Business context and reporting period
Greene County Bancorp, Inc. is a New York community banking holding company operating The Bank of Greene County and related subsidiaries. The supplied filing is a Form 10-Q for the quarter ended March 31, 2020—fiscal Q3 2020—with nine-month results through that date. This differs from the request metadata identifying 2019 Q3.
Financial results and position
Amounts below are in millions of dollars unless stated otherwise.
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Interest income | $13.4 | $11.7 | $39.2 | $34.1 |
| Net interest income | $11.1 | $10.0 | $32.6 | $29.7 |
| Provision for loan losses | $1.4 | $0.35 | $2.7 | $1.1 |
| Noninterest income | $2.1 | $2.0 | $6.7 | $6.2 |
| Noninterest expense | $7.2 | $6.5 | $20.2 | $18.7 |
| Net income | $4.1 | $4.4 | $14.0 | $13.3 |
| Diluted EPS | $0.47 | $0.51 | $1.64 | $1.56 |
- Quarterly net income fell 7.0%; nine-month net income rose 5.3%. Quarterly EPS declined from $0.51 to $0.47, while nine-month EPS increased from $1.56 to $1.64.
- Net interest margin was 2.99% for Q3 and 3.12% for the nine months, down 35 and 29 basis points, respectively, year over year. Management attributed margin pressure mainly to higher deposit funding costs and lower securities yields.
- At March 31, 2020, total assets were $1.584 billion, up 24.8% from June 30, 2019. Net loans were $883.7 million, up 12.5%; securities totaled $591.7 million, up 38.6%.
- Deposits reached $1.430 billion, up $309.0 million, or 27.6%, from June 30, 2019. NOW deposits accounted for most of the increase.
- Cash and cash equivalents were $77.8 million, versus $29.5 million at June 30, 2019. Nine-month operating cash flow was $17.8 million; investing cash flow was negative $267.6 million and financing cash flow was positive $298.0 million, principally reflecting securities and loan growth funded by increased deposits.
- Borrowings totaled $13.1 million: $9.1 million of long-term FHLB advances and $4.0 million on the holding company’s bank line. The company reported $180.2 million available in unused lines of credit and $141.3 million in unfunded loan commitments and unused customer credit lines.
- Shareholders’ equity was $124.0 million, or 7.83% of assets, compared with $112.4 million and 8.85% at June 30, 2019. The Bank of Greene County reported total risk-based capital of 15.2% and a Tier 1 leverage ratio of 8.1%; both banking subsidiaries met applicable regulatory capital requirements.
Material changes, outlook and risks
- Loan growth was concentrated in commercial real estate and commercial construction. Commercial real estate loans were $374.2 million and commercial construction loans were $70.3 million at March 31, 2020. Management noted increased commercial and construction credit exposure.
- The allowance for loan losses increased to $15.2 million from $13.2 million at June 30, 2019. The nine-month provision was $2.7 million, and management added $500,000 during Q3 for anticipated COVID-19-related losses. Loans rated special mention or substandard totaled $27.1 million, up from $17.1 million at June 30, 2019.
- Nonaccrual loans were $3.9 million, up from $3.6 million at June 30, 2019; nonperforming assets were 0.25% of assets. Management said certain commercial relationships were downgraded because of weaker borrower cash flows, though the loans were performing at quarter-end.
- As of May 6, 2020, the Bank had received requests to modify 688 loans totaling $196.1 million, primarily payment deferrals. It had also received SBA approval for about 1,088 Paycheck Protection Program applications totaling up to $95.1 million. At April 30, it had borrowed $11.6 million through the Paycheck Protection Program Liquidity Facility.
- Management warned that the pandemic and containment measures could impair borrowers’ ability to pay, increase credit losses, and make liquidity needs harder to forecast. It expected the Federal Reserve’s March rate cuts to negatively affect interest spread and margin in the quarter and fiscal year ending June 30, 2020. No earnings or margin guidance was provided.
- Other key risks include interest-rate sensitivity, real estate values, deposit flows, competition, and broader economic conditions. Management said branch lobby closures and remote work had not significantly disrupted customer service and that disclosure controls were effective.
- The company declared a $0.11-per-share dividend for the March quarter, payable May 29, 2020. It had repurchased 24,400 shares under a program authorizing up to 200,000 shares. No material legal proceedings were reported.
Important facts for investors to verify
- Confirm the requested period: this filing covers March 31, 2020, not 2019 Q3.
- Track COVID-19 loan modifications, repayment performance, PPP lending and forgiveness, and any resulting changes in delinquency classifications or credit-loss reserves.
- Review subsequent-quarter credit quality and allowance adequacy, particularly for commercial real estate, construction, and commercial borrowers.
- Monitor deposit mix and funding costs, net interest margin after the Federal Reserve rate cuts, and the company’s liquidity and borrowing usage.
- Assess whether rapid asset growth and share repurchases affect capital ratios and the capacity to sustain dividends.