Greene County Bancorp, Inc. - Reports Quarterly Earnings

  Greene County Bancorp, Inc. - Reports Quarterly Earnings

Business Wire

CATSKILL, N.Y. -- January 24, 2013

Greene County Bancorp, Inc. (the “Company”) (NASDAQ: GCBC), the holding
company for The Bank of Greene County and its subsidiary Greene County
Commercial Bank, today reported net income for the six months and quarter
ended December 31, 2012, which is the second quarter of the Company’s fiscal
year ending June 30, 2013. Net income for the six months and quarter ended
December 31, 2012 totaled $3.4 million, or $0.82 per basic and $0.81 per
diluted share, and $1.7 million, or $0.40 per basic and $0.39 per diluted
share, respectively, as compared to $3.0 million, or $0.72 per basic and
diluted share, and $1.5 million, or $0.36 per basic and diluted share, for the
six months and quarter ended December 31, 2011, respectively, an increase of
$429,000, or 14.3%, and $174,000, or 11.6% for these same periods in the prior
year.

Donald E. Gibson, President and CEO stated; “In light of the historically low
interest environment and the net interest margin compression our industry has
been experiencing we are proud to report another solid quarter.

A large part of our strategy to offset margin compression has been to focus on
growing quality loans. Over the last two years we have introduced several new
residential and commercial loan products and have increased the size of our
lending team by over 50%. We believe this emphasis along with personal service
has played a large role in growing our net loans by over $20.0 million over
the last six months and will serve us well in the future.”

Selected highlights for the six months and quarter ended December 31, 2012 are
as follows:

  *Net interest income increased $340,000 to $10.8 million for the six months
    ended December 31, 2012 compared to $10.4 million for the six months ended
    December 31, 2011 and increased $147,000 to $5.4 million for the quarter
    ended December 31, 2012 compared to $5.2 million for the quarter ended
    December 31, 2011. The increase in average balances of loans and
    securities, along with a decrease in rates paid on deposit accounts,
    primarily led to an increase in net interest income when comparing the six
    months and quarters ended December 31, 2012 and 2011.
  *Net interest rate spread decreased 21 basis points to 3.58% for the six
    months ended December 31, 2012 from 3.79% for the six months ended
    December 31, 2011, and decreased 29 basis points to 3.47% for the three
    months ended December 31, 2012 from 3.76% for the three months ended
    December 31, 2011. Net interest margin decreased 25 basis points to 3.67%
    for the six months ended December 31, 2012 from 3.92% for the six months
    ended December 31, 2011, and decreased 33 basis points to 3.55% for the
    quarter ended December 31, 2012 as compared to 3.88% for the quarter ended
    December 31, 2011. Despite increased net interest income from increased
    volume of loans and securities and a lower cost of funds, declines in the
    yields on interest-earning assets resulted in our net interest spread and
    net interest margin decreasing when comparing the three and six months
    ended December 31, 2012 and 2011, respectively. Although the Company has
    benefited from re-pricing its interest-bearing liabilities in the
    continuing historically low interest rate environment, the average
    interest rates earned on our loans and investments have similarly
    continued to re-price into lower yields.
  *The provision for loan losses amounted to $985,000 and $896,000 for the
    six months ended December 31, 2012 and 2011, respectively, an increase of
    $89,000 or 9.9%. The provision for loan losses amounted to $541,000 and
    $422,000 for the quarters ended December 31, 2012 and 2011, respectively.
    The allowance for loan losses totaled $6.8 million at December 31, 2012
    compared to $6.2 million at June 30, 2012 and $5.6 million at December 31,
    2011. The level of allowance for loan losses to total loans receivable
    increased to 1.91% at December 31, 2012 compared to 1.86% at June 30,
    2012, and 1.77% at December 31, 2011.
  *Net charge-offs amounted to $398,000 and $348,000 for the six months ended
    December 31, 2012 and 2011, respectively, an increase of $50,000.
  *Nonperforming loans amounted to $7.1 million and $7.0 million at December
    31, 2012 and June 30, 2012, respectively, an increase of $58,000 or 0.8%.
    Nonperforming loans remain high compared to historical levels as a result
    of adverse changes in the economy and local unemployment, which have been
    compounded by the extended length of time required to complete
    foreclosures in New York State. At December 31, 2012, nonperforming assets
    were 1.16% of total assets and nonperforming loans were 2.04% of net
    loans.
  *Noninterest income increased $153,000 and $88,000 when comparing the six
    months and quarters ended December 31, 2012 and 2011, respectively.
    Noninterest income amounted to $2.6 million and $1.3 million for the six
    months and quarter ended December 31, 2012, respectively. These increases
    were primarily the result of higher service charges on deposit accounts
    due to growth in the number of deposit accounts, as well as an increase in
    fees earned through investment services.
  *Noninterest expense decreased $7,000 and $22,000 when comparing the six
    months and quarters ended December 31, 2012 and 2011, respectively. These
    decreases were primarily due to a decrease in legal and professional fees,
    equipment and furniture expense, occupancy expense, and other expenses.
    The decrease in legal and professional fees of $68,000 and $43,000 when
    comparing the six months and quarters ended December 31, 2012 and 2011,
    respectively, were the result of lower costs for legal services related to
    loans in process of foreclosure and consulting services related to the
    implementation of strategic objectives. The decrease in equipment and
    furniture expense was the result of lower depreciation as assets
    previously capitalized have become fully depreciated. The decrease in
    other expenses was the result of the recognition of a loss on foreclosed
    assets of $27,700 and $131,500 for the six months ended December 31, 2012
    and 2011, respectively. Partially offsetting these decreases were
    increases in salaries and employee benefits, service and data processing
    fees, and advertising and promotion. The increase in salaries and employee
    benefits of $129,000 and $63,000 when comparing the six months and three
    months ended December 31, 2012 and 2011, respectively, was primarily the
    result of an increase in the number of employees. Included in the
    increases in service and data processing fees of $39,000 and $13,000 when
    comparing the six months and three months ended December 31, 2012 and
    2011, respectively, were increased costs associated with the increase in
    the number of accounts with a debit card.
  *Total assets of the Company were $624.5 million at December 31, 2012 as
    compared to $590.7 million at June 30, 2012, an increase of $33.8 million,
    or 5.7%.
  *Securities available for sale and held to maturity amounted to $245.4
    million, or 39.3% of assets, at December 31, 2012 as compared to $233.9
    million, or 39.6% of assets, at June 30, 2012, an increase of $11.5
    million or 4.9%.
  *Net loans grew by $20.7 million or 6.3% to $347.5 million at December 31,
    2012 as compared to $326.8 million at June 30, 2012. The loan growth
    experienced during the six months primarily consisted of $5.5 million in
    nonresidential real estate loans, $11.5 million in residential mortgage
    loans, $2.3 million in construction loans, $111,000 in multi-family
    mortgage loans and $2.0 million in non-mortgage loans, and was partially
    offset by a $587,000 increase in the allowance for loan loss. The
    continued low interest rate environment and strong customer satisfaction
    from personal service continued to enhance loan growth.
  *Total deposits increased to $545.7 million at December 31, 2012 from
    $511.9 million at June 30, 2012, an increase of $33.8 million, or 6.6%.
    This increase was partially the result of an increase of $13.5 million in
    balances at the Greene County Commercial Bank due primarily to the annual
    collection of taxes by several local school districts.
  *Borrowings decreased $700,000 from $21.0 million at June 30, 2012 to $20.3
    million at December 31, 2012. During the quarter and six months ended
    December 31, 2012, the Company prepaid $1.0 million in long term
    borrowings and recognized a prepayment penalty of $43,000.
  *Total shareholders’ equity increased $1.9 million to $54.6 million at
    December 31, 2012, or 8.7% of total assets, from $52.7 million at June 30,
    2012 primarily resulting from $3.4 million in net income for the six-month
    period less the payment of $1.5 million in dividends during the period.

Headquartered in Catskill, New York, the Company provides full-service
community-based banking in its twelve branch offices located in Greene,
Columbia and Albany Counties. Customers are offered 24-hour services through
ATM network systems, an automated telephone banking system and Internet
Banking through its web site at http://www.tbogc.com.

This press release contains statements about future events that constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Actual results could differ materially from
those projected in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, general economic
conditions, changes in interest rates, regulatory considerations, competition,
technological developments, retention and recruitment of qualified personnel,
and market acceptance of the Company’s pricing, products and services.

                                                  
                         At or for the Six           At or for the Three
                         Months Ended December 31,   Months Ended December 31,
                         2012          2011        2012          2011
Dollars In thousands,
                                                                
except share and per
share data
Interest income          $12,238        $12,363      $6,107         $6,158
Interest expense         1,476          1,941        737            935
Net interest income      10,762         10,422       5,370          5,223
Provision for loan       985            896          541            422
losses
Noninterest income       2,575          2,422        1,296          1,208
Noninterest expense      7,419          7,426        3,746          3,768
Income before taxes      4,933          4,522        2,379          2,241
Tax provision            1,500          1,518        710            746
Net Income               $3,433         $3,004       $1,669         $1,495
                                                                    
Basic EPS                $0.82          $0.72        $0.40          $0.36
Weighted average
                         4,184,747      4,146,965    4,185,562      4,148,102
shares outstanding
                                                                    
Diluted EPS              $0.81          $0.72        $0.39          $0.36
Weighted average
                         4,223,329      4,190,187    4,225,746      4,190,211
diluted shares
outstanding
                                                                    
Dividends declared per   $0.350         $0.350       $0.175         $0.175
share ^3
                                                                    
Selected Financial
Ratios
Return on average        1.13%          1.09%        1.07%          1.07%
assets^1
Return on average        12.79%         12.20%       12.30%         11.98%
equity^1
Net interest rate        3.58%          3.79%        3.47%          3.76%
spread^1
Net interest margin^1    3.67%          3.92%        3.55%          3.88%
Efficiency ratio^2       55.63%         57.82%       56.20%         58.59%
Non-performing assets
                         1.16%          1.35%
to total assets
Non-performing loans
                         2.04%          2.31%
to net loans
Allowance for loan
losses to                95.60%         77.83%

non-performing loans
Allowance for loan
losses to                1.91%          1.77%

total loans
Shareholders’ equity     8.75%          9.05%
to total assets
Dividend payout          42.68%         48.61%
ratio^3
Book value per share     $13.05         $12.20
                                                                    

^1 Ratios are annualized when necessary.
^2 Noninterest expense divided by the sum of net interest income and
noninterest income.
^3 Greene County Bancorp, MHC (the “MHC”), the owner of 55.1% of the shares
outstanding by the Company, waived its right to receive the dividends during
the six months ended December 31, 2011, no adjustment has been made to account
for this waiver. During the six months ended December 31, 2012, the MHC did
not receive permission to waive dividends. The Federal Reserve Bank has
adopted interim final regulations that impose significant conditions and
restrictions on the ability of mutual holding companies to waive the receipt
of dividends from their subsidiaries, and the MHC did not obtain the
non-objection of the Federal Reserve Board to waive the receipt of its
dividends on the Company’s common stock during the quarter ended September 30,
2012.

                                As of December 31, 2012  As of June 30, 2012
Dollars In thousands                                     
Assets
Total cash and cash              $10,430                   $7,742
equivalents
Long term certificate of         250                       ---
deposit
Securities- available for        77,987                    87,528
sale, at fair value
Securities- held to maturity,    167,449                   146,389
at amortized cost
Federal Home Loan Bank stock,    1,713                     1,744
at cost
                                                           
Gross loans receivable           353,712                   332,450
Less: Allowance for loan         (6,764          )         (6,177        )
losses
Unearned origination fees and    599                     478           
costs, net
Net loans receivable             347,547                   326,751
                                                           
Premises and equipment           14,605                    14,899
Accrued interest receivable      2,747                     2,688
Foreclosed real estate           140                       260
Prepaid expenses and other       1,680                   2,655         
assets
Total assets                     $624,548                $590,656      
                                                           
Liabilities and shareholders’
equity
Noninterest bearing deposits     $54,298                   $52,783
Interest bearing deposits        491,392                 459,154       
Total deposits                   545,690                   511,937
                                                           
Borrowings from FHLB, short      14,300                    14,000
term
Borrowings from FHLB, long       6,000                     7,000
term
Accrued expenses and other       3,931                   5,055         
liabilities
Total liabilities                569,921                   537,992
Total shareholders’ equity       54,627                  52,664        
Total liabilities and            $624,548                $590,656      
shareholders’ equity
Common shares outstanding        4,185,671                 4,182,671
Treasury shares                  119,999                   122,999

Contact:

Greene County Bancorp, Inc.
Donald E. Gibson, 518-943-2600
President & CEO
donaldg@tbogc.com
or
Michelle M. Plummer, CPA, 518-943-2600
EVP, COO & CFO
michellep@tbogc.com