SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------
FORM 10-QSB
[x]QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES AND EXCHANGE ACT
OF 1934
FOR THE QUARTER ENDED MARCH 31, 2001
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13
OF 15(d)OF THE SECURITIES EXCHANGE ACT
GREENE COUNTY BANCORP, INC.
(Exact name of small business issuer as specified in its charter)
Commission file number 0-25165
Delaware
(State or other jurisdiction of incorporation or organization)
14-1809721
(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
Check whether the issuer: (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 X NO________
As of May 9, 2001, the latest practicable date, 2,040,355 shares of the
registrant's common stock, $ .10 par value, were issued and outstanding.
GREENE COUNTY BANCORP, INC.
INDEX
PART I. FINANCIAL INFORMATION
Page
Item 1. Financial Statements
* Consolidated Statements of Financial Condition 3
* Consolidated Statements of Income 4
* Consolidated Statements of Comprehensive Income 5
* Consolidated Statements of Changes in Shareholders' Equity 6
* Consolidated Statements of Cash Flows 7
* Notes to Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
Greene County Bancorp, Inc.
Consolidated Statements of Financial Condition
As of March 31, 2001 and June 30, 2000
March 31, 2001 June 30, 2000
(Unaudited)
ASSETS
Cash and due from banks $6,270,394 $6,013,605
Federal funds sold 8,500,000 9,800,000
-------------- ------------
Total cash and cash equivalents 14,770,394 15,813,605
Investment securities, at fair value 47,765,822 44,807,624
Federal Home Loan Bank stock, at cost 939,600 879,100
Loans 104,967,257 98,960,189
Less: Allowance for possible loan losses (867,166) (866,443)
Less: Unearned origination
fees and costs (268,075) (275,118)
------------- ------------
Net loans receivable 103,832,016 97,818,628
Purchased mortgage servicing rights --- 1,105,599
Premises and equipment 5,121,572 5,113,620
Accrued interest receivable 1,231,873 1,164,735
Prepaid expenses and other assets 315,501 880,632
Other real estate owned 104,564 151,133
-------------- ------------
Total Assets $174,081,342 $167,734,676
============== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing deposits $15,380,928 $12,344,344
Interest bearing deposits 125,573,620 121,115,904
-------------- ------------
Total deposits 140,954,548 133,460,248
FHLB borrowings 7,500,000 10,000,000
Accrued expenses and other liabilities 539,237 455,912
Accrued income taxes 305,460 224,567
------------ ------------
Total Liabilities 149,299,245 144,140,727
Shareholders' equity
Common stock, par value $.10 per share;
authorized 4,000,000;
Issued: 2,152,835 at March 31, 2001
and June 30, 2000
Outstanding: 2,040,355 at March 31, 2001 and
2,045,235 at June 30 2000 215,284 215,284
Additional paid in capital 10,203,989 10,319,859
Retained earnings 15,706,653 15,526,092
Accumulated other comprehensive income(loss) 532,643 (524,546)
Less:Treasury stock, at cost -112,480 shares at
March 31, 2001 and 107,600 at June 30, 2000 (1,075,923) (1,019,976)
Less:Unearned ESOP, at cost -58,516 shares at
March 31, 2001 and 68,508 at June 30, 2000 (520,488) (589,074)
Less:Unearned stock-based compensation (280,061) (333,690)
-------------- --------------
Total shareholders' equity 24,782,097 23,593,949
Total liabilities
and shareholders' equity $174,081,342 $167,734,676
============== ==============
See notes to consolidated financial statements
Greene County Bancorp, Inc.
Consolidated Statements of Income
For the Three Months and Nine Months Ended March 31, 2001 and 2000
(Unaudited)
Three Months Ended
March 31,
2001 2000
Interest income:
Loans $2,000,082 $1,836,035
Investment securities 565,879 506,842
Mortgage-backed securities 100,036 63,566
Tax free securities 116,506 125,201
Interest bearing deposits and fed funds 125,461 94,913
-------------- --------------
Total interest income 2,907,964 2,626,557
Interest expense:
Interest on deposits 1,209,706 1,108,408
Interest on borrowings 162,090 159,106
-------------- --------------
Total interest expense 1,371,796 1,267,514
Net interest income 1,536,168 1,359,043
-------------- --------------
Less: provision for loan losses 15,000 30,000
-------------- --------------
Net interest income after provision
for loan losses 1,521,168 1,329,043
-------------- --------------
Noninterest income:
Service charges on deposit accounts 125,638 96,428
Other operating income 108,304 126,384
-------------- --------------
Total other income 233,942 222,812
Noninterest expense:
Salaries and employee benefits 755,621 628,050
Occupancy expense 118,722 57,017
Equipment and furniture expense 90,294 55,031
Service and data processing fees 131,988 134,707
Office supplies 33,526 32,399
Other operating expense 376,679 320,200
-------------- -------------
Total noninterest expense 1,506,830 1,227,404
Income before tax provision 248,280 324,451
Provision for income taxes 35,700 61,818
Net income $212,580 $262,633
============== ==============
Weighted average EPS $0.11 $0.13
Weighted average shares outstanding 1,974,262 1,977,945
Diluted EPS $0.11 $0.13
Diluted weighted average
shares outstanding 2,000,924 1,982,441
Nine Months Ended
March 31,
2001 2000
Interest income:
Loans $5,827,525 $5,392,531
Investment securities 1,655,618 1,616,287
Mortgage-backed securities 335,025 206,387
Tax free securities 345,270 373,898
Interest bearing deposits and fed funds 393,262 232,936
-------------- -----------
Total interest income 8,556,700 7,822,039
Interest expense:
Interest on deposits 3,620,351 3,358,820
Interest on borrowings 500,053 310,866
-------------- -----------
Total interest expense 4,120,404 3,669,686
Net interest income 4,436,296 4,152,353
-------------- -----------
Less: provision for loan losses 45,000 105,000
-------------- -----------
Net interest income after provision
for loan losses 4,391,296 4,047,353
-------------- -----------
Noninterest income:
Service charges on deposit accounts 383,971 272,754
Other operating income 401,775 343,315
-------------- -----------
Total other income 785,746 616,069
Noninterest expense:
Salaries and employee benefits 2,185,547 1,791,213
Occupancy expense 311,020 207,348
Equipment and furniture expense 248,227 189,241
Service and data processing fees 385,188 405,372
Office supplies 89,330 96,606
Other operating e 1,075,998 945,788
------------ -----------
Total noninterest expense 4,295,310 3,635,568
Income before tax provision 881,732 1,027,854
Provision for income taxes 207,866 288,863
Net income $673,866 $738,991
============== ===========
Weighted average EPS $0.34 $0.37
Weighted average shares outstanding 1,977,255 2,008,331
Diluted EPS $0.34 $0.37
Diluted weighted average
shares outstanding 1,994,882 2,009,825
See notes to consolidated financial statements
Greene County Bancorp, Inc.
Consolidated Statement of Comprehensive Income
(Unaudited)
For the Three Months Ended March 31, 2001 and 2000
2001 2000
Net income $212,580 $262,633
-------- ----------
Other comprehensive income (loss):
Unrealized holding gain(loss) arising
during the three months ended March 31,
2001 and 2000, net of tax (expense)/
benefit of ($298,179) and $86,545, respectively. 447,042 (114,724)
-------- ----------
Total other comprehensive income (loss) 447,042 (114,724)
-------- ----------
Comprehensive income $659,622 $147,909
======== ==========
Greene County Bancorp, Inc.
Consolidated Statement of Comprehensive Income
(Unaudited)
For the Nine Months Ended March 31, 2001 and 2000
2001 2000
Net income $673,866 $738,991
----------- ----------
Other comprehensive income (loss):
Unrealized holding gain (loss) arising
during the nine months ended March 31,
2001 and 2000, net of tax (expense)/
benefit of ($743,008) and $341,083, respectively. 1,074,040 (468,348)
Reclassification adjustment for gains arising
during the nine months ended March 31, 2001,
net of tax (expense) of ($12,712). (16,851) ---
----------- ----------
Total other comprehensive income (loss) 1,057,189 (468,348)
----------- ----------
Comprehensive income $1,731,055 $270,643
=========== ==========
See notes to consolidated financial statements
Greene County Bancorp, Inc.
Consolidated Statements of Changes in Shareholders' Equity
(Unaudited)
For the Nine Months Ended March 31, 2001 and 2000
Accumulated Unearned
Additional Other Unearned Stock- Total
Stock Paid - In Retained Comprehensive Treasury ESOP Based Shareholders'
Amount Capital Earnings Income Stock Shares Compensation Equity
Balance at
June 30, 1999 $195,706 $8,202,655 $16,354,339 ($118,394) --- ($712,440) --- $23,921,866
Stock dividend 19,578 1,766,896 (1,786,474) ---
ESOP shares earned (4,810) 78,363 73,553
Treasury stock ($1,019,976) (1,019,976)
repurchased
Net income 738,991 738,991
Change in unrealized
gain / (loss)
on securities
available for
sale, net of applicable,
deferred income taxes (468,348) (468,348)
taxes
-------- ----------- ----------- -------------- ------------ ---------- ------------- -------------
Balance at
March 31, 2000 $215,284 $9,964,741 $15,306,856 ($586,742) ($1,019,976) ($634,077) --- $23,246,086
======== =========== =========== ============== ============ ========== ============= =============
Balance at June 30, $215,284 $10,319,859 $15,526,092 ($524,546) ($1,019,976) ($589,074) ($333,690) $23,593,949
2000
ESOP shares earned 58 68,586 68,644
Stock-based
compensation earned 53,629 53,629
MRP shares issued (115,928) 115,928 ---
Treasury stock
repurchased (171,875) (171,875)
Net income 673,866 673,866
Dividends (493,305) (493,305)
Change in unrealized
gain / (loss)
on securities
available for
sale, net of applicable,
deferred income 1,057,189 1,057,189
taxes
-------- ----------- ----------- -------------- ------------ ---------- ------------- -------------
Balance at
March 31, 2001 $215,284 $10,203,989 $15,706,653 $532,643 ($1,075,923) ($520,488) ($280,061) $24,782,097
======== =========== =========== ============== ============ ========== ============= =============
See notes to consolidated financial statements
Greene County Bancorp, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended March 31, 2001 and 2000
2001 2000
---------- -----------
Net Income $673,866 $738,991
Adjustments to reconcile net income to cash provided by Operating activities:
Depreciation 296,000 180,000
Net amortization of premiums and discounts (2,137) 42,458
Provisions for loan losses 45,000 105,000
ESOP and other stock-based compensation earned 122,273 73,743
Net loss on sales of investments 9,437 ---
Net (gain) loss on sale of other real estate (6,158) 14,548
Net increase in accrued income taxes 80,893 8,952
Net increase in accrued interest receivable (67,138) (4,832)
Net increase in prepaid and other assets (27,131) (46,969)
Net decrease in other liabilities (67,421) (196,379)
--------- -----------
Net cash provided by operating activities 1,057,484 915,512
Cash flows from investing activities:
Proceeds from maturities of securities 7,616,469 3,359,774
Proceeds from sale of securities and other
investments 2,966,765 ---
Purchases of securities and other investments (11,287,785) (3,736,113)
Purchases of mortgage-backed securities (2,980,841) ---
Principal payments on securities 1,426,402 3,157,220
Principal payments on mortgage-backed securities 2,138,789 703,335
Proceeds from sale of other real estate 157,291 59,858
Net increase in loans receivable (6,162,952) (6,862,693)
Purchases of premises and equipment (303,953) (1,271,667)
-------------- ---------------
Net cash used by investing activities (6,429,815) (4,590,286)
Cash flows from financing activities:
(Payments to) borrowings from FHLB (2,500,000) 10,000,000
Purchases of treasury stock (171,875) (1,019,976)
Payment of dividends (493,305) ---
Net increase in deposits 7,494,300 405,969
-------------- -----------
Net cash provided by financing activities 4,329,120 9,385,993
Net (decrease)increase in cash and cash equivalents (1,043,211) 5,711,219
Cash and cash equivalents at the beginning of the period 15,813,605 6,135,746
-------------- -----------
Cash and cash equivalents at the end of the period $14,770,394 $11,846,965
============== ===========
See notes to consolidated financial statements
Greene County Bancorp, Inc
Notes to Consolidated Financial Statements
As of and for the Three and Nine Months Ended March 31, 2001 and 2000
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of Greene County Bancorp, Inc. (the "Company") and its wholly-owned
subsidiary, The Bank of Greene County (the "Bank"). The financial statements
have been prepared in accordance with generally accepted accounting principles
(GAAP) for interim financial information and the instructions to form 10-Qsb and
article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by GAAP for complete financial statements. 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 for the periods presented have been included. All
material inter-company accounts and transactions have been eliminated in the
consolidation. The results of operations and other data for the three and nine
months ended March 31, 2001 are not necessarily indicative of results that may
be expected for the entire fiscal year ending June 30, 2001.
In preparing the financial statements, management is required to make extensive
use of estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet, and revenues and expenses for
the period. Actual results could differ significantly 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 valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans. In connection with the determination of the allowance for
loan losses and valuation of other real estate owned, management obtains
independent appraisals for significant properties.
(2) NATURE OF ORGANIZATION
The Company operates as a holding company for the Bank, and its operations are
generally limited to holding the common stock of the Bank. The Bank has six full
service offices and an operations center located in its market area consisting
of Greene County, New York and southern Albany County. The Bank is primarily
engaged in the business of attracting deposits from the general public in the
Bank's market area, and investing such deposits, together with other sources of
funds in loans and investment securities.
(3) REORGANIZATION AND STOCK OFFERING
The Company is a Delaware corporation organized in December 1998 by The Bank in
connection with the conversion of the Bank from a New York chartered mutual
savings bank to a capital stock form of organization and reorganization to a
two-tiered mutual holding company. The Company was formed for the purpose of
acquiring all of the capital stock of the Bank upon completion of the
reorganization. The reorganization and offering were completed on December 30,
1998.
Completion of the offering resulted in the issuance of 1,957,057 shares of
common stock, 1,047,560 shares (53.5%) of which were issued to Greene County
Bancorp, MHC, the holding company's mutual holding Company (the "MHC"), 871,082
shares (44.5%) of which were sold at $10.00 per share to eligible depositors of
the Bank and issued to the Bank's ESOP, and 38,415 shares (2%) of which were
issued to the Bank's charitable foundation. The Bank's ESOP acquired 36,380
shares at issuance and purchased an additional 36,380 shares in the open market
after the initial public offering.
The Bank established a liquidation account, as of the date of the conversion, in
the amount of $15.7 million, equal to its net worth as of the date of the latest
consolidated statements of financial condition appearing in the final
prospectus. The liquidation account is maintained for the benefit of eligible
pre-conversion account holders who continue to maintain their accounts at the
Bank after the date of conversion. The liquidation account will be reduced
annually to the extent that eligible account holders have reduced their
qualifying deposits as of each anniversary date. Subsequent increases will not
restore an eligible account holder's interest in the liquidation account. In the
event of a complete liquidation, each eligible account holder will be entitled,
under New York State Law, to receive a distribution from the liquidation account
in an amount equal to their current adjusted account balances for all such
depositors then holding qualifying deposits in the Bank.
(4) EARNINGS PER SHARE
Basic earnings per share ("EPS") on common stock is computed by dividing the net
income by the weighted average number of shares of common stock outstanding for
the period. Diluted EPS is computed using the same method as Basic EPS, but
reflects potential dilution of common stock resulting from options what were
outstanding during the periods presented.
In calculating the weighted average number of shares outstanding, the results of
a stock dividend, stock repurchase programs and ESOP shares were taken into
account. The Board of Directors approved a 10% stock dividend on July 6, 1999
for shareholders of record July 26, 1999, effective August 9, 1999. As a result
of the stock dividend, 195,778 new shares were issued bringing the total number
of shares issued to 2,152,835. Shareholders who would have received a fractional
share as a result of the dividend were rounded up to the next whole number. The
effect of the stock dividend has been given retroactive treatment in the
calculation of EPS for all periods presented. On December 26, 2000, the Company
announced a new stock repurchase program authorizing the repurchase of up to 5%
of its issued and outstanding shares of common stock, or up to 102,200 shares.
All repurchases will be made in open market transactions, which are expected to
continue over a period of one year. Under the Repurchase Programs of 2000 and
2001, the Company has repurchased 124,600 shares of stock at an average cost of
$9.57. Under the 2000 Management Recognition Plan, 12,120 shares of stock were
issued from treasury stock in the first vesting of shares by officers and
outside directors. At December 31, 2000, 21,520 shares of the 80,036 shares of
common stock in the ESOP were outstanding and allocated to employees leaving
58,516 unallocated, and excluded from the calculation for the number of shares
outstanding.
Weighted Average
Number Of Shares
Three Months Ended Net Income Outstanding. Earnings Per Share
March 31,2001 $212,580
Weighted average EPS 1,974,262 $0.11
Diluted EPS 2,000,924 $0.11
March 31, 2000 $262,633
Weighted average EPS 1,977,945 $0.13
Diluted EPS 1,982,441 $0.13
Nine Months Ended
March 31, 2001 $673,866
Weighted average EPS 1,977,255 $0.34
Diluted EPS 1,994,882 $0.34
March 31, 2000 $738,991
Weighted average EPS 2,008,331 $0.37
Diluted EPS 2,009,825 $0.37
(5) DIVIDENDS
The Board of Directors approved a semi-annual $0.12 cash dividend on July 18,
2000 for shareholders of record August 1, 2000, and payable August 15, 2000.
The Board of Directors approved another semi-annual $0.12 cash dividend on
January 19, 2001 for shareholders of record February 15, 2001, and payable March
1, 2001. Stockholders were also offered the option to participate in a Dividend
Reinvestment Program at the payment of this dividend.
(6) IMPACT OF NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No.133, which establishes accounting
and reporting standards for derivative instruments and for hedging activities.
SFAS No. 133 requires that an entity recognize all derivatives as either assets
or liabilities in the statement of financial condition and measure those
instruments at fair value. In June 2000, SFAS No.133 was amended by SFAS
No.138 "Accounting for Certain Derivative Instruments and Certain Hedging
Activities." SFAS No. 138 and SFAS No. 133 are both effective for all fiscal
quarters of fiscal years beginning after June 15, 2000 and accordingly, have
been adopted by the Company in the fiscal year beginning on July 1, 2000.
The Company has not engaged in derivatives and hedging activities covered by
the new standard, and does not expect to begin such activities. Accordingly,
the adoptions of SFAS No. 133 and SFAS No. 138 have not had an impact on
the Company's consolidated financial statements.
In September 2000, the FASB issued SFAS No. 140. This Statement replaces FASB
Statement No. 125, Accounting Standards for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities. It revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures, but it carriers over most of
Statement 125's provisions without reconsideration. This Statement provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishments of liabilities. Those standards are based on
consistent application of a financial-components approach that focuses on
control. This Statement is effective for transfers and servicing for financial
assets and extinguishments of liabilities occurring after March 31, 2001. This
Statement is effective for recognition and reclassification of collateral and
for disclosures relating to securitization transactions and collateral for
fiscal years ending after December 15, 2000. The adoption of SFAS 140 has not
had an impact on the Company's consolidated financial statements.
In March 2000, the FASB issued FASB Interpretation ("FIN") No. 44, "Accounting
for Certain Transactions Involving Stock Compensation - an interpretation of APB
No. 25". FIN 44 clarifies the application of APB Opinion No. 25 and among other
issues clarifies the following: the definition of an employee for purposes of
applying APB Opinion No. 25; the criteria for determining whether a plan
qualifies as a noncompensatory plan, the accounting consequences of various
modifications to the terms of previously fixed stock options or awards; and the
accounting for an exchange of stock compensation awards in a business
combination. The Company adopted FIN 44 effective July 1, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
The Company's results of operations depend primarily on its net interest
income, which is the difference between the income earned on the Company'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 the
Company's provision for loan losses, income and expense pertaining to other real
estate owned, gains and losses from sales of securities, noninterest income and
noninterest expense. Noninterest income consists primarily of fees and service
charges. The Company's noninterest expenses consist principally of compensation
and employee benefits, occupancy, equipment, 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 the Company.
Special Note Regarding Forward-Looking Statements
This quarterly report on Form 10-Qsb contains forward-looking statements.
The Company 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,
describe future plans or strategies and include the Company's expectations of
future financial results. The words "believe," "expect," "anticipate,"
"project," and similar expressions identify forward-looking statements. The
Company'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, (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 Company's loan and investment portfolios, (f)
deposit flows, (g) competition, and (h) demand for financial services in the
Company'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.
Comparison of Financial Condition at March 31, 2001 and June 30, 2000
Total assets increased to $174.1 million at March 31, 2001 from $167.7
million at June 30, 2000, an increase of $6.4 million, or 3.8%. The asset growth
was a result of increases in the net loan portfolio and the investment
portfolio. The growth in assets was funded through increases in non-interest
bearing deposits, decreased federal funds sold, matured securities and sold
investments.
Total cash and cash equivalents including federal funds sold amounted to
$14.8 million at March 31, 2001, a decrease of $1.0 million or 6.3% from $15.8
million at June 30, 2000. Federal funds decreased $1.3 million or 13.3% to $8.5
million at March 31, 2001 as compared to $9.8 million at June 30, 2000. The
primary reason for the decrease in federal funds sold was to fund loan demand
and investment security purchases.
Investments amounted to $47.8 million at March 31, 2001 as compared to
$44.8 million at June 30, 2000, an increase of $3.0 million or 6.7%. The
increase of $3.0 million in investment securities was due to $14.3 million of
purchases of securities including $3.0 million of mortgage-backed securities
over the nine-month period ended March 31, 2001. The purchases of securities
were partially offset by a sale of securities, and liquidation of a mutual fund
investment and purchase mortgage servicing rights investment. Management
liquidated its entire positions of $1.2 million in a mutual fund that primarily
invests in adjustable mortgages, recording a loss of $15,000. Management also
liquidated its entire position of $1.0 million in an investment in purchased
mortgage servicing rights. However, another security was sold for approximately
$0.7 million for a gain of $44,000. Proceeds from maturities amounted to $7.6
million for the nine months ended March 31, 2001. Principal payments of
securities and mortgage-backed securities amounted to $1.4 million and $2.1
million, respectively for the nine-months ended March 31, 2001.
As a result of the investment activities occurring within the nine-month
period ended March 31, 2001, there were shifts in the portfolio mix. U.S.
Treasury securities decreased $3.7 million or 78.7% to $1.0 million at March 31,
2001 as compared to $4.7 million at June 30, 2000. U.S. Treasury securities
represented 10.5% of the investment portfolio at June 30, 2000 as compared to
2.1% at March 31, 2001. U.S. agency securities decreased $0.7 million or 13.5%
to $4.5 million at March 31, 2001 as compared to $5.2 million at June 30, 2000.
U.S agency securities represented 11.6% of the portfolio at June 30, 2000 as
compared to 9.4% at March 31, 2001. The portfolio of mortgage-backed securities
was maintained at approximately $6.0 million at March 31, 2001 and June 30,
2000, representing 13.4% of the portfolio at June 30, 2000 as compared to 12.7%
at March 31, 2001. Tax-free investments amounted to $10.0 million at March 31,
2001 as compared to $9.9 million at June 30, 2000, representing 21.0% and 22.1%
of the portfolio, respectively. Corporate securities increased $9.1 million or
71.1% to $21.9 million or 45.8% of the portfolio at March 31, 2001 as compared
to $12.8 million or 28.6% of the portfolio at June 30, 2000. Asset-backed
securities amounted to $4.1 million or 8.6% of the portfolio at March 31, 2001
as compared to $4.9 million or 11.0% of the portfolio at June 30, 2000, a
decrease of $0.8 million. Management attempted to take advantage of higher
yielding securities in anticipation of Federal Reserve interest rate reductions
with significant purchases made during the last quarter of calendar year 2000.
As a result, the yield on investments increased 8 basis points to 6.14% for the
three-months ended March 31, 2001 as compared to 6.06% for the three-months
ended March 31, 2000.
The net loan portfolio amounted to $103.8 million at March 31, 2001, as
compared to $97.8 million at June 30, 2000, an increase of $6.0 million or 6.1%.
Increases occurred in all the loan categories. An increase of $2.4 million, or
2.9% in residential mortgages was the largest dollar increase. Significant
increases also occurred in installment loans, which grew by $994,000 or 20.4%,
and home equity loans, which grew by $991,000 or 21.4% between June 30, 2000 and
March 31, 2001.
During the nine months ended March 31, 2001, there were $69,000 in
charge-offs and $25,000 in recoveries of loans previously charged-off. As a
result of these charge-offs, recoveries, and the provisions for loan losses, the
balance of the allowance for loan losses at March 31, 2001 increased to $867,166
from $866,443 at June 30, 2000. The ratio of the net charge-offs to average
loans outstanding of $100.5 million during the nine months ended March 31, 2001,
was less than one percent.
While management believes, based on information currently available, that
the allowance for loan losses is sufficient to cover losses inherent in the
Company's loan portfolio at this time, no assurances can be given that the level
of allowances will be sufficient to cover future loan losses or that future
adjustments to the allowance will not be necessary if economic and/or other
conditions differ substantially from the economic and other conditions
considered by management in evaluating the adequacy of the current level of the
allowance.
Nonaccrual Loans and Nonperforming Assets
At March 31, 2001 At June 30, 2000
(Dollars in Thousands)
Nonaccruing loans:
One-to-four family $675 $496
Commercial real estate 144 155
Consumer 25 21
Commercial business --- ---
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Total nonaccruing loans $844 $672
Real estate owned:
One-to-four family 104 42
Non-farm, nonresidential property --- 109
------------- -------------------
Total real estate owned 104 $151
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Total nonperforming assets $948 $823
------------- -------------------
Total nonperforming assets
as a percentage of net loans 0.91% 0.84%
Total nonperforming assets
as a percentage of total assets 0.54% 0.49%
Purchased mortgage servicing rights were sold during the quarter ended
September 30, 2000 at a loss of $39,000. Management was not satisfied with the
level of return of the investment compared to the risk involved in the asset.
Prepaid expenses and other assets decreased to $0.3 million at March 31,
2001 as compared to $0.9 million at June 30, 2000 due primarily to the change in
deferred taxes associated with marking to market the available-for-sale
investment portfolio. At March 31, 2001 the investment portfolio had unrealized
gains of approximately $885,000 as compared to unrealized losses of
approximately $915,000 at June 30, 2000.
Total deposits amounted to $141.0 million at March 31, 2001 as compared to
$133.5 million at June 30, 2000. The increase occurred in the non-interest
bearing deposit category, which grew to $15.4 million at March 31, 2001 from
$12.3 million at June 30, 2000, an increase of $3.1 million or 25.2%. Factors
contributing to the increase included offering of totally free checking
products, marketing efforts to commercial accounts for accounts such as business
checking and the opening of two new branches during the last nine months.
In September 1999, the Bank borrowed $2.5 million at a rate of 6.82%,
maturing in September 2004, from the Federal Home Loan Bank. In October 1999,
the Bank borrowed an additional $2.5 million at a rate of 6.8%, maturing in
October 2005, from the Federal Home Loan Bank. An additional $2.5 million was
borrowed short-term at a rate of 5.29%, and matured in April 2001.
Shareholders' equity amounted to $24.8 million at March 31, 2001 as
compared to $23.6 million at June 30, 2000, an increase of $1.2 million or 5.1%.
The increase in shareholders' equity was a result of net income, offset by
dividends declared and paid, and increases in unrealized gains on the
available-for-sale investment portfolio. Net income for the nine-month period
ended March 31, 2001 amounted to $673,866. Net income was offset by dividends of
$0.12 per share being paid in August 2000 and February 2001. Changes in
accumulated comprehensive income resulted from increases in the market value of
the available-for-sale investment portfolio of $1,057,000, net of tax.
Comparison of Operating Results for the Three Months
Ended March 31, 2001 and 2000
GENERAL. The Company reported net income of $212,580 for the three months
ended March 31, 2001, compared to $262,633 for the three months ended March 31,
2000, a decrease of $50,053 or 19.1%. Basic and diluted earnings per share as of
March 31, 2001 amounted to $0.11, a decrease of $0.02, from $0.13 for quarter
ended March 31, 2000. Since March 2000, the Company has opened two new branches
in Tannersville and Westerlo, New York primarily contributing to the decrease in
earnings. Management believes that the branches will contribute to future growth
of the Company.
INTEREST INCOME. Interest income increased to $2,907,964 for the three
months ended March 31, 2001 from $2,626,557 for the three months ended March 31,
2000, an increase of $281,407 or 10.7%. The increase was due to an increase of
$13.8 million, or 9.2%, in the average balance of interest earning assets for
the three months ended March 31, 2001, and an increase in the average yield on
such assets to 7.10% for the period from 7.01% for the earlier-year period.
Increases in yields on loans and investments offset decreases in yields on
interest bearing balances and federal funds sold. The average balance of loans
increased $5.9 million and the yield on such loans increased 20 basis points to
7.75% from 7.55% when comparing the quarter ended March 2001 to the quarter
ended March 2000. Investment securities' average balance increased $4.5 million
to $49.6 million for the three months ended March 31, 2001 as compared to $45.1
million for the three months ended March 31, 2000. The yield on such securities
also increased 8 basis points primarily due to the purchases of investments made
during the summer and fall of 2000 before the Federal Reserve began cutting
interest rates.
INTEREST EXPENSE. Interest expense increased to $1,371,796 for the three
months ended March 31, 2001 from $1,267,514 for the three months ended March 31,
2000, an increase of $104,282 or 8.2%. The average balance of interest bearing
liabilities increased to $147.9 million for the quarter ended March 31, 2001 as
compared to $136.5 million for the quarter ended March 31, 2000, an increase of
$11.4 million or 8.3%. The average balance in all deposit types increased. The
savings and escrow average balance increased $2.8 million and the average rate
on such deposits increased 5 basis points to 3.10%. The demand and Now average
balance increased $6.4 million; however, the average rate decreased by 10 basis
points to 0.73%. Partially contributing to the demand and Now average rate
decrease was the offering of a free-checking account product. The average
balance for certificate accounts increased by $2.1 million. The certificate
average rate also increased by 29 basis points to 5.25%, primarily due to the
higher interest rate environment during the summer and fall of calendar year
2000.
NET INTEREST INCOME. Net interest income increased to $1,536,168 for the
three months ended March 31, 2001 as compared to $1,359,043 for the three months
ended March 31, 2000, an increase of $177,125 or 13.0%. The higher market
interest rate environment contributed to the increase in yield on interest
earning assets and increased rate on interest bearing liabilities. Improvement
in net interest rate spread (the difference between yields earned on
interest-earning assets and rates paid on deposits and borrowings) also resulted
due to the increase in average balances and yield, which was partially offset by
increased certificate rates. The net interest rate spread increased to 3.39% for
the quarter ended March 31, 2001 as compared to 3.29% for the quarter ended
March 31, 2000. Other factors contributing to the improved spread were increases
in the non-interest bearing accounts resulting from the offering of totally-free
checking, increases in number and average balance of business checking accounts,
and opening of new branches.
PROVISION FOR LOAN LOSSES. The Company establishes provisions for loan
losses, which are charged to operations, in order to maintain the allowance for
loan losses at a level that is deemed appropriate to absorb future charge-offs
and loans deemed uncollectible. In determining the appropriate level of the
allowance for loan losses, management considers past and anticipated loss
experience, collateral values, current and anticipated economic conditions,
volume and type of lending activities and the level of non-performing and other
classified loans. The allowance is based on estimates and the ultimate losses
may vary from such estimates. Management of the Company assesses the allowance
for loan losses on a quarterly basis and makes provisions for loan losses in
order to maintain the adequacy of the allowance.
Provision for loan losses amounted to $15,000 for the quarter ended March
31, 2001 as compared to $30,000 for the quarter-ended March 31, 2000. The
allowance for loan loss amounted to $867,166 or approximately 0.83% of net loans
at March 31, 2001 as compared to $866,443 or $0.88% of net loans at June 30,
2000.
NON-INTEREST INCOME. Non-interest income consists primarily of fee income
for Bank services. Non-interest income increased to $233,942 for the three
months ended March 31, 2001, from $222,812 for the three months ended March 31,
2000, an increase of $11,130 or 5.0%. Items contributing to the increase in
non-interest income included: merchant services income, ATM surcharges, debit
card fees, and account service charges.
NON-INTEREST EXPENSE. Non-interest expense amounted to $1,506,830 for the
quarter ended March 31, 2001 as compared to $1,227,404 for the quarter ended
March 31, 2000. Salary expense, occupancy expense and equipment and furniture
expense all increased due to the two new branches in Tannersville and Westerlo,
New York. Insurance expense also increased as a result of additional staff and
the branches further contributing to the overall increase in non-interest
expense.
INCOME TAXES. The Company reported a tax expense of $35,700 for federal and
franchise taxes for the quarter ended March 31, 2001, compared to $61,818 for
the quarter ended March 31, 2000. The decrease was due to a reduced effective
tax rate from approximately 19.0% to 14.3% and corresponding change in the
provision to reflect actual expectations for the year.
Comparison of Operating Results for the Nine Months Ended
March 31, 2001 and 2000
GENERAL. Net income for the nine months ended March 31, 2001 amounted to
$673,866 as compared to $738,991 for the nine months ended March 31,2000, a
decrease of $65,125 or 8.8%. The most significant reason for the decrease in net
income was the addition of two new branches in Tannersville and Westerlo. As a
result of the new branches, compensation, occupancy, and equipment and furniture
expense all increased when comparing the nine-month periods ended March 31, 2001
and March 31, 2000.
INTEREST INCOME. Interest income increased to $8,556,700 for the nine
months ended March 31, 2001, compared to $7,822,039 for the nine months ended
March 31, 2000, an increase of $734,661 or 9.4%. The increase in interest income
can be attributed to an increase of approximately $4.9 million or 5.1% in
average loan balances from $95.6 million for the nine-month period ended March
31, 2000, to $100.5 million for the same period ended March 31, 2001. The effect
of an increase in the average loan balances was enhanced by a 21 basis point
increase in the average yield. The average balance for investment securities
increased $2.3 million and the yield increased 7 basis points on such securities
which enhanced interest income when comparing the nine-month period ended March
31, 2001 to March 31, 2000. Increases in the average federal funds balances of
$2.9 million and yield increases of 64 basis points contributed to the overall
increase in interest income. The general fluctuation in the market interest rate
environment as a result of Federal Reserve activities has been the primary
factor in the interest yield changes.
INTEREST EXPENSE. Interest expense increased to $4,120,404 for the nine
months ended March 31, 2001, from $3,669,686 for the nine months ended March 31,
2000. The average balance of certificate of deposit accounts increased to $52.0
million for the nine-months ended March 31, 2001 as compared to $51.4 million
for the nine-months ended March 31, 2000, an increase of $0.6 million. The
average rate on such certificates of deposit increased by 39 basis points to
5.28% from 4.89%. The reasons for the increase in certificate of deposit rates
include the general higher market interest rate environment for the period ended
March 31, 2001 as compared to March 31, 2000. The Bank also offered certificate
of deposit specials in the new branches to entice customers to move funds to the
Bank and to compete with the overall higher rates offered by competitors in the
fall of 2000. An increased average balance of borrowed funds to $10.0 million
for the nine months ended March 31, 2001 compared to $6.9 million for the nine
months ended March 31, 2000 contributed to the increased interest expense when
comparing the periods. The main reason for the increase in average balance was
because the Company had no borrowings until October 2000.
NET INTEREST INCOME. Net interest income increased $283,943 or 6.81%,to
$4,436,296 for the nine-month period ended March 31, 2001, as compared to
$4,152,353 for the same period ended March 30, 2000. The increase in net
interest income resulted from increases in yield and average balances of
interest earning assets that were partially offset by increases in rate and
average balances of interest-bearing liabilities.
Average balances of interest earning assets increased $10.2 million and yield
increased 17 basis points. However, average balances of interest-bearing
liabilities increased $10.3 million and average rate increased by 15 basis
points. The higher overall market interest rate environment was the primary
factor behind these rate and yield changes. As a result of these changes in
average balances, yields and rates the net interest spread increased to 3.36%
for the nine months ended March 31, 2001 from 3.35% for the nine months ended
March 31, 2000. Net interest margin remained consistent at 3.70% for both nine-
month periods ended March 31, 2001 and 2000.
PROVISION FOR LOAN LOSSES. The Company's provision for loan losses was
decreased to $45,000 for the nine-month period ended March 31, 2001, as compared
to $105,000 for the nine-month period ended March 31, 2000. The allowance for
loan loss amounted to $867,166 or approximately 0.83% of net loans at March 31,
2001 as compared to $866,443 or 0.88% of net loans at June 30, 2000.
NON-INTEREST INCOME. Non-interest income increased to $785,746 for the nine
months ended March 31, 2001, from $616,069 for the nine months ended March 31,
2000, an increase of $169,677 or 27.5%. Fees earned on deposit accounts
increased to $383,971 for the nine months ended March 31, 2001 as compared to
$272,754 for the nine months ended March 31, 2000, an increase of $111,217 or
40.8%. The increase in fees on these accounts was a result of more accounts and
increased service fees charges on such accounts. Other items contributing to the
overall increase in non-interest income were increases in debit card fees, ATM
surcharges, and merchant services income. A $17,000 gain on the sale of REO
property also enhanced non-interest income as well as a gain of $44,000 on the
sale of an investment security.
NON-INTEREST EXPENSE. Non-interest expense increased to $4,295,310 for the
nine months ended March 31, 2001 from $3,635,568 for the nine months ended March
31, 2000, an increase of $659,742 or 18.1%. The most significant increase of
$394,334 occurred in salary and employee benefits as a result of additional
staffing for the new Tannersville and Westerlo Branches as well as an additional
staff in the lending and operations departments. Also, contributing to the
increase in salary expense was the expense associated with the Management
Recognition and Retention Plan approved by shareholders in March 2000. The
opening of the new branches also increased occupancy and furniture and equipment
expenses. Investment in infrastructure such as technology also increased the
equipment expense for the nine months ended March 31, 2001. Losses
of $39,000 on the disposal of purchased mortgage servicing rights, of $15,000 on
the liquidation of an investment in a mutual fund and of $7,000 on the sale of
REO, were recognized which contributed to the overall increase in non-interest
expense for the nine month period ended March 31, 2001 as compared to March 31,
2000.
INCOME TAXES. The Company reported a tax expense of $207,866 for federal
and franchise taxes for the nine months ended March 31, 2001, compared to
$288,863 for the nine months ended March 31, 2000. A factor contributing to the
lower tax expense for the nine months ended March 31, 2001 was a refund of
approximately $34,000 received in association expenses incurred to restore the
1930s art-deco building at 302 Main Street in Catskill, which is currently the
Operations Center for the Company.
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. The Company's most
significant form of market risk is interest rate risk since the majority of the
Company's assets and liabilities are sensitive to changes in interest rates. The
Company's primary sources of funds are deposits, principal and interest payments
on loans, mortgage-backed securities and debt securities and a line of credit
available as needed from the FHLB. While maturities and scheduled amortization
of loans and investments are predictable sources of funds, deposit flows and
mortgage loan prepayments are greatly influenced by interest rate trends,
economic conditions and competition.
Liquidity risk is the risk of generating sufficient cash flow to meet all
present and future funding commitments, depositor withdrawals and operating
expenses.
Loan commitments for loans in process amounted to $1.2 million at March 31,
2001. Additionally, mortgage commitments amounted to $1.7 million at March 31,
2001. Total commitments related to lines of credit amounted to $1.7 million at
March 31, 2001, of which approximately $674,000 was associated with overdraft
lines of credit. The Company anticipates that it will have sufficient funds
available to meet current loan commitments.
The Company's most liquid assets are cash and due from banks and federal
funds sold. At March 31, 2001, such assets amounted to $14.8 million, or 8.5% of
total assets. Management also holds all investment securities as available for
sale and could consider the sale of securities as an option if liquidity were
needed.
Stockholders' equity increased to $24.8 million at March 31, 2001 as
compared to $23.6 million at June 30, 2000. At March 31, 2001, the Company
exceeded all regulatory capital requirements.
The Company's ability to pay dividends is dependent on the Bank's ability
to pay dividends to the Company. There are certain restrictions on the payment
of dividends and other payments by the Bank to the Company. Under New York law,
the Bank is prohibited from declaring a cash dividend on its common stock except
from its net earnings for the current year and retained net profits for the
preceding two years.
Recent Developments
The Company received approval on April 2, 2001 from the Office of Thrift
Supervision to convert the charter of Greene County Bancorp, Inc. and Greene
County Bancorp, MHC to federal charters. Greene County Bancorp, Inc. currently
operates as a Delaware Corporation. Greene County Bancorp, MHC currently
operates under a New York charter. However, the Bank itself will retain its
New York state savings bank charter.
These conversions are expected to be consummated during the quarter ending June
2001. The reasons for the charter conversions were described in the proxy
materials distributed to stockholders on October 12, 2000.
GREENE COUNTY BANCORP, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not engaged in any material legal proceedings at the present
time.
Item 2. Changes in Securities and Use of Proceeds
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
Not applicable
SIGNATURES
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: May 14, 2001
By: /s/ J. Bruce Whittaker
----------------------------------
J. Bruce Whittaker
President and Chief Executive Officer
Date: May 14, 2001
By: /s/ Michelle Plummer
----------------------------------
Michelle Plummer, CPA
Chief Financial Officer