Post-Modification
Outstanding Recorded
Investment
|
Current Outstanding
Recorded Investment
|
||||||||||||
|
December 31, 2018
|
||||||||||||||||
|
Commercial loans
|
1
|
$
|
127
|
$
|
131
|
$
|
131
|
|||||||||
There were no loans that have been modified as a troubled debt restructuring during the three and six months ended December 31, 2019. There were no loans that had been modified as a troubled debt restructuring
during the twelve months prior to June 30, 2019 or 2018 which have subsequently defaulted during the three and six months ended December 31, 2019 or 2018, respectively.
Allowance for Loan Losses
The allowance for loan losses is established through a provision for loan losses based on management’s evaluation of the risk inherent in the loan portfolio, the composition of the loan portfolio, specific impaired
loans and current economic conditions. Such evaluation, which includes a review of certain identified loans on which full collectability may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair
value of the underlying collateral, economic conditions, payment status of the loan, historical loan loss experience and other factors that warrant recognition in providing for the loan loss allowance. In addition, various regulatory agencies,
as an integral part of their examination process, periodically review The Bank of Greene County’s allowance for loan losses. Such agencies may require The Bank of Greene County to recognize additions to the allowance based on their judgment
about information available to them at the time of their examination. The Bank of Greene County considers smaller balance residential mortgages, home equity loans, commercial loans and installment loans to customers as small, homogeneous loans,
which are evaluated for impairment collectively based on historical loss experience. Larger balance residential, commercial mortgage and business loans are viewed individually and considered impaired if it is probable that The Bank of Greene
County will not be able to collect scheduled payments of principal and interest when due, according to the contractual terms of the loan agreements. The measurement of impaired loans is generally based on the fair value of the underlying
collateral. The Bank of Greene County charges loans off against the allowance for credit losses when it becomes evident that a loan cannot be collected within a reasonable amount of time or that it will cost the Bank more than it will receive,
and all possible avenues of repayment have been analyzed, including the potential of future cash flow, the value of the underlying collateral, and strength of any guarantors or co-borrowers. Generally, consumer loans and smaller commercial loans
(not secured by real estate) in excess of 90 days are charged-off against the allowance for loan losses, unless equitable arrangements are made. Included within consumer installment loan charge-offs and recoveries are deposit accounts that have
been overdrawn in excess of 60 days. With continued growth in the number of deposit accounts, charge-off activity within this category has also grown, as can be seen from the tables below. For loans secured by real estate, a charge-off is
recorded when it is determined that the collection of all or a portion of a loan may not be collected and the amount of that loss can be reasonably estimated. The allowance for loan losses is increased by a provision for loan losses (which
results in a charge to expense) and recoveries of loans previously charged off and is reduced by charge-offs.
The following tables set forth the activity and allocation of the allowance for loan losses by loan category during and at the periods indicated. The allowance is allocated to each loan category based on
historical loss experience and economic conditions.
|
Activity for the three months ended December 31, 2019
|
||||||||||||||||||||
|
(In thousands)
|
Balance at
September 30, 2019
|
Charge-offs
|
Recoveries
|
Provision
|
Balance at
December 31,
2019
|
|||||||||||||||
|
Residential real estate
|
$
|
1,512
|
$
|
48
|
$
|
10
|
$
|
(4
|
)
|
$
|
1,470
|
|||||||||
|
Residential construction and land
|
99
|
-
|
-
|
(6
|
)
|
93
|
||||||||||||||
|
Multi-family
|
205
|
-
|
-
|
(58
|
)
|
147
|
||||||||||||||
|
Commercial real estate
|
7,159
|
-
|
-
|
351
|
7,510
|
|||||||||||||||
|
Commercial construction
|
1,291
|
-
|
-
|
176
|
1,467
|
|||||||||||||||
|
Home equity
|
307
|
-
|
-
|
(37
|
)
|
270
|
||||||||||||||
|
Consumer installment
|
319
|
139
|
26
|
160
|
366
|
|||||||||||||||
|
Commercial loans
|
2,552
|
5
|
6
|
108
|
2,661
|
|||||||||||||||
|
Total
|
$
|
13,444
|
$
|
192
|
$
|
42
|
$
|
690
|
$
|
13,984
|
||||||||||
|
Activity for the six months ended December 31, 2019
|
||||||||||||||||||||
|
(In thousands)
|
Balance at
June 30, 2019
|
Charge-offs
|
Recoveries
|
Provision
|
Balance at
December 31,
2019
|
|||||||||||||||
|
Residential real estate
|
$
|
2,026
|
$
|
101
|
$
|
10
|
$
|
(465
|
)
|
$
|
1,470
|
|||||||||
|
Residential construction and land
|
87
|
-
|
-
|
6
|
93
|
|||||||||||||||
|
Multi-family
|
180
|
-
|
-
|
(33
|
)
|
147
|
||||||||||||||
|
Commercial real estate
|
7,110
|
-
|
-
|
400
|
7,510
|
|||||||||||||||
|
Commercial construction
|
872
|
-
|
-
|
595
|
1,467
|
|||||||||||||||
|
Home equity
|
314
|
-
|
-
|
(44
|
)
|
270
|
||||||||||||||
|
Consumer installment
|
250
|
248
|
50
|
314
|
366
|
|||||||||||||||
|
Commercial loans
|
2,361
|
204
|
36
|
468
|
2,661
|
|||||||||||||||
|
Total
|
$
|
13,200
|
$
|
553
|
$
|
96
|
$
|
1,241
|
$
|
13,984
|
||||||||||
|
Allowance for Loan Losses
|
Loans Receivable
|
|||||||||||||||
|
Ending Balance At December 31, 2019
Impairment Analysis
|
Ending Balance At December 31, 2019
Impairment Analysis
|
|||||||||||||||
|
(In thousands)
|
Individually
Evaluated
|
Collectively
Evaluated
|
Individually
Evaluated
|
Collectively
Evaluated
|
||||||||||||
|
Residential real estate
|
$
|
119
|
$
|
1,351
|
$
|
1,763
|
$
|
268,162
|
||||||||
|
Residential construction and land
|
-
|
93
|
-
|
8,667
|
||||||||||||
|
Multi-family
|
1
|
146
|
131
|
25,658
|
||||||||||||
|
Commercial real estate
|
5
|
7,505
|
475
|
359,949
|
||||||||||||
|
Commercial construction
|
7
|
1,460
|
102
|
56,546
|
||||||||||||
|
Home equity
|
73
|
197
|
588
|
22,156
|
||||||||||||
|
Consumer installment
|
-
|
366
|
-
|
5,769
|
||||||||||||
|
Commercial loans
|
12
|
2,649
|
332
|
113,888
|
||||||||||||
|
Unallocated
|
-
|
-
|
-
|
-
|
||||||||||||
|
Total
|
$
|
217
|
$
|
13,767
|
$
|
3,391
|
$
|
860,795
|
||||||||
|
Activity for the three months ended December 31, 2018
|
||||||||||||||||||||
|
(In thousands)
|
Balance at
September 30, 2018
|
Charge-offs
|
Recoveries
|
Provision
|
Balance at
December 31,
2018
|
|||||||||||||||
|
Residential real estate
|
$
|
2,108
|
$
|
75
|
$
|
-
|
$
|
37
|
$
|
2,070
|
||||||||||
|
Residential construction and land
|
116
|
-
|
-
|
(23
|
)
|
93
|
||||||||||||||
|
Multi-family
|
171
|
-
|
-
|
9
|
180
|
|||||||||||||||
|
Commercial real estate
|
6,023
|
-
|
-
|
159
|
6,182
|
|||||||||||||||
|
Commercial construction
|
957
|
-
|
-
|
(81
|
)
|
876
|
||||||||||||||
|
Home equity
|
317
|
-
|
-
|
5
|
322
|
|||||||||||||||
|
Consumer installment
|
229
|
89
|
22
|
128
|
290
|
|||||||||||||||
|
Commercial loans
|
2,133
|
-
|
153
|
95
|
2,381
|
|||||||||||||||
|
Unallocated
|
254
|
-
|
-
|
25
|
279
|
|||||||||||||||
|
Total
|
$
|
12,308
|
$
|
164
|
$
|
175
|
$
|
354
|
$
|
12,673
|
||||||||||
|
Activity for the six months ended December 31, 2018
|
||||||||||||||||||||
|
(In thousands)
|
Balance at
June 30, 2018
|
Charge-offs
|
Recoveries
|
Provision
|
Balance at
December 31,
2018
|
|||||||||||||||
|
Residential real estate
|
$
|
2,116
|
$
|
96
|
$
|
13
|
$
|
37
|
$
|
2,070
|
||||||||||
|
Residential construction and land
|
114
|
-
|
-
|
(21
|
)
|
93
|
||||||||||||||
|
Multi-family
|
162
|
-
|
-
|
18
|
180
|
|||||||||||||||
|
Commercial real estate
|
5,979
|
-
|
-
|
203
|
6,182
|
|||||||||||||||
|
Commercial construction
|
950
|
-
|
-
|
(74
|
)
|
876
|
||||||||||||||
|
Home equity
|
317
|
-
|
-
|
5
|
322
|
|||||||||||||||
|
Consumer installment
|
224
|
188
|
59
|
195
|
290
|
|||||||||||||||
|
Commercial loans
|
2,128
|
-
|
153
|
100
|
2,381
|
|||||||||||||||
|
Unallocated
|
34
|
-
|
-
|
245
|
279
|
|||||||||||||||
|
Total
|
$
|
12,024
|
$
|
284
|
$
|
225
|
$
|
708
|
$
|
12,673
|
||||||||||
|
Allowance for Loan Losses
|
Loans Receivable
|
|||||||||||||||
|
Ending Balance June 30, 2019
Impairment Analysis
|
Ending Balance June 30, 2019
Impairment Analysis
|
|||||||||||||||
|
(In thousands)
|
Individually
Evaluated
|
Collectively
Evaluated
|
Individually
Evaluated
|
Collectively
Evaluated
|
||||||||||||
|
Residential real estate
|
$
|
188
|
$
|
1,838
|
$
|
2,147
|
$
|
265,655
|
||||||||
|
Residential construction and land
|
-
|
87
|
-
|
7,462
|
||||||||||||
|
Multi-family
|
-
|
180
|
-
|
24,592
|
||||||||||||
|
Commercial real estate
|
-
|
7,110
|
717
|
328,951
|
||||||||||||
|
Commercial construction
|
2
|
870
|
102
|
36,259
|
||||||||||||
|
Home equity
|
59
|
255
|
657
|
22,528
|
||||||||||||
|
Consumer installment
|
-
|
250
|
-
|
5,481
|
||||||||||||
|
Commercial loans
|
13
|
2,348
|
271
|
103,283
|
||||||||||||
|
Unallocated
|
-
|
-
|
-
|
-
|
||||||||||||
|
Total
|
$
|
262
|
$
|
12,938
|
$
|
3,894
|
$
|
794,211
|
||||||||
Foreclosed real estate (FRE)
FRE consists of properties acquired through mortgage loan foreclosure proceedings or in full or partial satisfaction of loans. The following table sets forth information regarding FRE at December 31, 2019 and June
30, 2019:
|
(in thousands)
|
December 31, 2019
|
June 30, 2019
|
||||||
|
Residential real estate
|
$
|
303
|
$
|
53
|
||||
|
Total foreclosed real estate
|
$
|
303
|
$
|
53
|
||||
| (6) |
Fair Value Measurements and Fair Value of Financial Instruments
|
Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial
instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sale transaction on the dates indicated. The estimated fair value amounts have been measured at December 31, 2019 and
June 30, 2019 and have not been re-evaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective
reporting dates may be different than the amounts reported at each period-end.
The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and
liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.
The FASB ASC Topic on “Fair Value Measurement” established a fair value hierarchy that prioritized the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair
value hierarchy are as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).
An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
For assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used are as follows:
|
Fair Value Measurements Using
|
||||||||||||||||
|
Quoted
Prices In
Active Markets
For Identical
Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
|
(In thousands)
|
December 31, 2019
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||
|
Assets:
|
||||||||||||||||
|
U.S. Government sponsored enterprises
|
$
|
4,530
|
$
|
-
|
$
|
4,530
|
$
|
-
|
||||||||
|
State and political subdivisions
|
148,332
|
-
|
148,332
|
-
|
||||||||||||
|
Mortgage-backed securities-residential
|
10,316
|
-
|
10,316
|
-
|
||||||||||||
|
Mortgage-backed securities-multi-family
|
25,282
|
-
|
25,282
|
-
|
||||||||||||
|
Corporate debt securities
|
4,539
|
4,539
|
-
|
-
|
||||||||||||
|
Securities available-for-sale
|
192,999
|
$
|
4,539
|
$
|
188,460
|
-
|
||||||||||
|
Equity securities
|
265
|
265
|
-
|
-
|
||||||||||||
|
Total securities measured at fair value
|
$
|
193,264
|
$
|
4,804
|
$
|
188,460
|
$
|
-
|
||||||||
|
Fair Value Measurements Using
|
||||||||||||||||
|
Quoted Prices
In Active
Markets For
Identical Assets
|
Significant
Other Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
|
(In thousands)
|
June 30, 2019
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||
|
Assets:
|
||||||||||||||||
|
U.S. Government sponsored enterprises
|
$
|
5,553
|
$
|
-
|
$
|
5,553
|
$
|
-
|
||||||||
|
State and political subdivisions
|
96,570
|
-
|
96,570
|
-
|
||||||||||||
|
Mortgage-backed securities-residential
|
2,645
|
-
|
2,645
|
-
|
||||||||||||
|
Mortgage-backed securities-multi-family
|
16,410
|
-
|
16,410
|
-
|
||||||||||||
|
Corporate debt securities
|
1,550
|
1,550
|
-
|
-
|
||||||||||||
|
Securities available-for-sale
|
122,728
|
1,550
|
121,178
|
-
|
||||||||||||
|
Equity securities
|
253
|
253
|
-
|
-
|
||||||||||||
|
Total securities measured at fair value
|
$
|
122,981
|
$
|
1,803
|
$
|
121,178
|
$
|
-
|
||||||||
Certain investments that are actively traded and have quoted market prices have been classified as Level 1 valuations. Other available-for-sale investment securities have been valued by reference to prices for
similar securities or through model-based techniques in which all significant inputs are observable and, therefore, such valuations have been classified as Level 2.
In addition to disclosures of the fair value of assets on a recurring basis, FASB ASC Topic on “Fair Value Measurement” requires disclosures for assets and liabilities
measured at fair value on a nonrecurring basis, such as impaired assets, in the period in which a re-measurement at fair value is performed. Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records
nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Nonrecurring adjustments also include certain impairment amounts for
collateral-dependent loans calculated as required by the “Receivables –Loan Impairment” subtopic of the FASB ASC when establishing the allowance for credit losses. Impaired loans are those loans in which
the Company has measured impairment based on the fair value of the loan’s collateral or the discounted value of expected future cash flows. Fair value is generally determined based upon market value evaluations by third parties of the properties
and/or estimates by management of working capital collateral or discounted cash flows based upon expected proceeds. These appraisals may include up to three approaches to value: the sales comparison approach, the income approach (for
income-producing property), and the cost approach. Management modifies the appraised values, if needed, to take into account recent developments in the market or other factors, such as, changes in absorption rates or market conditions from the
time of valuation and anticipated sales values considering management’s plans for disposition. Such modifications to the appraised values could result in lower valuations of such collateral. Estimated costs to sell are based on current amounts of
disposal costs for similar assets. These measurements are classified as Level 3 within the valuation hierarchy. Impaired loans are subject to nonrecurring fair value adjustment upon initial recognition or subsequent impairment. A portion of the
allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance.
Fair values for foreclosed real estate are initially recorded based on market value evaluations by third parties, less costs to sell (“initial cost basis”). Any write-downs required when the related loan receivable
is exchanged for the underlying real estate collateral at the time of transfer to foreclosed real estate are charged to the allowance for loan losses. Values are derived from appraisals, similar to impaired loans, of underlying collateral or
discounted cash flow analysis. Subsequent to foreclosure, valuations are updated periodically and assets are marked to current fair value, not to exceed the initial cost basis. In the determination of fair value subsequent to foreclosure,
management also considers other factors or recent developments, such as, changes in absorption rates and market conditions from the time of valuation and anticipated sales values considering management’s plans for disposition. Either change could
result in adjustment to lower the property value estimates indicated in the appraisals. These measurements are classified as Level 3 within the fair value hierarchy.
|
Fair Value Measurements Using
|
||||||||||||||||||||||||
|
(In thousands)
|
Recorded
Investment
|
Related
Allowance
|
Fair Value
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||||||||
|
December 31, 2019
|
||||||||||||||||||||||||
|
Impaired loans
|
$
|
2,384
|
$
|
217
|
$
|
2,167
|
$
|
-
|
$
|
-
|
$
|
2,167
|
||||||||||||
|
Foreclosed real estate
|
303
|
-
|
303
|
-
|
-
|
303
|
||||||||||||||||||
|
June 30, 2019
|
||||||||||||||||||||||||
|
Impaired loans
|
$
|
2,335
|
$
|
262
|
$
|
2,073
|
$
|
-
|
$
|
-
|
$
|
2,073
|
||||||||||||
|
Foreclosed real estate
|
53
|
-
|
53
|
-
|
-
|
53
|
||||||||||||||||||
The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Level 3 inputs were utilized to determine fair value:
|
(Dollars in thousands)
|
Fair Value
|
Valuation Technique
|
Unobservable Input
|
Range
|
Weighted
Average
|
|||||||
|
December 31, 2019
|
||||||||||||
|
Impaired Loans
|
$
|
1,505
|
Appraisal of collateral(1)
|
Appraisal adjustments(2)
|
8.57%-33.73
|
%
|
27.81
|
%
|
||||
|
Liquidation expenses(3)
|
3.98%-7.03
|
%
|
4.83
|
%
|
||||||||
|
662
|
Discounted cash flow
|
Discount rate
|
4.19%-8.66
|
%
|
6.08
|
%
|
||||||
|
Foreclosed real estate
|
303
|
Appraisal of collateral(1)
|
Appraisal adjustments(2)
|
0.00-0.00
|
%
|
0.00
|
%
|
|||||
|
Liquidation expenses(3)
|
6.80
|
%
|
6.80
|
%
|
||||||||
|
June 30, 2019
|
||||||||||||
|
Impaired loans
|
$
|
1,403
|
Appraisal of collateral(1)
|
Appraisal adjustments(2)
|
0.00%-33.73
|
%
|
24.48
|
%
|
||||
|
Liquidation expenses(3)
|
3.98%-6.00
|
% |
4.53
|
% | ||||||||
|
670
|
Discounted cash flow
|
Discount rate
|
4.19%-8.66
|
% |
6.07
|
% |
||||||
|
Foreclosed real estate
|
53
|
Appraisal of collateral(1)
|
Appraisal adjustments(2)
|
0.00%-0.00
|
% |
0.00
|
% |
|||||
|
Liquidation expenses(3)
|
10.41
|
% |
10.41
|
%
|
||||||||
| (1) |
Fair value is generally determined through independent third-party appraisals of the underlying collateral, which generally includes various Level 3 inputs which are not observable.
|
| (2) |
Appraisals may be adjusted downwards by management for qualitative factors such as economic conditions. Higher downward adjustments are caused by negative changes to the collateral or conditions in the real estate market, actual
offers or sales contracts received or age of the appraisal.
|
| (3) |
Appraisals are adjusted downwards by management for qualitative factors such as the estimated costs to liquidate the collateral.
|
The carrying amounts reported in the statements of financial condition for cash and cash equivalents, accrued interest receivable and accrued interest payable approximate their fair values. Fair values of
securities are based on quoted market prices (Level 1), where available, or matrix pricing (Level 2), which is a mathematical technique, used widely in the industry to value debt securities without relying exclusively on quoted market prices for
the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. The carrying amount of Federal Home Loan Bank stock approximates fair value due to its restricted nature. The fair values for loans
are measured using the "exit price" notion which is a reasonable estimate of what another party might pay in an orderly transaction. Fair values for variable rate loans that reprice frequently, with no significant credit risk, are based on
carrying value. Fair value for fixed rate loans are estimated using discounted cash flows and interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values disclosed for demand and
savings deposits are equal to carrying amounts at the reporting date. The carrying amounts for variable rate money market deposits approximate fair values at the reporting date. Fair values for fixed rate certificates of deposit are estimated
using discounted cash flows and interest rates currently being offered in the market on similar certificates. Fair value for Federal Home Loan Bank long term borrowings are estimated using discounted cash flows and interest rates currently being
offered on similar borrowings. The carrying value of short-term Federal Home Loan Bank borrowings approximates its fair value.
The fair value of commitments to extend credit is estimated based on an analysis of the interest rates and fees currently charged to enter into similar transactions, considering the remaining terms of the
commitments and the credit-worthiness of the potential borrowers. At December 31, 2019 and June 30, 2019, the estimated fair values of these off-balance sheet financial instruments were immaterial, and are therefore excluded from the table
below.
The carrying amounts and estimated fair value of financial instruments are as follows:
|
(In thousands)
|
December 31, 2019
|
Fair Value Measurements Using
|
||||||||||||||||||
|
Carrying
Amount
|
Fair Value
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||||||
|
Cash and cash equivalents
|
$
|
34,542
|
$
|
34,542
|
$
|
34,542
|
$
|
-
|
$
|
-
|
||||||||||
|
Long term certificate of deposit
|
3,626
|
3,626
|
3,626
|
-
|
-
|
|||||||||||||||
|
Securities available-for-sale
|
192,999
|
192,999
|
4,539
|
188,460
|
-
|
|||||||||||||||
|
Securities held-to-maturity
|
331,989
|
343,896
|
-
|
343,896
|
-
|
|||||||||||||||
|
Equity securities
|
265
|
265
|
265
|
-
|
||||||||||||||||
|
Federal Home Loan Bank stock
|
3,554
|
3,554
|
-
|
3,554
|
-
|
|||||||||||||||
|
Net loans receivable
|
851,065
|
850,856
|
-
|
-
|
850,856
|
|||||||||||||||
|
Accrued interest receivable
|
6,810
|
6,810
|
-
|
6,810
|
-
|
|||||||||||||||
|
Deposits
|
1,244,658
|
1,244,901
|
-
|
1,244,901
|
-
|
|||||||||||||||
|
Borrowings from Federal Home Loan Bank
|
61,500
|
61,519
|
-
|
61,519
|
-
|
|||||||||||||||
|
Accrued interest payable
|
133
|
133
|
-
|
133
|
-
|
|||||||||||||||
|
(In thousands)
|
June 30, 2019
|
Fair Value Measurements Using
|
||||||||||||||||||
|
Carrying
Amount
|
Fair Value
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||||||
|
Cash and cash equivalents
|
$
|
29,538
|
$
|
29,538
|
$
|
29,538
|
$
|
-
|
$
|
-
|
||||||||||
|
Long term certificate of deposit
|
2,875
|
2,875
|
2,875
|
-
|
-
|
|||||||||||||||
|
Securities available-for-sale
|
122,728
|
122,728
|
1,550
|
121,178
|
-
|
|||||||||||||||
|
Securities held-to-maturity
|
304,208
|
313,613
|
-
|
313,613
|
-
|
|||||||||||||||
|
Equity Securities
|
253
|
253
|
253
|
-
|
-
|
|||||||||||||||
|
Federal Home Loan Bank stock
|
1,759
|
1,759
|
-
|
1,759
|
-
|
|||||||||||||||
|
Net loans receivable
|
785,738
|
781,614
|
-
|
-
|
781,614
|
|||||||||||||||
|
Accrued interest receivable
|
5,853
|
5,853
|
-
|
5,853
|
-
|
|||||||||||||||
|
Deposits
|
1,120,569
|
1,120,632
|
-
|
1,120,632
|
-
|
|||||||||||||||
|
Borrowings from Federal Home Loan Bank
|
21,600
|
21,534
|
-
|
21,534
|
-
|
|||||||||||||||
|
Accrued interest payable
|
110
|
110
|
-
|
110
|
-
|
|||||||||||||||
| (7) |
Earnings Per Share
|
Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed in a manner similar to that of
basic earnings per share except that the weighted-average number of common shares outstanding is increased to include the number of incremental common shares that would have been outstanding under the treasury stock method if all potentially
dilutive common shares (such as stock options) issued became vested during the period. There were no dilutive or anti-dilutive securities or contracts outstanding during the three and six months ended December 31, 2019 and 2018.
|
For the three months
ended December 31,
|
For the six months
ended December 31,
|
|||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
|||||||||||||
|
Net Income
|
$
|
5,113,000
|
$
|
4,584,000
|
$
|
9,976,000
|
$
|
8,964,000
|
||||||||
|
Weighted Average Shares – Basic
|
8,537,010
|
8,537,814
|
8,537,412
|
8,537,814
|
||||||||||||
|
Weighted Average Shares - Dilute
|
8,537,010
|
8,537,814
|
8,537,412
|
8,537,814
|
||||||||||||
|
Earnings per share - Basic
|
$
|
0.60
|
$
|
0.54
|
$
|
1.17
|
$
|
1.05
|
||||||||
|
Earnings per share - Diluted
|
$
|
0.60
|
$
|
0.54
|
$
|
1.17
|
$
|
1.05
|
||||||||
| (8) |
Dividends
|
On October 16, 2019, Greene County Bancorp, Inc. announced that its Board of Directors had approved a quarterly cash dividend of $0.11 per share on the Company’s common stock. The dividend reflects an annual cash
dividend rate of $0.44 per share which represents a 10.0% increase from the previous annual cash dividend rate of $0.40 per share. The dividend was payable to stockholders of record as of November 15, 2019, and was paid on November 29, 2019.
Greene County Bancorp, MHC did not waive its right to receive this dividend.
| (9) |
Impact of Recent Accounting Pronouncements
|
Accounting Pronouncements Recently Adopted
The following accounting standards have been adopted in the first quarter ended September 30, 2019:
On July 1, 2019, the Company adopted ASU 2016-02 Leases and all subsequent amendments (collectively, “ASU 2016-02”). The objective of this ASU is to increase transparency and comparability among organizations by
recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements to meet that objective. The main difference between previous GAAP and this ASU is the recognition of lease assets and
lease liabilities by lessees for those leases classified as operating leases under previous GAAP. Under this new guidance, a lessee should recognize in the statement of financial position a liability to make lease payments and a right-of-use
(“ROU”) asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP.
ASU 2016-02 required a modified retrospective transition approach, applying the new standard to all leases existing at the date of initial application. The Company elected to use the effective date, July 1, 2019, as our date of initial
application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before July 1, 2019. In addition, the Company elected the package of practical
expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. Under ASU 2016-02, leases are classified as finance or operating, with the
classification affecting the pattern and classification of expense recognition in the income statement. The Company’s leases, consisting of property leases for certain of our bank branches, are classified as operating leases. Operating lease ROU
assets and liabilities were recognized in the amount of $1.7 million at commencement date, with no adjustment to retained earnings, based on the present value of lease payments over the lease term. As these leases do not provide an implicit rate,
we use our incremental borrowing rate from the Federal Home Loan Bank of New York in determining the present value of lease payments. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will
exercise that option. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for lease payments is recognized on a straight-line basis over the lease term. ASU 2016-02 did not have a material impact
on the consolidated statements of income or the consolidated statements of cash flows.
On July 1, 2019, the Company adopted ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20) related to premium amortization on purchased callable debt securities. This Update shortens the
amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a
discount; the discount continues to be amortized to maturity. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early
adoption was permitted, including adoption in an interim period. If an entity early adopted the amendments in an interim period, any adjustments were reflected as of the beginning of the fiscal year that includes that interim period. An entity
should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The adoption of this guidance did not have a
material impact on our consolidated results of operations or financial position.
Accounting Pronouncements to be adopted in future periods
In June 2016, the FASB issued an Update (ASU 2016-13) to its guidance on “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 requires credit
losses on most financial assets measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected credit loss (CECL) model). Under this model, entities will estimate
credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications unless reasonable expectation of a troubled debt restructuring exists) from the date of initial
recognition of that instrument. The ASU also replaces the current accounting model for purchased credit impaired loans and debt securities. The allowance for credit losses for purchased financial assets with a more-than insignificant amount of
credit deterioration since origination (“PCD assets”), should be determined in a similar manner to other financial assets measured on an amortized cost basis. However, upon initial recognition, the allowance for credit losses is added to the
purchase price (“gross up approach”) to determine the initial amortized cost basis. The subsequent accounting for PCD financial assets is the same expected loss model described above. Further, the ASU made certain targeted amendments to the
existing impairment model for available-for-sale (AFS) debt securities. For an AFS debt security for which there is neither the intent nor a more-likely-than-not requirement to sell, an entity will record credit losses as an allowance rather than
a write-down of the amortized cost basis. An entity will apply the amendments in this Update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that
is, a modified-retrospective approach). In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which aligns the implementation date for nonpublic entities’ annual financial
statements with the implementation date for their interim financial statements and clarifies the scope of the guidance in the amendments in ASU 2016-13. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326,
Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. ASU 2019-04 clarifies or addresses stakeholders’ specific issues about certain aspects of the amendments in Update 2016-13 related to
measuring the allowance for loan losses under the new guidance. The effective dates and transition requirements for the amendments related to this Update are the same as the effective dates and transition requirements in Update 2016-13. In
November 2019, the FASB issued ASU 2019-11 Codification Improvements to Topic 326 Financial Instruments Credit Losses provides additional clarification to specific issues about certain aspects of the amendments in Update 2016-13 related to
measuring the allowance for loan losses under the new guidance. The Company is currently evaluating the potential impact on our consolidated results of operations or financial position. The initial adjustment will not be reported in earnings and
therefore will not have any material impact on our consolidated results of operations, but it is expected that it will have an impact on our consolidated financial position at the date of adoption of this Update. At this time, we have not
calculated the estimated impact that this Update will have on our Allowance for Loan Losses, however, we anticipate it will have a significant impact on the methodology process we utilize to calculate the allowance. A vendor has been selected
and alternative methodologies are currently being considered. Data requirements and integrity are being reviewed and enhancements incorporated into standard processes. For public business entities that are U.S. Securities and Exchange
Commission (SEC) filers, excluding small reporting companies such as the Company, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November
2019, FASB issued ASU 2019-10, Financial Instruments – Credit Losses which amends the implementation effective date for small reporting companies, such as the Company, and non-public business entities, for fiscal years beginning after December
15, 2022. All entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is in the early stages of evaluation and
implementation of the guidance.
In August 2018, the FASB issued an Update (ASU 2018-13) to its guidance on “Fair Value Measurement (Topic 820)”. This update modifies the disclosure requirements on fair value measurements. The following
disclosure requirements were removed from Topic 820: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (2) the policy for timing of transfers between levels; (3) the valuation processes for
Level 3 fair value measurements; and (4) for nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting period. The following
disclosure requirements were modified in Topic 820: (1) in lieu of a rollforward for Level 3 fair value measurements, a nonpublic entity is required to disclose transfers into and out of Level 3 of the fair value hierarchy and purchases and
issues of Level 3 assets and liabilities; (2) for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption
might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and (3) the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in
measurement as of the reporting date. The following disclosure requirements were added to Topic 820; however, the disclosures are not required for non-public entities: (1) the changes in unrealized gains and losses for the period included in
other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For
certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable
and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. In addition, the amendments eliminate at a minimum from the phrase “an entity shall disclose at a minimum” to promote the
appropriate exercise of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements. The
amendments in ASU No. 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted
average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in
the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. An entity is permitted to early adopt any removed or modified
disclosures upon issuance of ASU No. 2018-13 and delay adoption of the additional disclosures until their effective date. The adoption of this guidance is not expected to have a material impact on our consolidated results of operations or
financial position.
In August 2018, the FASB has issued an Update (ASU No. 2018-14), “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for
Defined Benefit Plans”, that applies to all employers that sponsor defined benefit pension or other postretirement plans. The amendments modify the disclosure requirements for employers that sponsor defined benefit pension or other
postretirement plans. The following disclosure requirements were removed from Subtopic 715-20: (1) the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal
year; (2) the amount and timing of plan assets expected to be returned to the employer; (3) the disclosures related to the June 2001 amendments to the Japanese Welfare Pension Insurance Law; related party disclosures about the amount of future
annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan; (4) for nonpublic entities, the reconciliation of the opening balances to the closing balances of plan
assets measured on a recurring basis in Level 3 of the fair value hierarchy. However, nonpublic entities will be required to disclose separately the amounts of transfers into and out of Level 3 of the fair value hierarchy and purchases of Level 3
plan assets; and (5) for public entities, the effects of a one-percentage-point change in assumed health care cost trend rates on the (a) aggregate of the service and interest cost components of net periodic benefit costs and (b) benefit
obligation for postretirement health care benefits. The following disclosure requirements were added to Subtopic 715-20: (1) the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting
rates; and (2) an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The amendments also clarify the disclosure requirements in paragraph 715-20-50-3, which state that the
following information for defined benefit pension plans should be disclosed: (1) the projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets; and (2) the accumulated benefit obligation (ABO)
and fair value of plan assets for plans with ABOs in excess of plan assets. ASU No. 2018-14 is effective for fiscal years ending after December 15, 2020, for public business entities and for fiscal years ending after December 15, 2021, for all
other entities. Early adoption is permitted for all entities. The adoption of this guidance is not expected to have a material impact on our consolidated results of operations or financial position.
In April 2019, the FASB issued an Update (ASU 2019-04), Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The
amendments to Topic 326 and other topics in this Update include items related to the amendments in Update 2016-13 discussed at the June 2018 and November 2018 Credit Losses TRG meetings. The amendments clarify or address stakeholders’ specific
issues about certain aspects of the amendments in Update 2016-13 on a number of different topics, including the following: Accrued Interest, Transfers between Classifications or Categories for Loans and Debt Securities, Recoveries, Consideration
of Prepayments in Determining the Effective Interest Rate, Consideration of Estimated Costs to Sell When Foreclosure Is Probable, Vintage Disclosures— Line-of-Credit Arrangements Converted to Term Loans, and Contractual Extensions and Renewals.
The ASU also covered a number of issues that related to hedge accounting including: Partial-Term Fair Value Hedges of Interest Rate Risk, Amortization of Fair Value Hedge Basis Adjustments, Disclosure of Fair Value Hedge Basis Adjustments,
Consideration of the Hedged Contractually Specified Interest Rate under the Hypothetical Derivative Method, Scoping for Not-for-Profit Entities, Hedge Accounting Provisions Applicable to Certain Private Companies and Not-for-Profit Entities,
Application of a First-Payments-Received Cash Flow Hedging Technique to Overall Cash Flows on a Group of Variable Interest Payments, and Transition Guidance For Codification Improvements specific to ASU 2016-01. The following topics were covered
within ASU 2019-04: Scope Clarifications, Held-to-Maturity Debt Securities Fair Value Disclosures, Applicability of Topic 820 to the Measurement Alternative, and Remeasurement of Equity Securities at Historical Exchange Rates. ASU 2019-04 has
various implementation dates dependent on a number of factors as it pertains to the above items. The Company is in the early stages of evaluation of the guidance.
| (10) |
Employee Benefit Plans
|
Defined Benefit Plan
The components of net periodic pension cost related to the defined benefit pension plan for the three and six months ended December 31, 2019 and 2018 were as follows:
|
Three months ended
December 31,
|
Six months ended
December 31,
|
|||||||||||||||
|
(In thousands)
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
|
Interest cost
|
$
|
49
|
$
|
54
|
$
|
98
|
$
|
108
|
||||||||
|
Expected return on plan assets
|
(63
|
)
|
(59
|
)
|
(126
|
)
|
(118
|
)
|
||||||||
|
Amortization of net loss
|
40
|
35
|
80
|
70
|
||||||||||||
|
Net periodic pension cost
|
$
|
26
|
$
|
30
|
$
|
52
|
$
|
60
|
||||||||
The Company does not anticipate that it will make any additional contributions to the defined benefit pension plan during fiscal 2020.
SERP
The Board of Directors of The Bank of Greene County adopted The Bank of Greene County Supplemental Executive Retirement Plan (the “SERP Plan”), effective as of July 1, 2010. The SERP Plan benefits certain key
senior executives of the Bank who have been selected by the Board to participate. The SERP Plan is intended to provide a benefit from the Bank upon retirement, death or disability or voluntary or involuntary termination of service (other than
“for cause”). The SERP Plan is more fully described in Note 10 of the consolidated financial statements as included in the Form 10-K and notes thereto for the year ended June 30, 2019.
The net periodic pension costs related to the SERP Plan for the three and six months ended December 31, 2019 were $214,000 and $419,000. The net periodic pension costs related to the SERP Plan for the three and
six months ended December 31, 2018 were $163,000 and $322,000, respectively, consisting primarily of service costs and interest costs. The total liability for the SERP Plan was $5.7 million and $5.0 million at
December 31, 2019 and June 30, 2019, respectively, and is included in accrued expenses and other liabilities. The total liability for the SERP Plan includes both accumulated net periodic pension costs and participant contributions.
| (11) |
Stock-Based Compensation
|
Phantom Stock Option Plan and Long-term Incentive Plan
The Greene County Bancorp, Inc. 2011 Phantom Stock Option and Long-term Incentive Plan (the “Plan”) was adopted effective July 1, 2011, to promote the long-term financial success of the Company and its subsidiaries
by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company’s shareholders. The Plan is intended to provide benefits to employees and directors of
the Company or any subsidiary as designated by the Compensation Committee of the Board of Directors of the Company (“Committee”). A phantom stock option represents the right to receive a cash payment on the date the award vests. The Plan is
more fully described in Note 11 of the consolidated financial statements and notes thereto for the year ended June 30, 2019.
A summary of the Company’s phantom stock option activity and related information for the Plan for the three and six months ended December 31, 2019 and 2018 is as follows:
1 Calculated net of deferred loan fees, loan discounts, and loans in process.
|
Three months ended December 31,
|
Six months ended December 31,
|
|||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
|||||||||||||
|
Number of options outstanding, beginning of period
|
2,319,300
|
1,742,100
|
1,711,600
|
1,634,160
|
||||||||||||
|
Options Granted
|
-
|
-
|
614,700
|
592,700
|
||||||||||||
|
Options Forfeited
|
-
|
-
|
(7,000
|
)
|
-
|
|||||||||||
|
Options Paid in Cash
|
(554,200
|
)
|
-
|
(554,200
|
)
|
(484,760
|
)
|
|||||||||
|
Number of options outstanding, end of period
|
1,765,100
|
1,742,100
|
1,765,100
|
1,742,100
|
||||||||||||
|
Three months ended December 31,
|
Six months ended December 31,
|
|||||||||||||||
|
(In thousands)
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
|
Cash paid out on options vested
|
$
|
2,516
|
$
|
-
|
$
|
2,516
|
$
|
1,704
|
||||||||
|
Compensation costs recognized
|
750
|
695
|
1,395
|
1,211
|
||||||||||||
The total liability for the Plan was $3.0 million and $4.1 million at December 31, 2019 and June 30, 2019, respectively, and is included in accrued expenses and other liabilities.
|
(12)
|
Accumulated Other Comprehensive Loss
|
The components of accumulated other comprehensive loss for the three and six months ended December 31, 2019 and 2018 are presented in the following table:
Activity for the three months ended December 31, 2019 and 2018
|
(In thousands)
|
Unrealized
gain (losses)
on securities
available-
for-sale
|
Pension
benefits
|
Total
|
|||||||||
|
Balance at September 30, 2018
|
$
|
(180
|
)
|
$
|
(1,633
|
)
|
$
|
(1,813
|
)
|
|||
|
Other comprehensive gain before reclassification
|
293
|
-
|
293
|
|||||||||
|
Other comprehensive gain for the three months ended December 31, 2018
|
293
|
-
|
293
|
|||||||||
|
Balance at December 31, 2018
|
$
|
113
|
$
|
(1,633
|
)
|
$
|
(1,520
|
)
|
||||
|
Balance at September 30, 2019
|
$
|
561
|
$
|
(1,838
|
)
|
$
|
(1,277
|
)
|
||||
|
Other comprehensive loss before reclassification
|
(114
|
)
|
-
|
(114
|
)
|
|||||||
|
Other comprehensive loss for the three months ended December 31, 2019
|
(114
|
)
|
-
|
(114
|
)
|
|||||||
|
Balance at December 31, 2019
|
$
|
447
|
$
|
(1,838
|
)
|
$
|
(1,391
|
)
|
||||
Activity for the six months ended December 31, 2019 and 2018
|
(In thousands)
|
Unrealized
gain (losses)
on securities
available-
for-sale
|
Pension
benefits
|
Total
|
|||||||||
|
Balance at June 30, 2018
|
$
|
10
|
$
|
(1,633
|
)
|
$
|
(1,623
|
)
|
||||
|
Other comprehensive income before reclassification
|
217
|
-
|
217
|
|||||||||
|
Other comprehensive income for the six months ended December 31, 2018
|
217
|
-
|
217
|
|||||||||
|
Reclassification for change in accounting(1)
|
(114
|
)
|
-
|
(114
|
)
|
|||||||
|
Balance at December 31, 2018
|
$
|
113
|
$
|
(1,633
|
)
|
$
|
(1,520
|
)
|
||||
|
Balance at June 30, 2019
|
$
|
832
|
$
|
(1,838
|
)
|
$
|
(1,006
|
)
|
||||
|
Other comprehensive loss before reclassification
|
(385
|
)
|
-
|
(385
|
)
|
|||||||
|
Other comprehensive income for the six months ended December 31, 2019
|
(385
|
)
|
-
|
(385
|
)
|
|||||||
|
Balance at December 31, 2019
|
$
|
447
|
$
|
(1,838
|
)
|
$
|
(1,391
|
)
|
||||
|
(1)
|
Adoption of ASU 2016-01 – cumulative effect of change in measurement of equity securities.
|
|
(13)
|
Revenue from Contracts with Customers
|
The majority of the Company's revenue-generating transactions are not subject to ASC Topic 606, including revenue generated from financial instruments, such as loans and investment securities which are presented
in our consolidated income statements as components of net interest income. All of the Company's revenue from contracts with customers in the scope of ASC 606 is recognized within non-interest income, with the exception of net gains and losses
from sales of foreclosed real estate, which is recognized within non-interest expense. The following table presents revenues subject to ASC 606 for the three and six months ended December 31, 2019 and 2018, respectively.
|
For the three months ended
December 31,
|
For the six months ended
December 31,
|
|||||||||||||||
|
(In thousands)
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
|
Service charges on deposit accounts
|
||||||||||||||||
|
Insufficient funds fees
|
$
|
1,003
|
$
|
996
|
$
|
2,021
|
$
|
1,926
|
||||||||
|
Deposit related fees
|
41
|
41
|
80
|
78
|
||||||||||||
|
ATM/point of sale fees
|
67
|
69
|
135
|
139
|
||||||||||||
|
Total service charges
|
1,111
|
1,106
|
2,236
|
2,143
|
||||||||||||
|
Interchange fee income
|
||||||||||||||||
|
Debit card interchange fees
|
755
|
685
|
1,498
|
1,325
|
||||||||||||
|
E-commerce fee income
|
||||||||||||||||
|
E-commerce fees
|
31
|
34
|
66
|
71
|
||||||||||||
|
Investment services income
|
||||||||||||||||
|
Investment services
|
168
|
136
|
313
|
251
|
||||||||||||
|
Sales of assets
|
||||||||||||||||
|
Net gain (loss) on sale of foreclosed real estate
|
-
|
-
|
76
|
(9
|
)
|
|||||||||||
Service Charges on Deposit Accounts: The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which included services
such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer's request. Account maintenance fees, which
relate primarily to monthly maintenance, are recognized at the time the maintenance occurs. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer's account
balance.
Debit Card Interchange Fee Income: The Company earns interchange fees from debit cardholder transactions conducted through the Visa DPS payment network. Interchange fees from cardholder transactions
represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to cardholder.
E-commerce income: The Company earns fees for merchant transaction processing services provided to its business customers by a third party service provider. The fees represent a percentage of the monthly
transaction activity net of related costs, and are received from the service provider on a monthly basis.
Investment Services Income: The Company earns fees from investment brokerage services provided to its customers by a third-party service provider. The Company receives commissions from the third-party
service provider on a monthly basis based upon customer activity for the month. The Company (i) acts as an agent in arranging the relationship between the customer and the third-party service provider and (ii) does not control the services
rendered to the customers. Investment brokerage fees are presented net of related costs.
Net Gains/Losses on Sales of Foreclosed Real Estate: The Company records a gain or loss from the sale of foreclosed real estate when control of the property transfers to the buyer, which generally occurs
at the time of an executed deed. When the Company finances the sale of foreclosed real estate to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the
transaction price is probable. Once these criteria are met, the foreclosed real estate asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on
the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.
|
(14)
|
Operating leases
|
The Company leases certain branch properties under long-term, operating lease agreements. The Company’s operating lease agreements contain lease components, which are generally accounted for separately. The
Company’s lease agreements do not contain any residual value guarantees. There were no significant rights and obligations of the Company for leases that have not commenced as of the reporting date. The following includes quantitative data
related to the Company’s operating leases as of December 31, 2019:
|
(In thousands, except weighted-average information).
|
||||
|
Operating Lease Amounts
|
December 31, 2019
|
|||
|
Right-of-use assets
|
$
|
1,701
|
||
|
Lease liabilities
|
$
|
1,707
|
||
|
Other Information:
|
||||
|
Operating outgoing cash flows from operating leases
|
$
|
155
|
||
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
$
|
1,840
|
||
|
Weighted-average remaining lease term (Years)
|
7.62
|
|||
|
Weighted-average discount rate
|
2.51
|
%
|
||
|
Three months ended
December 31,
|
Six months ended
December 31,
|
|||||||
|
(In thousands)
|
||||||||
|
Lease Costs
|
||||||||
|
Operating lease cost
|
$
|
70
|
$
|
142
|
||||
|
Variable lease cost
|
$
|
10
|
$
|
20
|
||||
The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding common area
maintenance charges and real estate taxes, as of December 31, 2019:
|
(in thousands)
|
||||
|
Within the twelve months ended December 31,
|
||||
|
2020
|
$
|
281
|
||
|
2021
|
283
|
|||
|
2022
|
226
|
|||
|
2023
|
208
|
|||
|
2024
|
218
|
|||
|
Thereafter
|
667
|
|||
|
Total undiscounted cash flow
|
1,883
|
|||
|
Less net present value adjustment
|
(176
|
)
|
||
|
Lease Liability
|
$
|
1,707
|
||
Right-of-use assets are included in prepaid expenses and other assets, and lease liabilities are included in accrued expenses and other liabilities within the Company’s statement of condition. The Company did not have any lease commitments
that had not yet commenced at December 31, 2019.
|
(15)
|
Subsequent events
|
On January 21, 2020, the Board of Directors declared a cash dividend for the quarter ended December 31, 2019 of $0.11 per share on Greene County Bancorp, Inc.’s common stock. The dividend reflects an annual cash
dividend rate of $0.44 per share, which was the same rate as the dividend declared during the previous quarter. The dividend will be payable to stockholders of record as of February 14, 2020, and will be paid on February 28, 2020. The MHC
intends to waive its receipt of this dividend.
Overview of the Company’s Activities and Risks
Greene County Bancorp, Inc.’s results of operations depend primarily on its net interest income, which is the difference between the income earned on Greene County Bancorp, Inc.’s loan and securities portfolios
and its cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by Greene County Bancorp, Inc.’s provision for loan losses, gains and losses from sales of securities, noninterest income
and noninterest expense. Noninterest income consists primarily of fees and service charges. Greene County Bancorp, Inc.’s noninterest expense consists principally of compensation and employee benefits, occupancy, equipment and data
processing, and other operating expenses. Results of operations are also significantly affected by general economic and competitive conditions, changes in interest rates, as well as government policies and actions of regulatory authorities.
Additionally, future changes in applicable law, regulations or government policies may materially affect Greene County Bancorp, Inc.
To operate successfully, the Company must manage various types of risk, including but not limited to, market or interest rate risk, credit risk, transaction risk, liquidity risk, security risk, strategic risk,
reputation risk and compliance risk. While all of these risks are important, the risks of greatest significance to the Company relate to market or interest rate risk and credit risk.
Market risk is the risk of loss from adverse changes in market prices and/or interest rates. Since net interest income (the difference between interest earned on loans and investments and interest paid on
deposits and borrowings) is the Company’s primary source of revenue, interest rate risk is the most significant non-credit related market risk to which the Company is exposed. Net interest income is affected by changes in interest rates as
well as fluctuations in the level and duration of the Company’s assets and liabilities.
Interest rate risk is the exposure of the Company’s net interest income to adverse movements in interest rates. In addition to directly impacting net interest income, changes in interest rates can also affect
the amount of new loan originations, the ability of borrowers and debt issuers to repay loans and debt securities, the volume of loan repayments and refinancings, and the flow and mix of deposits.
Credit risk is the risk to the Company’s earnings and shareholders’ equity that results from customers, to whom loans have been made and to the issuers of debt securities in which the Company has invested,
failing to repay their obligations. The magnitude of risk depends on the capacity and willingness of borrowers and debt issuers to repay and the sufficiency of the value of collateral obtained to secure the loans made or investments purchased.
Special Note Regarding Forward-Looking Statements
This quarterly report contains forward-looking statements. Greene County Bancorp, Inc. desires to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and is
including this statement for the express purpose of availing itself of the protections of the safe harbor with respect to all such forward-looking statements. These forward-looking statements, which are included in this Management’s Discussion
and Analysis and elsewhere in this quarterly report, describe future plans or strategies and include Greene County Bancorp, Inc.’s expectations of future financial results. The words “believe,” “expect,” “anticipate,” “project,” and similar
expressions identify forward-looking statements. Greene County Bancorp, Inc.’s ability to predict results or the effect of future plans or strategies or qualitative or quantitative changes based on market risk exposure is inherently
uncertain. Factors that could affect actual results include but are not limited to:
| (a) |
changes in general market interest rates,
|
| (b) |
general economic conditions, including unemployment rates and real estate values,
|
| (c) |
legislative and regulatory changes,
|
| (d) |
monetary and fiscal policies of the U.S. Treasury and the Federal Reserve,
|
| (e) |
changes in the quality or composition of The Bank of Greene County’s loan portfolio or the consolidated investment portfolios of The Bank of Greene County and Greene County Bancorp, Inc.,
|
| (f) |
deposit flows,
|
| (g) |
competition, and
|
| (h) |
demand for financial services in Greene County Bancorp, Inc.’s market area.
|
These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements, since results in future periods may differ materially from those
currently expected because of various risks and uncertainties.
Non-GAAP Financial Measures
Regulation G, a rule adopted by the Securities and Exchange Commission (SEC), applies to certain SEC filings, including earnings releases, made by registered companies that contain “non-GAAP financial measures.”
GAAP is generally accepted accounting principles in the United States of America. Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure,
certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure (if a comparable GAAP measure exists) and a statement of the Company’s reasons for utilizing the
non-GAAP financial measure as part of its financial disclosures. The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP. When these exempted measures are
included in public disclosures, supplemental information is not required. Financial institutions like the Company and its subsidiary banks are subject to an array of bank regulatory capital measures that are financial in nature but are not
based on GAAP and are not easily reconcilable to the closest comparable GAAP financial measures, even in those cases where a comparable measure exists. The Company follows industry practice in disclosing its financial condition under these
various regulatory capital measures in its periodic reports filed with the SEC, including period-end regulatory capital ratios for itself and its subsidiary banks, and does so without compliance with Regulation G, on the widely-shared
assumption that the SEC regards such non-GAAP measures to be exempt from Regulation G. The Company uses in this Report additional non-GAAP financial measures that are commonly utilized by financial institutions and have not been specifically
exempted by the SEC from Regulation G. The Company provides, as supplemental information, such non-GAAP measures included in this Report as described immediately below.
Tax-Equivalent Net Interest Income and Net Interest Margin: Net interest income, as a component of the tabular presentation by financial institutions of Selected Financial
Information regarding their recently completed operations, as well as disclosures based on that tabular presentation, is commonly presented on a tax-equivalent basis. That is, to the extent that some component of the institution's net interest
income, which is presented on a before-tax basis, is exempt from taxation (e.g., is received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is
added to the actual before-tax net interest income total. This adjustment is considered helpful in comparing one financial institution's net interest income to that of another institution or in analyzing any institution’s net interest income
trend line over time, to correct any analytical distortion that might otherwise arise from the fact that financial institutions vary widely in the proportions of their portfolios that are invested in tax-exempt securities, and that even a
single institution may significantly alter over time the proportion of its own portfolio that is invested in tax-exempt obligations. Moreover, net interest income is itself a component of a second financial measure commonly used by financial
institutions, net interest margin, which is the ratio of net interest income to average earning assets. For purposes of this measure as well, tax-equivalent net interest income is generally used by financial institutions, again to provide a
better basis of comparison from institution to institution and to better demonstrate a single institution’s performance over time. While we present net interest income and net interest margin utilizing GAAP measures (no tax-equivalent
adjustments) as a component of the tabular presentation within our disclosures, we do provide as supplemental information net interest income and net interest margin on a tax-equivalent basis.
Comparison of Financial Condition at December 31, 2019 and June 30, 2019
ASSETS
Total assets of the Company were $1.4 billion at December 31, 2019 and $1.3 billion at June 30, 2019, an increase of $174.5 million, or 13.8%. Securities available-for-sale and held-to-maturity amounted to
$525.0 million at December 31, 2019 as compared to $426.9 million at June 30, 2019, an increase of $98.1 million, or 23.0%. Net loans grew by $65.4 million, or 8.3%, to $851.1 million at December 31, 2019 as compared to $785.7 million at June
30, 2019.
CASH AND CASH EQUIVALENTS
Total cash and cash equivalents increased $5.0 million to $34.5 million at December 31, 2019 from $29.5 million at June 30, 2019. The level of cash and cash equivalents is a function of the daily account
clearing needs and deposit levels as well as activities associated with securities transactions and loan funding. All of these items can cause cash levels to fluctuate significantly on a daily basis.
SECURITIES
Securities available-for-sale and held-to-maturity increased $98.1 million, or 23.0%, to $525.0 million at December 31, 2019 as compared to $426.9 million at June 30, 2019. Securities purchases totaled $184.3
million during the six months ended December 31, 2019 and consisted of $132.5 million of state and political subdivision securities and $41.0 million of mortgage-backed securities, $7.3 million of other securities, and $3.5 million of corporate
securities. Principal pay-downs and maturities during the six months amounted to $85.4 million, of which $18.0 million were mortgage-backed securities, $58.5 million were state and political subdivision securities, $8.3 million were U.S.
government sponsored enterprises and $0.6 million were other securities. At December 31, 2019, 61.4% of our securities portfolio consisted of state and political subdivision securities to take advantage of tax savings and to promote Greene
County Bancorp, Inc.’s participation in the communities in which it operates. Mortgage-backed securities and asset-backed securities held within the portfolio do not contain sub-prime loans and are not exposed to the credit risk associated with
such lending.
|
December 31, 2019
|
June 30, 2019
|
|||||||||||||||
|
(Dollars in thousands)
|
Balance
|
Percentage of
portfolio
|
Balance
|
Percentage of
portfolio
|
||||||||||||
|
Securities available-for-sale:
|
||||||||||||||||
|
U.S. government sponsored enterprises
|
$
|
4,530
|
0.9
|
%
|
$
|
5,553
|
1.3
|
%
|
||||||||
|
State and political subdivisions
|
148,332
|
28.2
|
96,570
|
22.6
|
||||||||||||
|
Mortgage-backed securities-residential
|
10,316
|
2.0
|
2,645
|
0.6
|
||||||||||||
|
Mortgage-backed securities-multifamily
|
25,282
|
4.8
|
16,410
|
3.8
|
||||||||||||
|
Corporate debt securities
|
4,539
|
0.9
|
1,550
|
0.4
|
||||||||||||
|
Total securities available-for-sale
|
192,999
|
36.8
|
122,728
|
28.7
|
||||||||||||
|
Securities held-to-maturity:
|
||||||||||||||||
|
U.S. government sponsored enterprises
|
2,000
|
0.4
|
9,249
|
2.2
|
||||||||||||
|
State and political subdivisions
|
174,165
|
33.2
|
152,358
|
35.7
|
||||||||||||
|
Mortgage-backed securities-residential
|
11,302
|
2.1
|
4,570
|
1.1
|
||||||||||||
|
Mortgage-backed securities-multifamily
|
137,193
|
26.1
|
134,970
|
31.6
|
||||||||||||
|
Corporate debt securities
|
1,993
|
0.4
|
1,478
|
0.3
|
||||||||||||
|
Other securities
|
5,336
|
1.0
|
1,583
|
0.4
|
||||||||||||
|
Total securities held-to-maturity
|
331,989
|
63.2
|
304,208
|
71.3
|
||||||||||||
|
Total securities
|
$
|
524,988
|
100.0
|
%
|
$
|
426,936
|
100.0
|
%
|
||||||||
LOANS
Net loans receivable increased $65.4 million, or 8.3%, to $851.1 million at December 31, 2019 from $785.7 million at June 30, 2019. The loan growth experienced during the six months consisted primarily of $20.3
million in commercial construction loans, $30.8 million in commercial real estate loans, $10.7 million in commercial loans, $2.1 million in residential mortgages, $1.2 million in multi-family loans and $1.2 million in residential construction
and land loans. This growth was partially offset by a $441,000 decrease in home equity loans, and $784,000 increase in allowance for loan losses. We believe that the continued low interest rate environment and strong customer satisfaction
from personal service continued to enhance loan growth. If long term rates begin to rise, the Company anticipates some slowdown in new loan demand as well as refinancing activities. The Bank of Greene County continues to use a conservative
underwriting policy in regard to all loan originations, and does not engage in sub-prime lending or other exotic loan products. A significant decline in home values, however, in the Company’s markets could have a negative effect on the
consolidated results of operations, as any such decline in home values would likely lead to a decrease in residential real estate loans and new home equity loan originations and increased delinquencies and defaults in both the consumer home
equity loan and the residential real estate loan portfolios and result in increased losses in these portfolios. Updated appraisals are obtained on loans when there is a reason to believe that there has been a change in the borrower’s ability
to repay the loan principal and interest, generally, when a loan is in a delinquent status. Additionally, if an existing loan is to be modified or refinanced, generally, an appraisal is ordered to ensure continued collateral adequacy.
|
(Dollars in thousands)
|
December 31, 2019
|
June 30, 2019
|
||||||||||||||
|
Balance
|
Percentage of
Portfolio
|
Balance
|
Percentage of
Portfolio
|
|||||||||||||
|
Residential real estate
|
$
|
269,925
|
31.2
|
%
|
$
|
267,802
|
33.6
|
%
|
||||||||
|
Residential construction and land
|
8,667
|
1.0
|
7,462
|
0.9
|
||||||||||||
|
Multi-family
|
25,789
|
3.0
|
24,592
|
3.1
|
||||||||||||
|
Commercial real estate
|
360,424
|
41.7
|
329,668
|
41.3
|
||||||||||||
|
Commercial construction
|
56,648
|
6.6
|
36,361
|
4.5
|
||||||||||||
|
Home equity
|
22,744
|
2.6
|
23,185
|
2.9
|
||||||||||||
|
Consumer installment
|
5,769
|
0.7
|
5,481
|
0.7
|
||||||||||||
|
Commercial loans
|
114,220
|
13.2
|
103,554
|
13.0
|
||||||||||||
|
Total gross loans
|
864,186
|
100.0
|
%
|
798,105
|
100.0
|
%
|
||||||||||
|
Allowance for loan losses
|
(13,984
|
)
|
(13,200
|
)
|
||||||||||||
|
Deferred fees and costs
|
863
|
833
|
||||||||||||||
|
Total net loans
|
$
|
851,065
|
$
|
785,738
|
||||||||||||
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established through a provision for loan losses based on management’s evaluation of the risk inherent in the loan portfolio, the composition of the loan portfolio, specific
impaired loans and current economic conditions. Such evaluation, which includes a review of certain identified loans on which full collectability may not be reasonably assured, considers among other matters, the estimated net realizable value
or the fair value of the underlying collateral, economic conditions, payment status of the loan, historical loan loss experience and other factors that warrant recognition in providing for an allowance for loan loss. In addition, various
regulatory agencies, as an integral part of their examination process, periodically review The Bank of Greene County’s allowance for loan losses. Such agencies may require The Bank of Greene County to recognize additions to the allowance based
on their judgment about information available to them at the time of their examination. The Bank of Greene County considers smaller balance residential mortgages, home equity loans and installment loans to customers as small, homogeneous
loans, which are evaluated for impairment collectively based on historical loss experience. Larger balance residential and commercial mortgage and business loans are viewed individually and considered impaired if it is probable that The Bank
of Greene County will not be able to collect scheduled payments of principal and interest when due, according to the contractual terms of the loan agreements. The measurement of impaired loans is generally based on the fair value of the
underlying collateral. The Bank of Greene County charges loans off against the allowance for loan losses when it becomes evident that a loan cannot be collected within a reasonable amount of time or that it will cost the Bank more than it will
receive, and all possible avenues of repayment have been analyzed, including the potential of future cash flow, the value of the underlying collateral, and strength of any guarantors or co-borrowers. Generally, consumer loans and smaller
business loans (not secured by real estate) in excess of 90 days are charged-off against the allowance for loan losses, unless equitable arrangements are made. For loans secured by real estate, a charge-off is recorded when it is determined
that the collection of all or a portion of a loan may not be collected and the amount of that loss can be reasonably estimated. The allowance for loan losses is increased by a provision for loan losses (which results in a charge to expense) and
recoveries of loans previously charged off and is reduced by charge-offs.
Analysis of allowance for loan losses activity
|
At or for the six months ended
December 31,
|
||||||||
|
(Dollars in thousands)
|
2019
|
2018
|
||||||
|
Balance at the beginning of the period
|
$
|
13,200
|
$
|
12,024
|
||||
|
Charge-offs:
|
||||||||
|
Residential real estate
|
101
|
96
|
||||||
|
Consumer installment
|
248
|
188
|
||||||
|
Commercial loans
|
204
|
-
|
||||||
|
Total loans charged off
|
553
|
284
|
||||||
|
Recoveries:
|
||||||||
|
Residential real estate mortgages
|
10
|
13
|
||||||
|
Consumer installment
|
50
|
59
|
||||||
|
Commercial loans
|
36
|
153
|
||||||
|
Total recoveries
|
96
|
225
|
||||||
|
Net charge-offs
|
457
|
59
|
||||||
|
Provisions charged to operations
|
1,241
|
708
|
||||||
|
Balance at the end of the period
|
$
|
13,984
|
$
|
12,673
|
||||
|
Net charge-offs to average loans outstanding (annualized)
|
0.11
|
%
|
0.02
|
%
|
||||
|
Net charge-offs to nonperforming assets (annualized)
|
24.83
|
%
|
3.20
|
%
|
||||
|
Allowance for loan losses to nonperforming loans
|
413.85
|
%
|
350.66
|
%
|
||||
|
Allowance for loan losses to total loans receivable
|
1.62
|
%
|
1.66
|
%
|
||||
Nonaccrual Loans and Nonperforming Assets
Loans are reviewed on a regular basis to assess collectability of all principal and interest payments due. Management determines that a loan is impaired or nonperforming when it is probable at least a portion of
the principal or interest will not be collected in accordance with contractual terms of the note. When a loan is determined to be impaired, the measurement of the loan is based on present value of estimated future cash flows, except that all
collateral-dependent loans are measured for impairment based on the fair value of the collateral.
Generally, management places loans on nonaccrual status once the loans have become 90 days or more delinquent or sooner if there is a significant reason for management to believe the collectability is
questionable and, therefore, interest on the loan will no longer be recognized on an accrual basis. The Company identifies impaired loans and measures the impairment in accordance with FASB ASC subtopic “Receivables
– Loan Impairment.” Management may consider a loan impaired once it is classified as nonaccrual and when it is probable that the borrower will be unable to repay the loan according to the original contractual terms of the loan
agreement or the loan is restructured in a troubled debt restructuring. It should be noted that management does not evaluate all loans individually for impairment. Generally, The Bank of Greene County considers residential mortgages, home
equity loans and installment loans as small, homogeneous loans, which are evaluated for impairment collectively based on historical loan experience and other factors. In contrast, large commercial mortgage, construction, multi-family, business
loans and select larger balance residential mortgage loans are viewed individually and considered impaired if it is probable that The Bank of Greene County will not be able to collect scheduled payments of principal and interest when due,
according to the contractual terms of the loan agreement. The measurement of impaired loans is generally based on the fair value of the underlying collateral. The majority of The Bank of Greene County loans, including most nonaccrual loans,
are small homogenous loan types adequately supported by collateral. Management considers the payment status of loans in the process of evaluating the adequacy of the allowance for loan losses among other factors. Based on this evaluation, a
delinquent loan’s risk rating may be downgraded to either pass-watch, special mention, or substandard, and the allocation of the allowance for loan loss is based upon the risk associated with such designation. A loan does not have to be 90 days
delinquent in order to be classified as nonperforming. Foreclosed real estate is considered to be a nonperforming asset.
Analysis of Nonaccrual Loans and Nonperforming Assets
|
(Dollars in thousands)
|
December 31,
2019
|
June 30,
2019
|
||||||
|
Nonaccruing loans:
|
||||||||
|
Residential real estate
|
$
|
1,691
|
$
|
2,474
|
||||
|
Multi-family
|
131
|
-
|
||||||
|
Commercial real estate
|
984
|
598
|
||||||
|
Home equity
|
311
|
452
|
||||||
|
Consumer installment
|
-
|
6
|
||||||
|
Commercial
|
262
|
108
|
||||||
|
Total nonaccruing loans
|
3,379
|
3,638
|
||||||
|
90 days & accruing
|
||||||||
|
Residential real estate
|
-
|
-
|
||||||
|
Total 90 days & accruing
|
-
|
-
|
||||||
|
Total nonperforming loans
|
3,379
|
3,638
|
||||||
|
Foreclosed real estate:
|
||||||||
|
Residential real estate
|
303
|
53
|
||||||
|
Total foreclosed real estate
|
303
|
53
|
||||||
|
Total nonperforming assets
|
$
|
3,682
|
$
|
3,691
|
||||
|
Troubled debt restructuring:
|
||||||||
|
Nonperforming (included above)
|
$
|
326
|
$
|
531
|
||||
|
Performing (accruing and excluded above)
|
1,047
|
1,368
|
||||||
|
Total nonperforming assets as a percentage of total assets
|
0.25
|
%
|
0.29
|
%
|
||||
|
Total nonperforming loans to net loans
|
0.40
|
%
|
0.46
|
%
|
||||
The table below details additional information related to nonaccrual loans for the three and six months ended December 31:
|
For the three months
ended December 31,
|
For the six months
ended December 31
|
|||||||||||||||
|
(In thousands)
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
|
Interest income that would have been recorded if loans had been performing in accordance with original terms
|
$
|
53
|
$
|
58
|
$
|
154
|
$
|
129
|
||||||||
|
Interest income that was recorded on nonaccrual loans
|
42
|
23
|
92
|
55
|
||||||||||||
Nonperforming assets amounted to $3.7 million at December 31, 2019 and June 30, 2019. Nonaccrual loans consisted primarily of loans secured by real estate at December 31, 2019 and June 30, 2019. Loans on
nonaccrual status totaled $3.4 million at December 31, 2019 of which $1.1 million were in the process of foreclosure. At December 31, 2019, there were 10 residential loans in the process of foreclosure totaling $801,000. Included in nonaccrual
loans were $1.2 million of loans which were less than 90 days past due at December 31, 2019, but have a recent history of delinquency greater than 90 days past due. These loans will be returned to accrual status once they have demonstrated a
history of timely payments. Included in total loans past due were $151,000 of loans which were making payments pursuant to forbearance agreements. Under the forbearance agreements, the customers have made arrangements with the Bank to bring
the loans current over a specified period of time (resulting in an insignificant delay in repayment). During this term of the forbearance agreement, the Bank has agreed not to continue foreclosure proceedings. Loans on nonaccrual status
totaled $3.6 million at June 30, 2019 of which $1.6 million were in the process of foreclosure. At June 30, 2019, there were 12 residential loans in the process of foreclosure totaling $1.5 million. Included in nonaccrual loans were $1.8
million of loans which were less than 90 days past due at June 30, 2019, but have a recent history of delinquency greater than 90 days past due.
Impaired Loans
The Company identifies impaired loans and measures the impairment in accordance with FASB ASC subtopic “Receivables – Loan Impairment”. A loan is considered impaired when
it is probable that the borrower will be unable to repay the loan according to the original contractual terms of the loan agreement or the loan is restructured in a troubled debt restructuring.
The table below details additional information on impaired loans at December 31, 2019 and June 30, 2019:
|
(In thousands)
|
December 31, 2019
|
June 30, 2019
|
||||||
|
Balance of impaired loans, with a valuation allowance
|
$
|
2,183
|
$
|
2,000
|
||||
|
Allowances relating to impaired loans included in allowance for loan losses
|
217
|
262
|
||||||
|
Balance of impaired loans, without a valuation allowance
|
1,208
|
1,894
|
||||||
|
Total impaired loans
|
3,391
|
3,894
|
||||||
|
For the three months
ended December 31,
|
For the six months
ended December 31,
|
|||||||||||||||
|
(In thousands)
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
|
Average balance of impaired loans for the periods ended
|
$
|
3,272
|
$
|
3,920
|
$
|
3,150
|
$
|
3,938
|
||||||||
|
Interest income recorded on impaired loans during the periods ended
|
41
|
25
|
108
|
63
|
||||||||||||
DEPOSITS
Deposits totaled $1.2 billion at December 31, 2019 and $1.1 billion at June 30, 2019, an increase of $124.1 million, or 11.1%. Noninterest-bearing deposits increased $2.6 million, or 2.4%, NOW deposits increased
$123.1 million, or 19.0%, and savings deposits increased $2.3 million, or 1.1% when comparing December 31, 2019 and June 30, 2019. These increases were offset by a decrease in money market deposits of $3.4 million, or 3.0%, and a decrease in
certificates of deposits of $564,000, or 1.5%, when comparing December 31, 2019 and June 30, 2019.
|
(In thousands)
|
December 31, 2019
|
Percentage
of Portfolio
|
June 30, 2019
|
Percentage
of Portfolio
|
||||||||||||
|
Noninterest-bearing deposits
|
$
|
110,100
|
8.8
|
%
|
$
|
107,469
|
9.6
|
%
|
||||||||
|
Certificates of deposit
|
35,978
|
2.9
|
36,542
|
3.3
|
||||||||||||
|
Savings deposits
|
216,966
|
17.4
|
214,680
|
19.2
|
||||||||||||
|
Money market deposits
|
111,500
|
9.0
|
114,915
|
10.2
|
||||||||||||
|
NOW deposits
|
770,114
|
61.9
|
646,963
|
57.7
|
||||||||||||
|
Total deposits
|
$
|
1,244,658
|
100.0
|
%
|
$
|
1,120,569
|
100.0
|
%
|
||||||||
BORROWINGS
At December 31, 2019, The Bank of Greene County had pledged approximately $312.5 million of its residential and commercial mortgage portfolio as collateral for borrowing and irrevocable stand-by letters of credit
at the Federal Home Loan Bank of New York (“FHLB”). The maximum amount of funding available from the FHLB was $232.1 million at December 31, 2019, of which $12.6 million in borrowings and $75.6 million in irrevocable stand-by letters of credit
were outstanding at December 31, 2019. There were $48.9 million of short-term or overnight borrowings outstanding at December 31, 2019. The $12.6 million consisted of long-term fixed rate advances with a weighted average rate of 1.68% and a
weighted average maturity of 13 months. The $75.6 million of irrevocable stand-by letters of credit with the FHLB have been issued to secure municipal transactional deposit accounts, on behalf of Greene County Commercial Bank.
The Bank of Greene County also pledges securities and certificates of deposit as collateral at the Federal Reserve Bank discount window for overnight borrowings. At December 31, 2019, approximately $5.3 million
of collateral consisting of $4.5 million in securities and $752,000 of certificates of deposit, was available to be pledged against potential borrowings at the Federal Reserve Bank discount window. There were no balances outstanding with the
Federal Reserve Bank at December 31, 2019 or June 30, 2019.
The Bank of Greene County has established unsecured lines of credit with Atlantic Central Bankers Bank for $10.0 million and two other financial institutions for $40.0
million. Greene County Bancorp, Inc. has also established an unsecured line of credit with Atlantic Central Bankers Bank for $7.5 million. The lines of credit provide for overnight borrowing and the interest rate is determined at the time of
the borrowing. At December 31, 2019 and June 30, 2019, there were no balances outstanding on any of these lines of credit.
Scheduled maturities of long-term borrowings at December 31, 2019 were as follows:
|
(In thousands)
|
||||
|
Within the twelve months ended December 31,
|
||||
|
2020
|
$
|
6,500
|
||
|
2021
|
2,950
|
|||
|
2022
|
3,150
|
|||
|
$
|
12,600
|
|||
EQUITY
Shareholders’ equity increased to $120.5 million at December 31, 2019 from $112.4 million at June 30, 2019, resulting primarily from net income of $10.0 million and a decrease in other accumulated comprehensive
loss of $385,000, partially offset by dividends declared and paid of $1.4 million.
On September 17, 2019, the Board of Directors of the Company adopted a stock repurchase program. Under the repurchase program, the Company may repurchase up to 200,000 shares of its common stock. Repurchases
will be made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of
the stock, alternative uses for capital, and the Company’s financial performance. At December 31, 2019, the Company had repurchased 1,400 shares.
Selected Equity Data:
|
December 31, 2019
|
June 30, 2019
|
|||||||
|
Shareholders’ equity to total assets, at end of period
|
8.35
|
%
|
8.85
|
%
|
||||
|
Book value per share
|
$
|
14.12
|
$
|
13.16
|
||||
|
Closing market price of common stock
|
$
|
28.79
|
$
|
29.42
|
||||
|
For the six months ended December 31,
|
||||||||
|
2019
|
2018
|
|||||||
|
Average shareholders’ equity to average assets
|
8.52
|
%
|
8.60
|
%
|
||||
|
Dividend payout ratio1
|
18.80
|
%
|
19.05
|
%
|
||||
|
Actual dividends paid to net income2
|
13.79
|
%
|
13.96
|
%
|
||||
1The dividend payout ratio has been calculated based on the dividends declared per share divided by basic earnings per share. No adjustments have been made for dividends waived by Greene County
Bancorp, MHC (“MHC”), the owner of 54.0% of the Company’s shares outstanding.
2 Dividends declared divided by net income. The MHC waived its right to receive dividends declared during the three months ended September 30, 2019. Dividends declared during the three months ended
December 31, 2019 were paid to the MHC. Dividends declared during the three months ended September 30, 2018 were paid to the MHC. The MHC waived its right to receive dividends during the three months ended December 31, 2018. 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.
Comparison of Operating Results for the Three and Six Months Ended December 31, 2019 and 2018
Average Balance Sheet
The following table sets forth certain information relating to Greene County Bancorp, Inc. for the three and six months ended December 31, 2019 and 2018. For the periods indicated, the total dollar amount of
interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, are expressed both in dollars and rates. No tax equivalent adjustments were made. Average
balances were based on daily averages. Average loan balances include nonperforming loans. The loan yields include net amortization of certain deferred fees and costs that are considered adjustments to yields.
|
Three months ended December 31,
|
||||||||||||||||||||||||
|
2019
|
2018
|
|||||||||||||||||||||||
|
(Dollars in thousands)
|
Average
Outstanding
Balance
|
Interest
Earned
/ Paid
|
Average
Yield
/ Rate
|
Average
Outstanding
Balance
|
Interest
Earned
/ Paid
|
Average
Yield /
Rate
|
||||||||||||||||||
|
Interest-earning Assets:
|
||||||||||||||||||||||||
|
Loans receivable, net1
|
$
|
841,604
|
$
|
9,801
|
4.66
|
%
|
$
|
750,182
|
$
|
8,696
|
4.64
|
%
|
||||||||||||
|
Securities2
|
516,840
|
3,166
|
2.45
|
393,525
|
2,624
|
2.67
|
||||||||||||||||||
|
Interest-bearing bank balances and federal funds
|
43,559
|
207
|
1.90
|
5,111
|
28
|
2.19
|
||||||||||||||||||
|
FHLB stock
|
1,619
|
23
|
5.68
|
1,950
|
58
|
11.90
|
||||||||||||||||||
|
Total interest-earning assets
|
1,403,622
|
13,197
|
3.76
|
%
|
1,150,768
|
11,406
|
3.96
|
%
|
||||||||||||||||
|
Cash and due from banks
|
10,328
|
9,633
|
||||||||||||||||||||||
|
Allowance for loan losses
|
(13,525
|
)
|
(12,452
|
)
|
||||||||||||||||||||
|
Other noninterest-earning assets
|
23,445
|
20,186
|
||||||||||||||||||||||
|
Total assets
|
$
|
1,423,870
|
$
|
1,168,135
|
||||||||||||||||||||
|
Interest-Bearing Liabilities:
|
||||||||||||||||||||||||
|
Savings and money market deposits
|
$
|
318,522
|
$
|
323
|
0.41
|
%
|
$
|
325,726
|
$
|
295
|
0.36
|
%
|
||||||||||||
|
NOW deposits
|
808,219
|
1,760
|
0.87
|
554,996
|
832
|
0.60
|
||||||||||||||||||
|
Certificates of deposit
|
36,374
|
122
|
1.34
|
45,335
|
144
|
1.27
|
||||||||||||||||||
|
Borrowings
|
18,485
|
81
|
1.75
|
27,171
|
140
|
2.06
|
||||||||||||||||||
|
Total interest-bearing liabilities
|
1,181,600
|
2,286
|
0.77
|
%
|
953,228
|
1,411
|
0.59
|
%
|
||||||||||||||||
|
Noninterest-bearing deposits
|
108,256
|
102,467
|
||||||||||||||||||||||
|
Other noninterest-bearing liabilities
|
15,760
|
10,744
|
||||||||||||||||||||||
|
Shareholders' equity
|
118,254
|
101,696
|
||||||||||||||||||||||
|
Total liabilities and equity
|
$
|
1,423,870
|
$
|
1,168,135
|
||||||||||||||||||||
|
Net interest income
|
$
|
10,911
|
$
|
9,995
|
||||||||||||||||||||
|
Net interest rate spread
|
2.99
|
%
|
3.37
|
%
|
||||||||||||||||||||
|
Net earnings assets
|
$
|
222,022
|
$
|
197,540
|
||||||||||||||||||||
|
Net interest margin
|
3.11
|
%
|
3.47
|
%
|
||||||||||||||||||||
|
Average interest-earning assets to average interest-bearing liabilities
|
118.79
|
%
|
120.72
|
%
|
||||||||||||||||||||
1Calculated net of deferred loan fees and costs, loan discounts, and loans in process.
2Includes tax-free securities, mortgage-backed securities, and asset-backed securities.
|
Taxable-equivalent net interest income and net interest margin
|
For the three months ended
December 31,
|
|||||||
|
(Dollars in thousands)
|
2019
|
2018
|
||||||
|
Net interest income (GAAP)
|
$
|
10,911
|
$
|
9,995
|
||||
|
Tax-equivalent adjustment(1)
|
627
|
493
|
||||||
|
Net interest income (fully taxable-equivalent)
|
$
|
11,538
|
$
|
10,488
|
||||
|
Average interest-earning assets
|
$
|
1,403,622
|
$
|
1,150,768
|
||||
|
Net interest margin (fully taxable-equivalent)
|
3.29
|
%
|
3.65
|
%
|
||||
1Net 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. The rate used for this adjustment was 21% for federal income taxes and 3.98% for New York State income taxes for the periods ended December 31, 2019 and
2018.
|
Six months ended December 31,
|
||||||||||||||||||||||||
|
2019
|
2018
|
|||||||||||||||||||||||
|
(Dollars in thousands)
|
Average
Outstanding
Balance
|
Interest
Earned
/ Paid
|
Average
Yield
/ Rate
|
Average
Outstanding
Balance
|
Interest
Earned
/ Paid
|
Average
Yield /
Rate
|
||||||||||||||||||
|
Interest-earning Assets:
|
||||||||||||||||||||||||
|
Loans receivable, net1
|
$
|
823,051
|
$
|
19,206
|
4.67
|
%
|
$
|
737,662
|
$
|
16,994
|
4.61
|
%
|
||||||||||||
|
Securities2
|
479,199
|
6,148
|
2.57
|
396,196
|
5,264
|
2.66
|
||||||||||||||||||
|
Interest-bearing bank balances and federal funds
|
41,533
|
405
|
1.95
|
5,945
|
59
|
1.98
|
||||||||||||||||||
|
FHLB stock
|
1,512
|
46
|
6.08
|
2,631
|
86
|
6.54
|
||||||||||||||||||
|
Total interest-earning assets
|
1,345,295
|
25,805
|
3.84
|
%
|
1,142,434
|
22,403
|
3.92
|
%
|
||||||||||||||||
|
Cash and due from banks
|
10,532
|
9,629
|
||||||||||||||||||||||
|
Allowance for loan losses
|
(13,377
|
)
|
(12,284
|
)
|
||||||||||||||||||||
|
Other noninterest-earning assets
|
22,547
|
19,671
|
||||||||||||||||||||||
|
Total assets
|
$
|
1,364,997
|
$
|
1,159,450
|
||||||||||||||||||||
|
Interest-Bearing Liabilities:
|
||||||||||||||||||||||||
|
Savings and money market deposits
|
$
|
324,109
|
$
|
664
|
0.41
|
%
|
$
|
334,362
|
$
|
588
|
0.35
|
%
|
||||||||||||
|
NOW deposits
|
748,421
|
3,346
|
0.89
|
527,348
|
1,473
|
0.56
|
||||||||||||||||||
|
Certificates of deposit
|
36,679
|
245
|
1.34
|
42,453
|
246
|
1.16
|
||||||||||||||||||
|
Borrowings
|
16,110
|
139
|
1.73
|
42,298
|
444
|
2.10
|
||||||||||||||||||
|
Total interest-bearing liabilities
|
1,125,319
|
4,394
|
0.78
|
%
|
946,461
|
2,751
|
0.58
|
%
|
||||||||||||||||
|
Noninterest-bearing deposits
|
107,465
|
102,341
|
||||||||||||||||||||||
|
Other noninterest-bearing liabilities
|
15,917
|
10,915
|
||||||||||||||||||||||
|
Shareholders' equity
|
116,296
|
99,733
|
||||||||||||||||||||||
|
Total liabilities and equity
|
$
|
1,364,997
|
$
|
1,159,450
|
||||||||||||||||||||
|
Net interest income
|
$
|
21,411
|
$
|
19,652
|
||||||||||||||||||||
|
Net interest rate spread
|
3.06
|
%
|
3.34
|
%
|
||||||||||||||||||||
|
Net earnings assets
|
$
|
219,976
|
$
|
195,973
|
||||||||||||||||||||
|
Net interest margin
|
3.18
|
%
|
3.44
|
%
|
||||||||||||||||||||
|
Average interest-earning assets to average interest-bearing liabilities
|
119.55
|
%
|
120.71
|
%
|
||||||||||||||||||||
1Calculated net of deferred loan fees and costs, loan discounts, and loans in process.
2Includes tax-free securities, mortgage-backed securities, and asset-backed securities.
|
Taxable-equivalent net interest income and net interest margin
|
For the six months ended
December 31,
|
|||||||
|
(Dollars in thousands)
|
2019
|
2018
|
||||||
|
Net interest income (GAAP)
|
$
|
21,411
|
$
|
19,652
|
||||
|
Tax-equivalent adjustment(1)
|
1,203
|
962
|
||||||
|
Net interest income (fully taxable-equivalent)
|
$
|
22,614
|
$
|
20,614
|
||||
|
Average interest-earning assets
|
$
|
1,345,295
|
$
|
1,142,434
|
||||
|
Net interest margin (fully taxable-equivalent)
|
3.36
|
%
|
3.61
|
%
|
||||
1Net 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. The rate used for this adjustment was 21% for federal income taxes and 3.98% for New York State income taxes for the periods ended December 31, 2019 and
2018.
Rate / Volume Analysis
The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected Greene County
Bancorp, Inc.’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to:
| (i) |
Change attributable to changes in volume (changes in volume multiplied by prior rate);
|
| (ii) |
Change attributable to changes in rate (changes in rate multiplied by prior volume); and
|
| (iii) |
The net change.
|
The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.
|
(Dollars in thousands)
|
Three Months Ended December 31,
2019 versus 2018
|
Six Months Ended December 31,
2019 versus 2018
|
||||||||||||||||||||||
|
Increase/(Decrease)
Due To
|
Total
Increase/
|
Increase/(Decrease)
Due To
|
Total
Increase/
|
|||||||||||||||||||||
|
Volume
|
Rate
|
(Decrease)
|
Volume
|
Rate
|
(Decrease)
|
|||||||||||||||||||
|
Interest Earning Assets:
|
||||||||||||||||||||||||
|
Loans receivable, net1
|
$
|
1,067
|
$
|
38
|
$
|
1,105
|
$
|
1,988
|
$
|
224
|
$
|
2,212
|
||||||||||||
|
Securities2
|
772
|
(230
|
)
|
542
|
1,068
|
(184
|
)
|
884
|
||||||||||||||||
|
Interest-bearing bank balances and federal funds
|
183
|
(4
|
)
|
179
|
347
|
(1
|
)
|
346
|
||||||||||||||||
|
FHLB stock
|
(8
|
)
|
(27
|
)
|
(35
|
)
|
(35
|
)
|
(5
|
)
|
(40
|
)
|
||||||||||||
|
Total interest-earning assets
|
2,014
|
(223
|
)
|
1,791
|
3,368
|
34
|
3,402
|
|||||||||||||||||
|
Interest-Bearing Liabilities:
|
||||||||||||||||||||||||
|
Savings and money market deposits
|
(7
|
)
|
35
|
28
|
(19
|
)
|
95
|
76
|
||||||||||||||||
|
NOW deposits
|
467
|
461
|
928
|
779
|
1,094
|
1,873
|
||||||||||||||||||
|
Certificates of deposit
|
(30
|
)
|
8
|
(22
|
)
|
(35
|
)
|
34
|
(1
|
)
|
||||||||||||||
|
Borrowings
|
(40
|
)
|
(19
|
)
|
(59
|
)
|
(237
|
)
|
(68
|
)
|
(305
|
)
|
||||||||||||
|
Total interest-bearing liabilities
|
390
|
485
|
875
|
488
|
1,155
|
1,643
|
||||||||||||||||||
|
Net change in net interest income
|
$
|
1,624
|
$
|
(708
|
)
|
$
|
916
|
$
|
2,880
|
$
|
(1,121
|
)
|
$
|
1,759
|
||||||||||
1 Calculated net of deferred loan fees, loan discounts, and loans in process.
2 Includes tax-free securities, mortgage-backed securities, and asset-backed securities.
GENERAL
Return on average assets and return on average equity are common methods of measuring operating results. Annualized return on average assets decreased to 1.44% for the three months ended December 31, 2019 as
compared to 1.57% for the three months ended December 31, 2018, and was 1.46% and 1.55% for the six months ended December 31, 2019 and 2018, respectively. Annualized return on average equity decreased to 17.29% for the three months and 17.16%
for the six months ended December 31, 2019, as compared to 18.03% for the three months and 17.98% for the six months ended December 31, 2018. The decrease in return on average assets and return on average equity was primarily the result of
balance sheet growth outpacing growth in net income. Net income amounted to $5.1 million and $4.6 million for the three months ended December 31, 2019 and 2018, respectively, an increase of $529,000, or 11.5%, and amounted to $10.0 million and
$9.0 million for the six months ended December 31, 2019 and 2018, respectively, an increase of $1.0 million, or 11.1%. Average assets increased $255.7 million, or 21.9%, to $1.4 billion for the three months ended December 31, 2019 as compared
to $1.2 billion for the three months ended December 31, 2018. Average equity increased $16.6 million, or 16.3%, to $118.3 million for the three months ended December 31, 2019 as compared to $101.7 million for the three months ended December
31, 2018. Average assets increased $205.5 million, or 17.7%, to $1.4 billion for the six months ended December 31, 2019 as compared to $1.2 billion for the six months ended December 31, 2018. Average equity increased $16.6 million, or 16.6%, to
$116.3 million for the six months ended December 31, 2019 as compared to $99.7 million for the six months ended December 31, 2018.
INTEREST INCOME
Interest income amounted to $13.2 million for the three months ended December 31, 2019 as compared to $11.4 million for the three months ended December 31, 2018, an increase of $1.8 million, or 15.8%. Interest
income amounted to $25.8 million for the six months ended December 31, 2019 as compared to $22.4 million for the six months ended December 31, 2018, an increase of $3.4 million, or 15.2%. The increase in average loan and securities balances
had the greatest impact on interest income when comparing the three and six months ended December 31, 2019 and 2018. Average loan balances increased $91.4 million and $85.4 million while the yield on loans increased two basis points and six
basis points when comparing the three and six months ended December 31, 2019 and 2018, respectively. Average securities increased $123.3 million and $83.0 million and the yield on such securities decreased 22 basis points and nine basis
points when comparing the three and six months ended December 31, 2019 and 2018.
INTEREST EXPENSE
Interest expense amounted to $2.3 million for the three months ended December 31, 2019 as compared to $1.4 million for the three months ended December 31, 2018, an increase of $875,000 or 62.0%. Interest expense
amounted to $4.4 million for the six months ended December 31, 2019 as compared to $2.8 million for the six months ended December 31, 2018, an increase of $1.6 million, or 57.1%. Increases in both the rate paid and the increase in average
balances of NOW accounts had the greatest impact on interest expense and was the result of promotions within the Company’s newer markets targeting new businesses, municipal and retail customers as well as the impact from increased market
interest rates during fiscal 2019. As illustrated in the rate/volume table, interest expense increased $485,000 and $1.2 million when comparing the three and six months ended December 31, 2019 and 2018 due to the increase in the rate paid on
interest-bearing liabilities. Interest expense increased $390,000 and $488,000 when comparing these same periods due to the increased average balances.
Average interest-bearing liabilities increased $228.4 million and $178.9 million when comparing the three and six months ended December 31, 2019, respectively. The average rate paid on interest-bearing
liabilities increased 18 basis points to 0.77% from 0.59% when comparing the three months ended December 31, 2019 and 2018, respectively, and increased 20 basis points to 0.78% from 0.58% when comparing the six months ended December 31, 2019
and 2018.
Average deposits increased $237.1 million and $205.0 million for the three and six months ended December 31, 2019 and 2018, respectively, as a result of continued growth across all three of our primary banking
lines – retail, commercial and municipal. The average rate paid on NOW deposits increased 27 basis points when comparing the three months ended December 31, 2019 and 2018, and the average balance of such accounts grew by $253.2 million when
comparing these same periods. The average rate paid on NOW deposits increased 33 basis points when comparing the six months ended December 31, 2019 and 2018, and the average balance of such accounts increased $221.1 million when comparing these
same periods. The average balance of savings and money market deposits decreased $7.2 million and $10.3 million when comparing the three and six months ended December 31, 2019 and 2018, respectively. The rates paid on savings and money market
deposits increased five basis points and six basis points when comparing the three and six months ended December 31, 2019 and 2018, respectively. The average balance of certificates of deposit decreased $9.0 million and $5.8 million when
comparing the three and six months ended December 31, 2019 and 2018, respectively. The average rate paid on certificate of deposits increased seven basis and 18 basis points when comparing the three and six months ended December 31, 2019 and
2018.
The average balance on borrowings decreased $8.7 million and $26.2 million when comparing the three and six months ended December 31, 2019 and 2018. The rate decreased 31 basis points and 37 basis points when
comparing the three and six months ended December 31, 2019 and 2018.
NET INTEREST INCOME
Net interest income increased $916,000 million to $10.9 million for the three months ended December 31, 2019 from $10.0 million for the three months ended December 31, 2018. Net interest income increased $1.7
million to $21.4 million for the six months ended December 31, 2019 from $19.7 million for the six months ended December 31, 2018. These increases in net interest income were primarily the result of growth in the average balance of
interest-earning assets, with continued growth in loans and securities, funded primarily from growth in deposits.
Net interest spread decreased 38 basis points to 2.99% for the three months ended December 31, 2019 compared to 3.37% for the three months ended December 31, 2018. Net interest margin decreased 36 basis points to
3.11% for the three months ended December 31, 2019 compared to 3.47% for the three months ended December 31, 2018. Net interest spread and margin decreased 28 basis points and 26 basis points to 3.06% and 3.18%, respectively, for the six months
ended December 31, 2019 compared to 3.34% and 3.44%, respectively, for the six months ended December 31, 2018. Decreases in net interest spread and margin are primarily the result of the higher cost of interest-bearing liabilities and lower
yields on securities, partially offset by growth in average 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 3.29% and 3.65% for the three months ended December 31, 2019 and 2018, respectively, and was 3.36% and 3.61% for the six months
ended December 31, 2019 and 2018, respectively. As a result of the enactment of the Tax Cut and Jobs Act of 2017 (“TCJA”) in December 2017, which permanently reduces the maximum corporate income tax rate from 35% to 21% effective for tax years
beginning after December 31, 2017, the tax benefits derived from tax-exempt securities and loans is lower for the three and six months ended December 31, 2018 compared to December 31, 2017. However, beginning January 1, 2018, pricing of
tax-exempt securities and loan originations have been adjusted to reflect the change in the corporate tax rate, thereby producing a tax-equivalent yield on these securities and loans that are comparable to yields obtained on similar taxable
investments.
Due to the large portion of fixed-rate residential mortgages in the Company’s portfolio, interest rate risk is a concern and the Company will continue to monitor and adjust the asset and liability mix as much as
possible to take advantage of the benefits and reduce the risks or potential negative effects of a rising rate environment. Management attempts to mitigate the interest rate risk through balance sheet composition. Several strategies are used
to help manage interest rate risk such as maintaining a high level of liquid assets such as short-term federal funds sold and various investment securities and maintaining a high concentration of less interest-rate sensitive and lower-costing
core deposits.
PROVISION FOR LOAN LOSSES
Management continues to closely monitor asset quality and adjust the level of the allowance for loan losses when necessary. The amount recognized for the provision for loan losses is determined by management
based on its ongoing analysis of the adequacy of the allowance for loan losses.
Provision for loan losses amounted to $690,000 and $354,000 for the three months ended December 31, 2019 and 2018, respectively, and amounted to $1.2 million and $708,000 for the six months ended December 31,
2019 and 2018, respectively. This increase was due to the growth in gross loans as well as an increase in loans adversely classified. Loans classified as substandard or special mention totaled $24.7 million at December 31, 2019 compared to
$17.1 million at June 30, 2019, an increase of $7.6 million. Reserves on these loans totaled $1.9 million at December 31, 2019 compared to $1.5 million at June 30, 2019, an increase of $395,000. The increase in classified loans is primarily
due to the downgrade of a construction loan to special mention during the six months ended December 31, 2019 as a result of project cost overruns and several delinquent payment. No loans were classified as doubtful or loss at December 31, 2019
or June 30, 2019. Allowance for loan losses to total loans receivable was 1.62% at December 31, 2019, and 1.65% at June 30, 2019.
Net charge-offs for the three months ended December 31, 2019 totaled $149,000 compared to a net recovery for the three months ended December 31, 2018 of $11,000. Net charge-offs totaled $457,000 and $59,000 for
the six months ended December 31, 2019 and 2018, respectively. This increase in charge-off activity was primarily within the commercial loan and consumer loan portfolios. Commercial loan net charge-offs totaled $168,000 for the six months
ended December 31, 2019 compared to a net recovery of $153,000 for the six months ended December 31, 2018. Consumer loan net charge-offs totaled $198,000 and $129,000 for the six months ended December 31, 2019 and 2018, respectively, an
increase of $69,000. The increase in the consumer loan portfolio is the result of an increase in charge-offs related to the deposit overdraft protection program, and is due to the significant growth in the number of checking accounts with
overdraft protection as well as a recent increase in the amount of protection provided per account.
Nonperforming loans amounted to $3.4 million and $3.6 million at December 31, 2019 and June 30, 2019, respectively. At December 31, 2019 and June 30, 2019, nonperforming assets were 0.25% and 0.29% of total
assets, and nonperforming loans were 0.40% and 0.46% of net loans. At December 31, 2018, nonperforming assets to total assets were 0.31% and nonperforming loans to net loans were 0.48%. The Company has not been an originator of “no
documentation” mortgage loans, and the loan portfolio does not include any mortgage loans that the Company classifies as sub-prime.
NONINTEREST INCOME
|
(In thousands)
|
For the three months
ended December 31,
|
Change from Prior Year
|
For the six months
ended December 31,
|
Change from Prior Year
|
||||||||||||||||||||||||||||
|
Noninterest income:
|
2019
|
2018
|
Amount
|
Percent
|
2019
|
2018
|
Amount
|
Percent
|
||||||||||||||||||||||||
|
Service charges on deposit accounts
|
$
|
1,111
|
$
|
1,106
|
$
|
5
|
0.45
|
%
|
$
|
2,236
|
$
|
2,143
|
$
|
93
|
4.34
|
%
|
||||||||||||||||
|
Debit card fees
|
755
|
685
|
70
|
10.22
|
1,498
|
1,325
|
173
|
13.06
|
||||||||||||||||||||||||
|
Investment services
|
168
|
136
|
32
|
23.53
|
313
|
251
|
62
|
24.70
|
||||||||||||||||||||||||
|
E-commerce fees
|
31
|
34
|
(3
|
)
|
(8.82
|
)
|
66
|
71
|
(5
|
)
|
(7.04
|
)
|
||||||||||||||||||||
|
Other operating income
|
251
|
180
|
71
|
39.44
|
469
|
403
|
66
|
(16.38
|
)
|
|||||||||||||||||||||||
|
Total noninterest income
|
$
|
2,316
|
$
|
2,141
|
$
|
175
|
8.17
|
%
|
$
|
4,582
|
$
|
4,193
|
$
|
389
|
9.28
|
%
|
||||||||||||||||
Noninterest income increased $175,000, or 8.2%, and totaled $2.3 million and $2.1 million for the three months ended December 31, 2019 and 2018. Noninterest income increased $389,000, or 9.3%, and totaled $4.6
million and $4.2 million for the six months ended December 31, 2019 and 2018. This increase was primarily due to increases in debit card fees and service charges on deposit accounts resulting from continued growth in the number of checking
accounts with debit cards, as well as increased monthly or transactional service charges on deposit accounts. Investment services income also increased during the period due to higher sales volume of investment products.
NONINTEREST EXPENSE
|
(In thousands)
|
For the three months
ended December 31
|
Change from Prior Year
|
For the six months
ended December 31,
|
Change from Prior Year
|
||||||||||||||||||||||||||||
|
Noninterest expense:
|
2019
|
2018
|
Amount
|
Percent
|
2019
|
2018
|
Amount
|
Percent
|
||||||||||||||||||||||||
|
Salaries and employee benefits
|
$
|
3,992
|
$
|
3,677
|
$
|
315
|
8.57
|
%
|
$
|
7,934
|
$
|
7,155
|
$
|
779
|
10.89
|
%
|
||||||||||||||||
|
Occupancy expense
|
441
|
414
|
27
|
6.52
|
907
|
816
|
91
|
11.15
|
||||||||||||||||||||||||
|
Equipment and furniture expense
|
126
|
127
|
(1
|
)
|
(0.79
|
)
|
407
|
341
|
66
|
19.35
|
||||||||||||||||||||||
|
Service and data processing fees
|
638
|
542
|
96
|
17.71
|
1,212
|
1,037
|
175
|
16.88
|
||||||||||||||||||||||||
|
Computer software, supplies and support
|
264
|
200
|
64
|
32.00
|
506
|
423
|
83
|
19.62
|
||||||||||||||||||||||||
|
Advertising and promotion
|
142
|
76
|
66
|
86.84
|
258
|
196
|
62
|
31.63
|
||||||||||||||||||||||||
|
FDIC insurance premiums
|
12
|
100
|
(88
|
)
|
(88.00
|
)
|
(27
|
)
|
227
|
(254
|
)
|
(111.89
|
)
|
|||||||||||||||||||
|
Legal and professional fees
|
325
|
283
|
42
|
14.84
|
604
|
612
|
(8
|
)
|
(1.31
|
)
|
||||||||||||||||||||||
|
Other
|
595
|
828
|
(233
|
)
|
(28.14
|
)
|
1,156
|
1,401
|
(245
|
)
|
(17.49
|
)
|
||||||||||||||||||||
|
Total noninterest expense
|
$
|
6,535
|
$
|
6,247
|
$
|
288
|
4.61
|
%
|
$
|
12,957
|
$
|
12,208
|
$
|
749
|
6.14
|
%
|
||||||||||||||||
Noninterest expense increased $288,000 or 4.6%, to $6.5 million for the three months ended December 31, 2019 as compared to $6.2 million for the three months ended December 31, 2018. Noninterest expense increased
$749,000, or 6.1%, to $13.0 million for the six months ended December 31, 2019, compared to $12.2 million for the six months ended December 31, 2018. This increase, during the three and six months ended December 31, 2019, was primarily due to
an increase in salaries and employee benefits expenses, resulting from additional staffing for the addition of a new branch located in Kinderhook-Valatie, New York, which opened in July 2019. As the Company continues to grow, staffing was also
increased within our lending department, customer service center and investment center. This increase was partially offset by a decrease in FDIC insurance premiums. In January 2019, the FDIC provided notification to the Company that a credit
in the amount of $177,000 was calculated for The Bank of Greene County, and a credit in the amount of $91,000 was calculated for Greene County Commercial Bank, based on a change in assessments under FDIC regulations resulting from the Deposit
Insurance Fund Reserve Ratio reaching 1.36. The Deposit Insurance Fund reserve ratio was above 1.38% as of June 30, 2019 and September 30, 2019, and therefore, the FDIC offset regular deposit insurance assessments with credits on the September
and December 2019 invoices. The Company received credits totaling $120,000 and $228,000 during the three and six months ended December 31, 2019. This credit was applied against FDIC insurance premiums expense. Other noninterest expense also
decreased for both the three and six months ended December 31, 2019 and was due to a charitable donation made to the Company’s Charitable Foundation during the three and six months ended December 31, 2018.
INCOME TAXES
The provision for income taxes directly reflects the expected tax associated with the pre-tax income generated for the given year and certain regulatory requirements. The effective tax rate was 14.8% and 15.4%
for the three and six months ended December 31, 2019, compared to 17.2% and 18.0% for the three and six months ended December 31, 2018. 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, 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.
LIQUIDITY AND CAPITAL RESOURCES
Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates or prices such as interest rates, foreign currency exchange rates, commodity prices, and equity prices.
Greene County Bancorp, Inc.’s most significant form of market risk is interest rate risk since the majority of Greene County Bancorp, Inc.’s assets and liabilities are sensitive to changes in interest rates. Greene County Bancorp, Inc.’s
primary sources of funds are deposits and proceeds from principal and interest payments on loans, mortgage-backed securities and debt securities, with lines of credit available through the Federal Home Loan Bank and Atlantic Central Bankers
Bank as needed. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit outflows, mortgage prepayments, and lending activities are greatly influenced by general interest rates, economic
conditions and competition.
The Bank of Greene County’s unfunded loan commitments and unused lines of credit are as follows at December 31, 2019:
|
(In thousands)
|
2019
|
|||
|
Unfunded loan commitments
|
$
|
73,667
|
||
|
Unused lines of credit
|
60,110
|
|||
|
Total commitments
|
$
|
133,777
|
||
Risk Participation Agreements
Risk participation agreements (“RPAs”) are guarantees issued by the Company to other parties for a fee, whereby the Company agrees to participate in the credit risk of a derivative customer of the other party.
Under the terms of these agreements, the “participating bank” receives a fee from the “lead bank” in exchange for the guarantee of reimbursement if the customer defaults on an interest rate swap. The interest rate swap is transacted such that
any and all exchanges of interest payments (favorable and unfavorable) are made between the lead bank and the customer. In the event that an early termination of the swap occurs and the customer is unable to make a required close out payment,
the participating bank assumes that obligation and is required to make this payment.
RPAs where the Company acts as the lead bank are referred to as “participations-out,” in reference to the credit risk associated with the customer derivatives being transferred out of the Company.
Participations-out generally occur concurrently with the sale of new customer derivatives. The Company had no participations-out at December 31, 2019 or June 30, 2019. RPAs where the Company acts as the participating bank are referred to as
“participations-in,” in reference to the credit risk associated with the counterparty’s derivatives being assumed by the Company. The Company’s maximum credit exposure is based on its proportionate share of the settlement amount of the
referenced interest rate swap. Settlement amounts are generally calculated based on the fair value of the swap plus outstanding accrued interest receivables from the customer. The Company’s estimate of the credit exposure associated with its
risk participations-in was $2.1 million and $1.2 million at December 31, 2019 and June 30, 2019, respectively. The current amount of credit exposure is spread out over five counterparties, and terms range between five to ten years.
Greene County Bancorp, Inc. anticipates that it will have sufficient funds available to meet current loan commitments based on the level of cash and cash equivalents as well as the available-for-sale investment
portfolio and borrowing capacity.
The Bank of Greene County and Greene County Commercial Bank met all applicable regulatory capital requirements at December 31, 2019 and June 30, 2019. Consolidated shareholders’ equity represented 8.4% and 8.9%
of total assets at December 31, 2019 and at June 30, 2019, respectively.
|
|
To Be Well
Capitalized Under
|
|||||||||||||||||||||||||||||||
|
(Dollars in thousands)
|
Actual
|
For Capital
Adequacy Purposes |
Prompt Corrective
Action Provisions
|
Capital Conservation
Buffer
|
||||||||||||||||||||||||||||
|
The Bank of Greene County
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Actual
|
Required
|
||||||||||||||||||||||||
|
As of December 31, 2019:
|
||||||||||||||||||||||||||||||||
|
Total risk-based capital
|
$
|
128,629
|
15.45
|
%
|
$
|
66,590
|
8.0
|
%
|
$
|
83,238
|
10.0
|
%
|
7.45
|
%
|
2.50
|
%
|
||||||||||||||||
|
Tier 1 risk-based capital
|
118,181
|
14.20
|
49,943
|
6.0
|
66,590
|
8.0
|
8.20
|
2.50
|
||||||||||||||||||||||||
|
Common equity tier 1 capital
|
118,181
|
14.20
|
37,457
|
4.5
|
54,104
|
6.5
|
9.70
|
2.50
|
||||||||||||||||||||||||
|
Tier 1 leverage ratio
|
118,181
|
8.32
|
56,788
|
4.0
|
70,985
|
5.0
|
4.32
|
2.50
|
||||||||||||||||||||||||
|
As of June 30, 2019:
|
||||||||||||||||||||||||||||||||
|
Total risk-based capital
|
$
|
118,113
|
15.8
|
%
|
$
|
59,842
|
8.0
|
%
|
$
|
74,802
|
10.0
|
%
|
7.79
|
%
|
2.50
|
%
|
||||||||||||||||
|
Tier 1 risk-based capital
|
108,716
|
14.5
|
44,881
|
6.0
|
59,842
|
8.0
|
8.53
|
2.50
|
||||||||||||||||||||||||
|
Common equity tier 1 capital
|
108,716
|
14.5
|
33,661
|
4.5
|
48,621
|
6.5
|
10.03
|
2.50
|
||||||||||||||||||||||||
|
Tier 1 leverage ratio
|
108,716
|
8.7
|
50,049
|
4.0
|
62,561
|
5.0
|
4.69
|
2.50
|
||||||||||||||||||||||||
|
Greene County Commercial Bank
|
||||||||||||||||||||||||||||||||
|
As of December 31, 2019:
|
||||||||||||||||||||||||||||||||
|
Total risk-based capital
|
$
|
51,204
|
43.1
|
%
|
$
|
9,499
|
8.0
|
%
|
$
|
11,874
|
10.0
|
%
|
35.12
|
%
|
2.50
|
%
|
||||||||||||||||
|
Tier 1 risk-based capital
|
51,204
|
43.1
|
7,124
|
6.0
|
9,499
|
8.0
|
37.12
|
2.50
|
||||||||||||||||||||||||
|
Common equity tier 1 capital
|
51,204
|
43.1
|
5,343
|
4.5
|
7,718
|
6.5
|
38.62
|
2.50
|
||||||||||||||||||||||||
|
Tier 1 leverage ratio
|
51,204
|
8.4
|
24,464
|
4.0
|
30,580
|
5.0
|
4.37
|
2.50
|
||||||||||||||||||||||||
|
As of June 30, 2019:
|
||||||||||||||||||||||||||||||||
|
Total risk-based capital
|
$
|
47,366
|
47.4
|
%
|
$
|
7,996
|
8.0
|
%
|
$
|
9,996
|
10.0
|
%
|
39.39
|
%
|
2.50
|
%
|
||||||||||||||||
|
Tier 1 risk-based capital
|
47,366
|
47.4
|
5,997
|
6.0
|
7,996
|
8.0
|
41.39
|
2.50
|
||||||||||||||||||||||||
|
Common equity tier 1 capital
|
47,366
|
47.4
|
4,498
|
4.5
|
6,497
|
6.5
|
42.89
|
2.50
|
||||||||||||||||||||||||
|
Tier 1 leverage ratio
|
47,366
|
9.6
|
19,678
|
4.0
|
24,597
|
5.0
|
5.63
|
2.50
|
||||||||||||||||||||||||
Not applicable to smaller reporting companies.
Under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation
of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that the Company files or submits
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and in timely altering them to material information relating to the Company (or
its consolidated subsidiaries) required to be filed in its periodic SEC filings.
There has been no change in the Company's internal control over financial reporting in connection with the quarterly evaluation that occurred during the Company's last fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the Company's internal control over financial reporting.
|
Part II.
|
Other Information
|
Greene County Bancorp, Inc. and its subsidiaries are not engaged in any material legal proceedings at the present time.
Not applicable to smaller reporting companies.
|
a)
|
Not applicable
|
| b) |
Not applicable
|
| c) |
On September 17, 2019, the Board of Directors of the Company adopted a stock repurchase program. Under the repurchase program, the Company may repurchase up to 200,000 shares of its common stock.
Repurchases will be made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market
conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. At December 31, 2019, the Company had repurchased 1,400 shares.
|
The following table presents stock purchases made during the quarter ended December 31, 2019:
Issuer Purchases of Equity Securities
|
Period
|
Total Number
of Shares
Purchased
|
Average Price Paid
Per Share
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
|
Maximum Number of
Shares That May Yet Be
Purchased Under the
Plans or Programs
|
||||||||||||
|
October 1-31
|
-
|
$
|
-
|
-
|
200,000
|
|||||||||||
|
November 1-30
|
1,400
|
$
|
26.87
|
1,400
|
198,600
|
|||||||||||
|
December 1-31
|
-
|
$
|
-
|
-
|
198,600
|
|||||||||||
Not applicable
Not applicable
| a) |
Not applicable
|
| b) |
There were no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors during the period covered by this Form 10-Q.
|
|
Exhibits
|
||
|
Certification of Chief Executive Officer, adopted pursuant to Rule 13a-14(a)/15d-14(a)
|
||
|
Certification of Chief Financial Officer, adopted pursuant to Rule 13a-14(a)/15d-14(a)
|
||
|
Statement of Chief Executive Officer, furnished pursuant to U.S.C. Section 1350
|
||
|
Statement of Chief Financial Officer, furnished pursuant to U.S.C. Section 1350
|
||
|
101
|
The following materials from Greene County Bancorp, Inc. Form 10-Q for the quarter ended December 31, 2019, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of
Income, (ii) the Consolidated Statements of Financial Condition, (iii) Consolidated Statements of Cash Flows and (iv) related notes, tagged as blocks of text.
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned thereunto duly authorized.
|
Greene County Bancorp, Inc.
|
|
|
Date: February 6, 2020
|
|
|
By: /s/ Donald E. Gibson
|
|
|
Donald E. Gibson
|
|
|
President and Chief Executive Officer
|
|
|
Date: February 6, 2020
|
|
|
By: /s/ Michelle M. Plummer
|
|
|
Michelle M. Plummer, CPA, CGMA
|
|
|
Executive Vice President, Chief Financial Officer, and Chief Operating Officer
|
|
49
EXHIBIT 31.1
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Donald E. Gibson, certify that:
| 1. |
I have reviewed this quarterly report on Form 10-Q of Greene County Bancorp, Inc.;
|
| 2. |
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects the consolidated financial condition, consolidated results of
operations and consolidated cash flows of the registrant as of, and for, the periods presented in this report;
|
| 4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
| 5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors:
|
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 6, 2020
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/s/ Donald E. Gibson
|
|
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Donald E. Gibson,
|
||
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President and Chief Executive Officer
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EXHIBIT 31.2
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Michelle M. Plummer, certify that:
| 1. |
I have reviewed this quarterly report on Form 10-Q of Greene County Bancorp, Inc.;
|
| 2. |
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects the consolidated financial condition, consolidated results of
operations and consolidated cash flows of the registrant as of, and for, the periods presented in this report;
|
| 4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
| 5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors:
|
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 6, 2020
|
/s/ Michelle M. Plummer
|
|
|
Michelle M. Plummer, CPA, CGMA
|
||
|
Executive Vice President, Chief Financial Officer
|
||
|
and Chief Operating Officer
|
||
Statement of Chief Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Donald E. Gibson, President and Chief Executive Officer, of Greene County Bancorp, Inc. (the “Company”) certifies in his capacity as an officer of the Company that he has reviewed the Quarterly Report of the Company on
Form 10-Q for the quarter ended December 31, 2019 and that to the best of his knowledge:
| a. |
the report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
| b. |
the information contained in the report fairly presents, in all material respects, the consolidated financial condition and consolidated results of operations of the Company as of the dates and for the periods covered by the report.
|
This statement is authorized to be attached as an exhibit to the report so that this statement will accompany the report at such time as the report is filed with the Securities and Exchange Commission pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 USC 1350. It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934, as amended.
|
Date: February 6, 2020
|
/s/ Donald E. Gibson
|
|
|
Donald E. Gibson,
|
||
|
President and Chief Executive Officer
|
||
EXHIBIT 32.2
Statement of Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Michelle M. Plummer, Chief Financial Officer, of Greene County Bancorp, Inc. (the “Company”) certifies in her capacity as an officer of the Company that he or she has reviewed the Quarterly Report of the Company on
Form 10-Q for the quarter ended December 31, 2019 and that to the best of her knowledge:
| a. |
the report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
| b. |
the information contained in the report fairly presents, in all material respects, the consolidated financial condition and consolidated results of operations of the Company as of the dates and for the periods covered by the report.
|
This statement is authorized to be attached as an exhibit to the report so that this statement will accompany the report at such time as the report is filed with the Securities and Exchange Commission pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 USC 1350. It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934, as amended.
|
Date: February 6, 2020
|
/s/ Michelle M. Plummer
|
|
|
Michelle M. Plummer, CPA, CGMA
|
||
|
Executive Vice President, Chief Financial Officer
|
||
|
and Chief Operating Officer
|
||