form10qsbmarch312007
U.S.
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 QUARTERLY PERIOD ENDED MARCH 31, 2007
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
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
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:
X
No:
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.
Yes:
No: X
As
of May
4, 2007, the registrant had 4,305,670 shares of common stock issued at $ 0.10
par value, and 4,151,066 shares were outstanding.
Transitional
Small Business Disclosure
Format:
Yes:
No: X
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GREENE
COUNTY BANCORP, INC.
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INDEX
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PART
I.
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FINANCIAL
INFORMATION
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Page
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Item
1.
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Financial
Statements
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*
Consolidated Statements of Financial Condition
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*
Consolidated Statements of Income
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*
Consolidated Statements of Comprehensive Income
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*
Consolidated Statements of Changes in Shareholders’ Equity
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*
Consolidated Statements of Cash Flows
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*
Notes to Consolidated Financial Statements
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Item
2.
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Management’s
Discussion and Analysis
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Item
3.
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Controls
and Procedures
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PART
II.
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OTHER
INFORMATION
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Item
1.
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Legal
Proceedings
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Item
2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
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Item
3.
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Defaults
Upon Senior Securities
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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Item
5.
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Other
Information
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Item
6.
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Exhibits
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Signatures
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Exhibit
31.1 302 Certification of Chief Executive Officer
Exhibit
31.2 302 Certification of Chief Financial Officer
Exhibit
32.1 906 Statement of Chief Executive Officer
Exhibit
32.2 906 Statement of Chief Financial Officer
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Part
I. Item 1.
Consolidated
Statements of Financial Condition
As
of March 31, 2007 and June 30, 2006 (Unaudited)
(Dollars
in thousands, except per share amounts)
ASSETS
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March
31, 2007
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June
30, 2006
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Cash
and due from banks
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$
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11,910
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$
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12,218
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Federal
funds sold
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8,042
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3,634
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Total
cash and cash equivalents
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19,952
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15,852
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Securities
available for sale, at fair value
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79,390
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87,267
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Federal
Home Loan Bank stock, at cost
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643
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643
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Loans
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206,251
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191,429
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Less:
Allowance for loan losses
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(1,437
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)
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(1,314
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)
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Unearned
origination fees and costs, net
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51
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(22
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)
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Net
loans receivable
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204,865
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190,093
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Premises
and equipment
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13,703
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10,805
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Accrued
interest receivable
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1,901
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1,736
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Prepaid
expenses and other assets
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951
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1,169
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Total
assets
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$
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321,405
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$
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307,565
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LIABILITIES
AND SHAREHOLDERS' EQUITY
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LIABILITIES
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Noninterest
bearing deposits
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$
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42,008
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$
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41,503
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Interest
bearing deposits
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238,205
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226,747
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Total
deposits
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280,213
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268,250
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Borrowings
from FHLB
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5,000
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5,000
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Accrued
expenses and other liabilities
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820
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734
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Total
liabilities
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286,033
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273,984
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SHAREHOLDERS’
EQUITY
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Preferred
stock,
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Authorized
1,000,000 shares; none issued
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---
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---
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Common
stock, par value $.10 per share;
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Authorized:12,000,000
shares
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Issued:
4,305,670 shares
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Outstanding:
4,150,066 shares at March 31, 2007
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and
4,145,246 shares at June 30, 2006;
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431
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431
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Additional
paid-in capital
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10,418
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10,300
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Retained
earnings
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25,593
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24,588
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Accumulated
other comprehensive loss
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(152
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(747
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Treasury
stock, at cost 155,604 shares at March 31,
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2007,
and 160,424 shares at June 30, 2006
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(834
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(860
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)
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Unearned
ESOP shares, at cost
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(84
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)
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(131
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)
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Total
shareholders’ equity
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35,372
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33,581
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Total
liabilities and shareholders’ equity
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$
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321,405
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$
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307,565
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See
notes to consolidated financial statements.
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Consolidated
Statements of Income
For
the Nine Months Ended March 31, 2007 and 2006
(Unaudited)
(Dollars
in thousands, except per share amounts)
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2007
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2006
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Interest
income:
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Loans
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$
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9,835
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$
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8,345
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Investment
securities
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487
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345
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Mortgage-backed
securities
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1,079
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1,156
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Tax
exempt securities
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833
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751
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Interest
bearing deposits and federal funds sold
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297
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324
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Total
interest income
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12,531
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10,921
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Interest
expense:
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Interest
on deposits
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4,514
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2,727
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Interest
on borrowings
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139
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182
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Total
interest expense
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4,653
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2,909
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Net
interest income
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7,878
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8,012
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Provision
for loan losses
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194
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100
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Net
interest income after provision for loan losses
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7,684
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7,912
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Noninterest
income:
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Service
charges on deposit accounts
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1,566
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1,330
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Debit
card fees
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436
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370
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Gain
on sale of premises and equipment
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257
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---
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Other
operating income
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675
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625
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Total
noninterest income
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2,934
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2,325
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Noninterest
expense:
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Salaries
and employee benefits
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4,339
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4,314
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Occupancy
expense
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589
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451
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Equipment
and furniture expense
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632
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587
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Service
and data processing fees
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719
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735
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Computer
supplies and support
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194
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154
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Office
supplies
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149
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90
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Loss
on sale of premises and equipment
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---
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66
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Other
|
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1,369
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1,389
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Total
noninterest expense
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7,991
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7,786
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Income
before provision for income taxes
|
|
|
2,627
|
|
|
2,451
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|
|
|
|
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|
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Provision
for income taxes
|
|
|
737
|
|
|
694
|
|
|
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|
|
|
|
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Net
income
|
|
$
|
1,890
|
|
$
|
1,757
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|
|
|
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|
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|
Basic
EPS
|
|
$
|
0.46
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|
$
|
0.43
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|
Basic
shares outstanding
|
|
|
4,122,500
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|
|
4,095,406
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|
Diluted
EPS
|
|
$
|
0.45
|
|
$
|
0.42
|
|
Diluted
average shares outstanding
|
|
|
4,192,002
|
|
|
4,178,548
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|
Dividends
declared per share
|
|
$
|
0.48
|
|
$
|
0.45
|
|
See
notes to consolidated financial statements.
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Greene
County Bancorp, Inc.
Consolidated
Statements of Income
For
the Three Months Ended March 31, 2007 and 2006
(Unaudited)
(Dollars
in thousands, except per share amounts)
|
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|
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|
|
|
|
2007
|
|
|
2006
|
|
Interest
income:
|
|
|
|
|
|
|
|
Loans
|
|
$
|
3,353
|
|
$
|
2,879
|
|
Investment
securities
|
|
|
167
|
|
|
94
|
|
Mortgage-backed
securities
|
|
|
328
|
|
|
377
|
|
Tax
exempt securities
|
|
|
282
|
|
|
270
|
|
Interest
bearing deposits and federal funds sold
|
|
|
107
|
|
|
112
|
|
Total
interest income
|
|
|
4,237
|
|
|
3,732
|
|
|
|
|
|
|
|
|
|
Interest
expense:
|
|
|
|
|
|
|
|
Interest
on deposits
|
|
|
1,592
|
|
|
1,018
|
|
Interest
on borrowings
|
|
|
46
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|
|
45
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|
Total
interest expense
|
|
|
1,638
|
|
|
1,063
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Net
interest income
|
|
|
2,599
|
|
|
2,669
|
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|
|
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|
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Provision
for loan losses
|
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|
83
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|
40
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|
|
|
|
|
|
|
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Net
interest income after provision for loan losses
|
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|
2,516
|
|
|
2,629
|
|
|
|
|
|
|
|
|
|
Noninterest
income:
|
|
|
|
|
|
|
|
Service
charges on deposit accounts
|
|
|
509
|
|
|
417
|
|
Debit
card fees
|
|
|
146
|
|
|
137
|
|
Other
operating income
|
|
|
185
|
|
|
208
|
|
Total
noninterest income
|
|
|
840
|
|
|
762
|
|
|
|
|
|
|
|
|
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Noninterest
expense:
|
|
|
|
|
|
|
|
Salaries
and employee benefits
|
|
|
1,549
|
|
|
1,459
|
|
Occupancy
expense
|
|
|
236
|
|
|
162
|
|
Equipment
and furniture expense
|
|
|
236
|
|
|
192
|
|
Service
and data processing fees
|
|
|
245
|
|
|
214
|
|
Computer
supplies and support
|
|
|
76
|
|
|
51
|
|
Office
supplies
|
|
|
69
|
|
|
33
|
|
Other
|
|
|
486
|
|
|
491
|
|
Total
noninterest expense
|
|
|
2,897
|
|
|
2,602
|
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes
|
|
|
459
|
|
|
789
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
80
|
|
|
215
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
379
|
|
$
|
574
|
|
|
|
|
|
|
|
|
|
Basic
EPS
|
|
$
|
0.09
|
|
$
|
0.14
|
|
Basic
shares outstanding
|
|
|
4,127,946
|
|
|
4,103,510
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
$
|
0.09
|
|
$
|
0.14
|
|
Diluted
average shares outstanding
|
|
|
4,195,761
|
|
|
4,179,729
|
|
Dividends
declared per share
|
|
$
|
0.25
|
|
$
|
0.23
|
|
See
notes to consolidated financial statements.
|
|
|
|
|
|
|
|
Consolidated
Statements of Comprehensive Income
(Unaudited)
(Dollars
in thousands)
For
the Nine Months Ended March 31, 2007 and 2006
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
1,890
|
|
$
|
1,757
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
holding gain (loss) arising during the nine months
|
|
|
|
|
|
|
|
ended
March 31, 2007 and 2006, net of income
|
|
|
|
|
|
|
|
tax
(expense) benefit of $(381) and $190, respectively.
|
|
|
595
|
|
|
(298
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other comprehensive income (loss)
|
|
|
595
|
|
|
(298
|
)
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
|
2,485
|
|
$
|
1,459
|
|
|
|
|
|
|
|
|
|
For
the Three
Months Ended March 31, 2007 and 2006
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
379
|
|
$
|
574
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss) :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
holding gain (loss) arising during the three months
|
|
|
|
|
|
|
|
ended
March 31, 2007 and 2006, net of income
|
|
|
|
|
|
|
|
tax
(expense) benefit of $(51) and $66, respectively.
|
|
|
80
|
|
|
(103
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other comprehensive income (loss)
|
|
|
80
|
|
|
(103
|
)
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
|
459
|
|
$
|
471
|
|
|
|
|
|
|
|
|
|
See
notes to consolidated financial statements.
Consolidated
Statements of Changes in Shareholders’ Equity
For
the Nine
Months Ended March 31, 2007 and 2006
(Unaudited)
(Dollars
in thousands)
|
|
|
|
Accumulated
|
|
|
|
|
|
Additional
|
|
Other
|
|
Unearned
|
Total
|
|
Capital
|
Paid
- In
|
Retained
|
Comprehensive
|
Treasury
|
ESOP
|
Shareholders’
|
|
Stock
|
Capital
|
Earnings
|
Income
|
Stock
|
Shares
|
Equity
|
|
|
|
|
(loss)
|
|
|
|
Balance
at
|
|
|
|
|
|
|
|
June
30, 2005
|
$431
|
$10,129
|
$23,168
|
$163
|
($942)
|
($196)
|
$32,753
|
|
|
|
|
|
|
|
|
ESOP
shares earned
|
|
140
|
|
|
|
49
|
189
|
|
|
|
|
|
|
|
|
Options
exercised
|
|
(21)
|
|
|
80
|
|
59
|
|
|
|
|
|
|
|
|
Dividends
declared
|
|
|
(823)
|
|
|
|
(823)
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
1,757
|
|
|
|
1,757
|
|
|
|
|
|
|
|
|
Unrealized
loss on securities, net
|
|
|
|
(298)
|
|
|
(298)
|
|
|
|
|
|
|
|
|
Balance
at
|
|
|
|
|
|
|
|
March
31, 2006
|
$431
|
$10,248
|
$24,102
|
($135)
|
($862)
|
($147)
|
$33,637
|
|
|
|
|
|
|
|
|
Balance
at
|
|
|
|
|
|
|
|
June
30, 2006
|
$431
|
$10,300
|
$24,588
|
($747)
|
($860)
|
($131)
|
$33,581
|
|
|
|
|
|
|
|
|
ESOP
shares earned
|
|
111
|
|
|
|
47
|
158
|
|
|
|
|
|
|
|
|
Options
exercised
|
|
(7)
|
|
|
26
|
|
19
|
|
|
|
|
|
|
|
|
Tax
effect, options
|
|
14
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
Dividends
declared
|
|
|
(885)
|
|
|
|
(885)
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
1,890
|
|
|
|
1,890
|
|
|
|
|
|
|
|
|
Unrealized
gain on securities, net
|
|
|
|
595
|
|
|
595
|
|
|
|
|
|
|
|
|
Balance
at
|
|
|
|
|
|
|
|
March
31, 2007
|
$431
|
$10,418
|
$25,593
|
($152)
|
($834)
|
($84)
|
$35,372
|
See
notes to consolidated financial statements.
Consolidated
Statements of Cash Flows
For
the Nine Months Ended March 31, 2007 and 2006
(Unaudited)
(Dollars
in thousands)
|
|
|
2007
|
|
|
2006
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
Income
|
|
$
|
1,890
|
|
$
|
1,757
|
|
Adjustments
to reconcile net income to cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation
|
|
|
713
|
|
|
608
|
|
Net
amortization of security premiums and discounts
|
|
|
575
|
|
|
1,298
|
|
Provision
for loan losses
|
|
|
194
|
|
|
100
|
|
ESOP
compensation earned
|
|
|
158
|
|
|
189
|
|
(Gain)
loss on sale of premises and equipment
|
|
|
(257
|
)
|
|
66
|
|
Net
(decrease) increase in accrued income taxes
|
|
|
(105
|
)
|
|
114
|
|
Net
increase in accrued interest receivable
|
|
|
(165
|
)
|
|
(96
|
)
|
Net
increase in prepaid and other assets
|
|
|
(58
|
)
|
|
(100
|
)
|
Net
increase (decrease) in other liabilities
|
|
|
86
|
|
|
(639
|
)
|
Net
cash provided by operating activities
|
|
|
3,031
|
|
|
3,297
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
Proceeds
from maturities and calls of securities
|
|
|
4,124
|
|
|
6,116
|
|
Purchases
of securities
|
|
|
(7,559
|
)
|
|
(9,594
|
)
|
Principal
payments on securities
|
|
|
11,713
|
|
|
15,762
|
|
Net
increase in loans receivable
|
|
|
(14,966
|
)
|
|
(18,564
|
)
|
Proceeds
from sale of premises and equipment
|
|
|
350
|
|
|
262
|
|
Purchases
of premises and equipment
|
|
|
(3,704
|
)
|
|
(2,581
|
)
|
Net
cash used in investing activities
|
|
|
(10,042
|
)
|
|
(8,599
|
)
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
Repayments
of FHLB borrowings
|
|
|
---
|
|
|
(2,500
|
)
|
Dividends
paid
|
|
|
(885
|
)
|
|
(823
|
)
|
Proceeds
from exercise of stock options
|
|
|
19
|
|
|
59
|
|
Excess
tax benefit from stock based compensation
|
|
|
14
|
|
|
---
|
|
Net
increase in deposits
|
|
|
11,963
|
|
|
6,692
|
|
Net
cash provided by financing activities
|
|
|
11,111
|
|
|
3,428
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
4,100
|
|
|
(1,874
|
)
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of period
|
|
|
15,852
|
|
|
19,931
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
|
$
|
19,952
|
|
$
|
18,057
|
|
See
notes to consolidated financial statements.
|
|
|
|
Notes
to Consolidated Financial Statements
As
of and for the Nine Months and Three Months Ended March 31, 2007 and
2006
(1) Basis
of Presentation
The
accompanying consolidated balance sheet information as of June 30, 2006 was
derived from the audited consolidated financial statements of Greene County
Bancorp, Inc. (the “Company”) and its wholly owned subsidiary, The Bank of
Greene County (the “Bank”) and the Bank’s wholly owned subsidiary, Greene County
Commercial Bank. The consolidated financial statements at and for the three
and
nine months ended March 31, 2007 and 2006 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-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. To the extent
that
information and footnotes 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-KSB for the year ended June 30, 2006, such information and footnotes 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. Amounts in the prior year’s consolidated
financial statements have been reclassified whenever necessary to conform to
the
current year’s presentation. These reclassifications had no effect on net income
or retained earnings as previously reported. All material inter-company accounts
and transactions have been eliminated in the consolidation. The results of
operations and other data for the nine months ended March 31, 2007 are not
necessarily indicative of results that may be expected for future periods,
including the entire fiscal year ending June 30, 2007.
CRITICAL
ACCOUNTING POLICY
Greene
County Bancorp, Inc.’s critical accounting policy relates to the allowance for
loan losses. It 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 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 collectibility
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.
(2) Nature
of Operations
Greene
County Bancorp, Inc.’s primary business is the ownership and operation of its
subsidiaries. The Bank of Greene County has nine full-service offices and
an operations center located in its market area consisting of Greene County,
Columbia County and southern Albany County, New York. 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
County Commercial Bank’s primary business is to attract deposits from and
provide banking services to local municipalities.
(3) Use
of Estimates
The
preparation of 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 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
(the
“Allowance”) 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 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 our Allowance. Such authorities may require us 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 periodic assessments to determine whether there
have
been any events or economic circumstances to indicate that securities on which
there are unrealized losses are 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 securities for a
period of time sufficient for a recovery in value; recent events specific to
the
issuer or industry; and for debt securities, 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 with the write-down recorded
as a realized loss.
(4) Earnings
Per Share (“EPS”)
Basic
EPS
is computed by dividing net income by the weighted average number of common
shares outstanding during the period. Shares of restricted stock are not
considered outstanding for the calculation of basic earnings per share until
they become fully vested. Diluted EPS is computed in a manner similar to that
of
basic EPS 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 and unvested restricted stock) issued
became vested during the period. Unallocated common shares held by the ESOP
are
not included in the weighted-average number of common shares outstanding for
either the basic or diluted EPS calculations.
|
Net
Income
|
Weighted
Average Number of Shares
Outstanding
|
Earnings
Per Share
|
Nine
Months Ended
|
|
|
|
|
|
|
|
March
31, 2007:
|
$1,890,000
|
|
|
Basic
|
|
4,122,500
|
$0.46
|
Effect
of dilutive stock options
|
|
|
|
and
unearned restricted stock
|
|
69,502
|
(0.01)
|
Diluted
|
|
4,192,002
|
$0.45
|
|
|
|
|
March
31, 2006:
|
$1,757,000
|
|
|
Basic
|
|
4,095,406
|
$0.43
|
Effect
of dilutive stock options
|
|
|
|
and
unearned restricted stock
|
|
83,142
|
(0.01)
|
Diluted
|
|
4,178,548
|
$0.42
|
|
|
|
|
|
|
|
|
|
Net
Income
|
Weighted
Average Number of Shares
Outstanding
|
Earnings
Per Share
|
Three
Months Ended
|
|
|
|
|
|
|
|
March
31, 2007:
|
$379,000
|
|
|
Basic
|
|
4,127,946
|
$0.09
|
Effect
of dilutive stock options
|
|
|
|
and
unearned restricted stock
|
|
67,815
|
(0.00)
|
Diluted
|
|
4,195,761
|
$0.09
|
|
|
|
|
March
31, 2006:
|
$574,000
|
|
|
Basic
|
|
4,103,510
|
$0.14
|
Effect
of dilutive stock options
|
|
|
|
and
unearned restricted stock
|
|
76,219
|
(0.00)
|
Diluted
|
|
4,179,729
|
$0.14
|
(5) Dividends
On
January 17, 2007, the Board of Directors declared a semi-annual cash dividend
of
$0.25 per share of Greene County Bancorp, Inc. common stock. The dividend
reflects an annual cash dividend rate of $0.50 cents per share, which
represented an increase from the previous annual cash dividend rate of $0.46
per
share. The dividend was payable to stockholders of record as of February 15,
2007, and paid on March 1, 2007. It should be noted that Greene County Bancorp,
Inc.’s mutual holding company continued to waive receipt of dividends on the
2,304,632 shares of Company common stock it owns for the current
period.
(6)
Impact
of Inflation and Changing Prices
The
consolidated financial statements of Greene County Bancorp, Inc. and notes
thereto, presented elsewhere herein, have been prepared in accordance with
U.S.
generally accepted accounting principles, which require the measurement of
financial position and operating results in terms of historical dollars without
considering the change in the relative purchasing power of money over time
and
due to inflation. The impact of inflation is reflected in the increased cost
of
Greene County Bancorp, Inc.’s operations. Unlike most industrial companies,
nearly all the assets and liabilities of Greene County Bancorp, Inc. are
monetary. As a result, interest rates have a greater impact on Greene County
Bancorp, Inc.’s performance than do the effects of general levels of inflation.
Interest rates do not necessarily move in the same direction or to the same
extent as the price of goods and services.
(7) Impact
of Recent Accounting Pronouncements
In
February 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 155, “Accounting for
Certain Hybrid Financial Instruments.” SFAS No. 155 amends SFAS Nos. 133
and 140, and improves the financial reporting of certain hybrid financial
instruments by requiring more consistent accounting that eliminates exemptions
and provides a means to simplify the accounting for these instruments.
Specifically, SFAS No. 155 allows financial instruments that have embedded
derivatives to be accounted for as a whole (eliminating the need to bifurcate
the derivative from its host) if the holder elects to account for the whole
instrument on a fair value basis. SFAS No. 155 is effective for all
financial instruments acquired or issued after the beginning of an entity's
first fiscal year that begins after September 15, 2006. The Company is
required to adopt the provisions of SFAS No. 155, as applicable, beginning
on
July 1, 2007. The Company does not believe the adoption of SFAS No. 155
will have any material impact on the Company's financial position, results
of
operations or cash flows.
In
March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of
Financial Assets — An Amendment of FASB Statement No. 140.”
SFAS No. 156 requires that all separately recognized servicing assets and
servicing liabilities be initially measured at fair value, if practicable,
and
permits, but does not require, the subsequent measurement of servicing assets
and servicing liabilities at fair value. SFAS No. 156 is effective as of
the beginning of an entity’s first fiscal year that begins after
September 15, 2006, which for the Company will be July 1, 2007. The Company
does not believe that the adoption of SFAS No. 156 will have any material
effect on its consolidated financial position, results of operations or cash
flows.
In
July
2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes—an interpretation of FASB Statement No. 109” (FIN 48),
which clarifies the accounting for uncertainty in tax positions. This
Interpretation requires that companies recognize in their financial statements
the impact of a tax position only if the Company has determined, based on the
technical merits of the tax position, that the tax position would more likely
than not be sustained upon an examination by the appropriate taxing authority.
The provisions of FIN 48 are effective for fiscal years beginning after December
15, 2006, with the cumulative effect of the change in accounting principle
recorded as an adjustment to opening retained earnings. The Company does not
believe that the adoption of FIN 48 will have a material effect on its
consolidated financial position, results of operations or cash
flows.
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which
defines fair value, establishes a framework for measuring fair value under
GAAP,
and expands disclosures about fair value measurements. SFAS No. 157 applies
to other accounting pronouncements that require or permit fair value
measurements. The new guidance is effective for financial statements issued
for
fiscal years beginning after November 15, 2007, and for interim periods
within those fiscal years. The Company is currently evaluating the potential
impact, if any, of the adoption of SFAS No. 157 on its consolidated
financial position, results of operations and cash flows.
On
September 29, 2006, the FASB issued SFAS No. 158, “Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans”, which
amends SFAS 87 and SFAS 106 to require recognition of the overfunded or
underfunded status of pension and other postretirement benefit plans on the
balance sheet. Under SFAS 158, gains and losses, prior service costs and
credits, and any remaining transition amounts under SFAS 87 and SFAS 106 that
have not yet been recognized through net periodic benefit cost will be
recognized in accumulated other comprehensive income, net of tax effects, until
they are amortized as a component of net periodic cost. The measurement date
—
the date at which the benefit obligation and plan assets are measured — is
required to be the company’s fiscal year end. SFAS 158 is effective for
publicly-held companies for fiscal years ending after December 15, 2006,
except for the measurement date provisions, which are effective for fiscal
years
ending after December 15, 2008. The
Company is currently evaluating the potential impact, if any, of the adoption
of
SFAS No. 158 on its consolidated financial position, results of operations
and cash flows.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities-Including an amendment of FASB
Statement No. 115” SFAS No. 159 permits entities to choose to measure many
financial instruments and certain other items at fair value. Unrealized gains
and losses on items for which the fair value option has been elected will be
recognized in earnings at each subsequent reporting date. SFAS No. 159 is
effective for the Company July 1, 2008. The Company is evaluating the impact
that the adoption of SFAS No. 159 will have on the its consolidated financial
statements.
(8)
Stock-Based Compensation
At
March
31, 2007, Greene County Bancorp, Inc. had two stock-based compensation plans,
which are described more fully in Note 9 of the consolidated financial
statements and notes thereto for the year ended June 30, 2006. Through June
30,
2006, the Company accounted for stock-based compensation in accordance with
SFAS
No. 123, Accounting
for Stock-Based Compensation,
which
required the measurement of the fair value of stock options or warrants granted
to employees to be included in the statement of operations or, alternatively,
disclosed in the notes to consolidated financial statements. The Company
elected to account for stock-based compensation of employees under the intrinsic
value method of Accounting Principles Board (APB) Opinion No. 25, Accounting
for Stock Issued to Employees,
and
related Interpretations and elected the disclosure-only alternative under SFAS
No. 123. Accordingly no stock-based compensation cost was reflected in net
income, as all options granted under the plans had an exercise price equal
to
the market value of the underlying common stock on the date of grant. The
Company adopted SFAS 123(R), “Share-Based Payment” effective July 1, 2006. SFAS
No. 123 (R) requires compensation costs related to share-based payment
transactions to be recognized in the financial statements over the period that
the employees provide service in exchange for the award. Public companies were
required to adopt the standard using a modified prospective method and they
were
given the option to elect to restate prior periods using the modified
retrospective method. Under the modified prospective method, companies are
required to record compensation cost for new and modified awards over the
related vesting period of such awards prospectively and record compensation
cost
prospectively for the unvested portion, at the date of adoption of previously
issued and outstanding awards over the remaining vesting period of such awards.
Greene County Bancorp, Inc. chose the modified prospective method. However,
since all outstanding options vested prior to March 31, 2006, there is no
stock-based compensation expense to be recorded in the current period and,
therefore, no effect on net income or earnings per share; consequently, no
table
illustrating the impact of share-based compensation on earnings for the quarter
ended March 31, 2007 is included.
A
summary
of the Company’s stock option activity and related information for its option
plans is as follows:
Nine
Months Ended March 31, 2007
|
Outstanding
Options
|
Wtd.
Avg.
Exercise
Price
|
Wtd.
Avg. Rem.
Contractual
Term
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
Outstanding
at 6/30/2006
|
100,084
|
$4.38
|
|
|
|
|
|
|
|
Granted
|
---
|
---
|
|
|
Exercised
|
4,820
|
$3.94
|
|
|
Forfeited
or Cancelled
|
---
|
---
|
|
|
|
|
|
|
|
Outstanding
at 03/31/2007
|
95,264
|
$4.41
|
3.0
years
|
$951,000
|
|
|
|
|
|
Exercisable
at 03/31/2007
|
95,264
|
$4.41
|
3.0
years
|
$951,000
|
|
|
|
|
|
The
total
intrinsic value of the options exercised during the nine and three months ended
March 31, 2007, was approximately $53,000 and $35,000, respectively. There
were
no stock options granted during the nine and three months ended March 31, 2007
and 2006. The Company had no non-vested options outstanding at or during the
nine months ended March 31, 2007.
For
the
purposes of pro forma disclosures, the estimated fair value of stock options
is
amortized to expense over their assumed vesting periods. The following table
illustrates the effect on net income and earnings per share if the Company
had
applied the fair value recognition provisions of SFAS No. 123 to all
stock-related compensation prior to July 1, 2006. The fair value of each option
grant has been estimated using the Black-Scholes option-pricing
model.
|
|
|
Nine
Months Ended March 31,
|
|
|
Three
Months Ended
March
31,
|
|
|
|
|
2006
|
|
|
2006
|
|
(In
thousands, except per share amounts)
|
|
|
|
|
|
|
|
Net
income, as reported
|
|
$
|
1,757
|
|
$
|
574
|
|
|
|
|
|
|
|
|
|
Add:
Stock related compensation expense included in
|
|
|
|
|
|
|
|
reported
net income, net of income tax
|
|
|
---
|
|
|
---
|
|
|
|
|
|
|
|
|
|
Deduct:
Stock related compensation expense determined
|
|
|
|
|
|
|
|
under
the fair value method, net of income taxes
|
|
|
1
|
|
|
---
|
|
|
|
|
|
|
|
|
|
Pro
forma net income
|
|
$
|
1,756
|
|
$
|
574
|
|
|
|
|
|
|
|
|
|
Earnings
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic,
as reported
|
|
$
|
0.43
|
|
$
|
0.14
|
|
Basic,
pro forma
|
|
$
|
0.43
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
Diluted,
as reported
|
|
$
|
0.42
|
|
$
|
0.14
|
|
Diluted,
pro forma
|
|
$
|
0.42
|
|
$
|
0.14
|
|
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,
|
(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.,
|
(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.
Comparison
of Financial Condition as of March 31, 2007 and June 30,
2006
ASSETS
Total
assets of the Company increased to $321.4 million at March 31, 2007 from $307.6
million at
June
30, 2006. The asset composition shifted toward loans, which amounted to $204.9
million, or 63.8% of total assets at March 31, 2007, as compared to $190.1
million, or 61.8% of total assets at June 30, 2006. The asset composition
shifted away from securities, which represented $79.4 million or 24.7% of total
assets at March 31, 2007 as compared to $87.3 million or 28.4% of total assets
at June 30, 2006.
CASH
AND
CASH EQUIVALENTS
Total
cash and cash equivalents increased to $20.0 million at March 31, 2007 as
compared to $15.9 million at June 30, 2006, an increase of $4.1 million or
25.8%. Cash, such as vault cash and balances with correspondent banks, was
$11.9
million at March 31, 2007 compared to $12.2 million at June 30, 2006. Federal
funds sold increased to $8.0 million at March 31, 2007 as compared to $3.6
million at June 30, 2006.
SECURITIES
AVAILABLE FOR SALE
Investment
securities decreased to $79.4 million at March 31, 2007 as compared to $87.3
million at June 30, 2006, a decrease of $7.9 million, or 9.0%. The decline
in
the securities portfolio was used to help fund loan growth and was the result
of
principal pay-downs that amounted to $11.7 million during the nine-month period
ended March 31, 2007, of which $10.9 million were mortgage-backed
securities. Also, maturities that amounted to $4.1 million, of which
$2.6 million were state and political subdivision securities, $1.0 million
were
government agency securities and $0.5 million were corporate securities.
Purchases of $7.5 million, of which $4.2 million were tax-exempt securities
and
$3.3 million were government agency securities, partially offset the principal
pay-downs and maturities between March 31, 2007 and June 30, 2006. Additionally,
during the nine months ended March 31, 2007, unrealized losses on these
available- for-sale securities declined $976,000. Greene County Bancorp, Inc.
held 39.1% of the securities portfolio at March 31, 2007 in 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.
(Dollars
in thousands)
|
|
|
Fair
value at
Mar.
31, 2007
|
|
|
Percentage
of
portfolio
|
|
|
Fair
value at
June
30, 2006
|
|
|
Percentage
of
portfolio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
government agencies
|
|
$
|
13,425
|
|
|
16.9
|
%
|
$
|
10,990
|
|
|
12.6
|
%
|
State
and political subdivisions
|
|
|
31,049
|
|
|
39.1
|
|
|
29,939
|
|
|
34.3
|
|
Mortgage-backed
securities
|
|
|
34,568
|
|
|
43.6
|
|
|
45,490
|
|
|
52.1
|
|
Asset-backed
securities
|
|
|
77
|
|
|
0.1
|
|
|
93
|
|
|
0.1
|
|
Corporate
debt securities
|
|
|
---
|
|
|
---
|
|
|
501
|
|
|
0.6
|
|
Total
debt securities
|
|
|
79,119
|
|
|
99.7
|
|
|
87,013
|
|
|
99.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
securities and other
|
|
|
271
|
|
|
0.3
|
|
|
254
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
securities available-for-sale
|
|
$
|
79,390
|
|
|
100.0
|
%
|
$
|
87,267
|
|
|
100.0
|
%
|
LOANS
Net
loans
receivable increased to $204.9 million at March 31, 2007 from $190.1 million
at
June 30, 2006, an increase of $14.8 million, or 7.8%. The loan growth
experienced during the nine months primarily consisted of $8.0 million in
residential mortgages, $3.0 million in commercial real estate, and $2.7 million
in home equity loans. The continued low interest rate environment and strong
customer satisfaction from personal service continued to enhance loan growth.
Recent interest rate hikes by the Federal Open Market Committee have yet to
significantly affect long term interest rates. If long term rates begin to
rise,
the Company anticipates some slow down in new loan demand as well as refinancing
activities. It appears consumers continue to use the equity in their homes
and
credit cards to fund financing needs for some activities, where in the past
an
installment loan may have been the choice. The low financing options from auto
makers continued to cut into the Bank’s automobile loan generation.
(Dollars
in thousands)
|
|
|
At
Mar.
31, 2007
|
|
|
Percentage
of
portfolio
|
|
|
At
June
30, 2006
|
|
|
Percentage
of
portfolio
|
|
|
|
Real
estate mortgages
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
$
|
148,211
|
|
|
71.9
|
%
|
$
|
140,253
|
|
|
73.3
|
%
|
Commercial
|
|
|
26,328
|
|
|
12.8
|
|
|
23,284
|
|
|
12.2
|
|
Home
equity loans
|
|
|
19,207
|
|
|
9.3
|
|
|
16,486
|
|
|
8.6
|
|
Commercial
loans
|
|
|
8,073
|
|
|
3.9
|
|
|
7,390
|
|
|
3.8
|
|
Installment
loans
|
|
|
3,820
|
|
|
1.8
|
|
|
3,384
|
|
|
1.8
|
|
Passbook
loans
|
|
|
612
|
|
|
0.3
|
|
|
632
|
|
|
0.3
|
|
Total
loans
|
|
$
|
206,251
|
|
|
100.0
|
%
|
$
|
191,429
|
|
|
100.0
|
%
|
Less:
Allowance for loan losses
|
|
|
(1,437
|
)
|
|
|
|
|
(1,314
|
)
|
|
|
|
Unearned
origination fees and costs, net
|
|
|
51
|
|
|
|
|
|
(22
|
)
|
|
|
|
Net
loans receivable
|
|
$
|
204,865
|
|
|
|
|
$
|
190,093
|
|
|
|
|
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 all loans on which
full
collectibility 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 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 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 net charge-offs. The level
of
the provision for the nine months ended March 31, 2007, was driven by the
continued good asset quality. Any future increase in the allowance for loan
losses or loan charge-offs could have a material adverse effect on Greene County
Bancorp, Inc.’s results of operations and financial condition.
Analysis
of allowance for loan losses activity
(Dollars
in thousands)
|
|
Nine
months ended
|
|
|
|
March
31, 2007
|
|
|
March
31, 2006
|
|
|
|
|
|
|
|
|
|
Balance
at the beginning of the period
|
|
$
|
1,314
|
|
$
|
1,236
|
|
Charge-offs:
|
|
|
|
|
|
|
|
Commercial
loan
|
|
|
7
|
|
|
---
|
|
Installment
loans to individuals
|
|
|
25
|
|
|
34
|
|
Overdraft
protection
|
|
|
109
|
|
|
57
|
|
Total
loans charged off
|
|
|
141
|
|
|
91
|
|
|
|
|
|
|
|
|
|
Recoveries:
|
|
|
|
|
|
|
|
Commercial
loan
|
|
|
7
|
|
|
---
|
|
Installment
loans to individuals
|
|
|
27
|
|
|
23
|
|
Overdraft
protection
|
|
|
36
|
|
|
25
|
|
Total
recoveries
|
|
|
70
|
|
|
48
|
|
|
|
|
|
|
|
|
|
Net
charge-offs
|
|
|
71
|
|
|
43
|
|
|
|
|
|
|
|
|
|
Provisions
charged to operations
|
|
|
194
|
|
|
100
|
|
Balance
at the end of the period
|
|
$
|
1,437
|
|
$
|
1,293
|
|
|
|
|
|
|
|
|
|
Ratio
of net charge-offs to average loans outstanding
|
|
|
0.04
|
%
|
|
0.03
|
%
|
Ratio
of net charge-offs to nonperforming assets
|
|
|
6.14
|
%
|
|
5.93
|
%
|
Allowance
for loan loss to nonperforming loans
|
|
|
124.20
|
%
|
|
178.07
|
%
|
Allowance
for loan loss to total loans receivable
|
|
|
0.70
|
%
|
|
0.71
|
%
|
Nonaccrual
Loans and Nonperforming Assets
Loans
are
reviewed on a regular basis. Management determines that a loan is impaired
or
nonperforming when it is probable at least a portion of the loan will not be
collected in accordance with its contractual terms due to an irreversible
deterioration in the financial condition of the borrower or the value of the
underlying collateral. When a loan is determined to be impaired, the measurement
of the loan impairment is based on the 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. Management places loans on nonaccrual
status once the loans have become 90 days or more delinquent. Nonaccrual is
defined as a loan in which collectibility is questionable and therefore interest
on the loan will no longer be recognized on an accrual basis. A loan does not
have to be 90 days delinquent in order to be classified as nonperforming.
Foreclosed real estate is considered nonperforming. The Bank of Greene County
had no accruing loans delinquent more than 90 days at March 31, 2007 or June
30,
2006.
Analysis
of Nonaccrual Loans and Nonperforming Assets
(Dollars
in thousands)
|
|
|
At
March 31, 2007
|
|
|
At
June 30, 2006
|
|
Nonaccruing
loans:
|
|
|
|
|
|
|
|
Real
estate mortgage loans:
|
|
|
|
|
|
|
|
Residential
mortgages loans (one- to four-family)
|
|
$
|
546
|
|
$
|
3
|
|
Commercial
mortgage loans
|
|
|
358
|
|
|
---
|
|
Home
equity
|
|
|
114
|
|
|
---
|
|
Commercial
loans
|
|
|
130
|
|
|
---
|
|
Installment
loans to individuals
|
|
|
9
|
|
|
4
|
|
|
|
|
|
|
|
|
|
Total
nonaccruing loans
|
|
|
1,157
|
|
|
7
|
|
|
|
|
|
|
|
|
|
Foreclosed
real estate:
|
|
|
---
|
|
|
---
|
|
|
|
|
|
|
|
|
|
Total
nonperforming assets
|
|
$
|
1,157
|
|
$
|
7
|
|
|
|
|
|
|
|
|
|
Total
nonperforming assets
as
a percentage of total assets
|
|
|
0.36
|
%
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
Total
nonperforming loans to total loans
|
|
|
0.56
|
%
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
During
the nine-months ended March 31, 2007, interest income of approximately $29,000
was not recorded on nonaccrual loans under their original terms due to the
nonaccrual nature of these loans. At March 31, 2007, there has been a
significant increase in nonperforming loans when compared to June 30, 2006
at
which time the level of nonperforming loans was unusually low. The collateral
supporting these nonaccrual loans has been evaluated and is considered
adequate at March 31, 2007.
DEPOSITS
Total
deposits increased to $280.2 million at March 31, 2007 from $268.3 million
at
June 30, 2006, an increase of $11.9 million, or 4.4%. The net growth in deposits
was primarily due to a $13.2 million increase in municipal deposits at Greene
County Commercial Bank. The Company has seen a shift from savings and money
market deposits to NOW deposits as customers try to shop for the best rates
while still maintaining liquidity. The Company continues to try to encourage
customers to open noninterest bearing deposit accounts through various marketing
strategies, including gifts.
(Dollars
in thousands)
|
|
|
At
Mar.
31, 2007
|
|
|
Percentage
of
portfolio
|
|
|
At
June
30, 2006
|
|
|
Percentage
of
portfolio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
bearing deposits
|
|
$
|
42,008
|
|
|
15.0
|
%
|
$
|
41,503
|
|
|
15.5
|
%
|
Certificates
of deposit
|
|
|
69,632
|
|
|
24.9
|
|
|
61,370
|
|
|
22.9
|
|
Savings
deposits
|
|
|
71,883
|
|
|
25.6
|
|
|
87,776
|
|
|
32.7
|
|
Money
market deposits
|
|
|
40,193
|
|
|
14.3
|
|
|
45,348
|
|
|
16.9
|
|
NOW
deposits
|
|
|
56,497
|
|
|
20.2
|
|
|
32,253
|
|
|
12.0
|
|
Total
deposits
|
|
$
|
280,213
|
|
|
100.0
|
%
|
$
|
268,250
|
|
|
100.0
|
%
|
BORROWINGS
At
March
31, 2007, The Bank of Greene County had the following borrowings:
Amount
|
Rate
|
Maturity
Date
|
$5,000,000
|
3.64%
- convertible
|
10/24/2013
|
The
$5.0
million borrowing, which carried a 3.64% interest rate at March 31, 2007, is
convertible by the FHLB under certain market interest rate scenarios, including
three-month LIBOR at or above 7.5%. The FHLB has the option to convert existing
advances into replacement advances for the same or lesser principal amount
based
on the then current market rates. If the Bank chooses not to replace the
funding, the Bank must repay this convertible advance, including any accrued
interest, on the interest payment date.
EQUITY
Shareholders’
equity increased to $35.4 million at March 31, 2007 from $33.6 million at June
30, 2006, as net income of $1.9 million was partially offset by dividends
declared and paid of $885,000. Accumulated other comprehensive loss decreased
by
$595,000 to $152,000 as a result of an improvement in the fair value of the
securities available-for-sale portfolio, net of tax. The unrealized loss in
the
portfolio was due solely to interest rate movements and management does not
consider the loss to be other-than-temporary. Other changes in equity were
the
result of activities associated with the various stock-based compensation plans
of the Company including the 2000 Stock Option Plan and ESOP Plan. 4,820 options
were exercised during the nine months ended March 31, 2007, reducing the number
of shares held as treasury stock to 155,604.
Comparison
of Operating Results for the Nine Months and Quarter Ended March 31, 2007 and
2006
Average
Balance Sheet
The
following table sets forth certain information relating to Greene County
Bancorp, Inc. for the nine months and quarters ended March 31, 2007 and 2006.
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 for the quarters ended March 31, 2007 and 2006.
Average loan balances include non-performing loans. The loan yields include
net
amortization of certain deferred fees and costs that are considered adjustments
to yields.
Nine
Months Ended March 31, 2007 and 2006
(Dollars
in thousands)
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
2006
|
|
|
2006
|
|
|
2006
|
|
|
|
|
Average
|
|
|
Interest
|
|
|
Average
|
|
|
Average
|
|
|
Interest
|
|
|
Average
|
|
|
|
|
Outstanding
|
|
|
Earned/
|
|
|
Yield/
|
|
|
Outstanding
|
|
|
Earned/
|
|
|
Yield/
|
|
|
|
|
Balance
|
|
|
Paid
|
|
|
Rate
|
|
|
Balance
|
|
|
Paid
|
|
|
Rate
|
|
Interest
earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
receivable, net1
|
|
$
|
198,219
|
|
$
|
9,835
|
|
|
6.62
|
%
|
$
|
172,101
|
|
$
|
8,345
|
|
|
6.47
|
%
|
Securities2
|
|
|
82,721
|
|
|
2,366
|
|
|
3.81
|
|
|
90,891
|
|
|
2,201
|
|
|
3.23
|
|
Federal
funds
|
|
|
5,224
|
|
|
204
|
|
|
5.21
|
|
|
8,929
|
|
|
257
|
|
|
3.84
|
|
Interest
bearing bank balances
|
|
|
2,816
|
|
|
93
|
|
|
4.40
|
|
|
2,660
|
|
|
67
|
|
|
3.36
|
|
FHLB
stock
|
|
|
643
|
|
|
33
|
|
|
6.84
|
|
|
1,276
|
|
|
51
|
|
|
5.33
|
|
Total
interest earning assets
|
|
$
|
289,623
|
|
$
|
12,531
|
|
|
5.77
|
%
|
$
|
275,857
|
|
$
|
10,921
|
|
|
5.28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings
and money market deposits
|
|
$
|
121,204
|
|
$
|
1,816
|
|
|
2.00
|
%
|
$
|
134,770
|
|
$
|
1,445
|
|
|
1.43
|
%
|
Demand
and NOW deposits
|
|
|
85,602
|
|
|
868
|
|
|
1.35
|
|
|
62,825
|
|
|
126
|
|
|
0.27
|
|
Certificates
of deposit
|
|
|
63,671
|
|
|
1,830
|
|
|
3.83
|
|
|
55,781
|
|
|
1,156
|
|
|
2.76
|
|
Borrowings
|
|
|
5,001
|
|
|
139
|
|
|
3.71
|
|
|
5,867
|
|
|
182
|
|
|
4.14
|
|
Total
interest bearing liabilities
|
|
$
|
275,478
|
|
$
|
4,653
|
|
|
2.25
|
%
|
$
|
259,243
|
|
$
|
2,909
|
|
|
1.50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
|
|
|
$
|
7,878
|
|
|
|
|
|
|
|
$
|
8,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest rate spread
|
|
|
|
|
|
|
|
|
3.52
|
%
|
|
|
|
|
|
|
|
3.78
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest margin
|
|
|
|
|
|
|
|
|
3.63
|
%
|
|
|
|
|
|
|
|
3.87
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
interest earning assets to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average
interest bearing liabilities
|
|
|
105.13
|
%
|
|
|
|
|
|
|
|
106.41
|
%
|
|
|
|
|
|
|
________________________________________
1Calculated
net of deferred loan fees and costs, loan discounts, loans in process and loan
loss reserves.
2Includes
tax-exempt securities, mortgage-backed securities and debt
securities.
Rate
/ Volume Analysis
The
following Rate / Volume tables present 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
|
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.
|
Nine
Months
Ended
March 31,
|
(Dollars
in thousands)
|
2007
versus 2006
|
|
Increase/(Decrease)
|
Total
|
|
Due
to
|
Increase/
|
Interest-earning
assets:
|
Volume
|
Rate
|
(Decrease)
|
Loans
receivable, net1
|
$1,293
|
$197
|
$1,490
|
Securities2
|
(209)
|
374
|
165
|
Federal
funds
|
(127)
|
74
|
(53)
|
Interest-bearing
bank balances
|
4
|
22
|
26
|
FHLB
stock
|
(30)
|
12
|
(18)
|
Total
interest-earning assets
|
931
|
679
|
1,610
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
Savings
deposits
|
(158)
|
529
|
371
|
Demand
and NOW deposits
|
62
|
680
|
742
|
Certificates
of deposit
|
180
|
494
|
674
|
Borrowings
|
(25)
|
(18)
|
(43)
|
Total
interest-bearing liabilities
|
59
|
1,685
|
1,744
|
Net
interest income
|
$872
|
$(1,006)
|
$(134)
|
_____________________________________________
1
Calculated net of deferred loan fees, loan discounts, loans in process and
loan
loss reserves.
2
Includes
tax-exempt securities, mortgage-backed securities and debt
securities.
Quarter
Ended March 31, 2007 and 2006
(Dollars
in thousands)
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
2006
|
|
|
2006
|
|
|
2006
|
|
|
|
|
Average
|
|
|
Interest
|
|
|
Average
|
|
|
Average
|
|
|
Interest
|
|
|
Average
|
|
|
|
|
Outstanding
|
|
|
Earned/
|
|
|
Yield/
|
|
|
Outstanding
|
|
|
Earned/
|
|
|
Yield/
|
|
|
|
|
Balance
|
|
|
Paid
|
|
|
Rate
|
|
|
Balance
|
|
|
Paid
|
|
|
Rate
|
|
Interest
earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
receivable, net1
|
|
$
|
203,102
|
|
$
|
3,353
|
|
|
6.60
|
%
|
$
|
177,990
|
|
$
|
2,879
|
|
|
6.47
|
%
|
Securities2
|
|
|
78,857
|
|
|
765
|
|
|
3.88
|
|
|
87,661
|
|
|
734
|
|
|
3.35
|
|
Federal
funds
|
|
|
5,434
|
|
|
70
|
|
|
5.15
|
|
|
8,177
|
|
|
88
|
|
|
4.30
|
|
Interest
bearing bank balances
|
|
|
3,266
|
|
|
37
|
|
|
4.53
|
|
|
2,542
|
|
|
24
|
|
|
3.78
|
|
FHLB
stock
|
|
|
643
|
|
|
12
|
|
|
7.47
|
|
|
632
|
|
|
7
|
|
|
4.43
|
|
Total
interest earning assets
|
|
$
|
291,302
|
|
$
|
4,237
|
|
|
5.82
|
%
|
$
|
277,002
|
|
$
|
3,732
|
|
|
5.39
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings
and money market deposits
|
|
$
|
114,062
|
|
$
|
576
|
|
|
2.02
|
%
|
$
|
133,006
|
|
$
|
536
|
|
|
1.61
|
%
|
Demand
and NOW deposits
|
|
|
92,464
|
|
|
346
|
|
|
1.50
|
|
|
66,208
|
|
|
66
|
|
|
0.40
|
|
Certificates
of deposit
|
|
|
66,265
|
|
|
670
|
|
|
4.04
|
|
|
56,966
|
|
|
416
|
|
|
2.92
|
|
Borrowings
|
|
|
5,000
|
|
|
46
|
|
|
3.68
|
|
|
5,000
|
|
|
45
|
|
|
3.60
|
|
Total
interest bearing liabilities
|
|
$
|
277,791
|
|
$
|
1,638
|
|
|
2.36
|
|
$
|
261,180
|
|
$
|
1,063
|
|
|
1.63
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
|
|
|
$
|
2,599
|
|
|
|
|
|
|
|
$
|
2,669
|
|
|
|
|
Net
interest rate spread
|
|
|
|
|
|
|
|
|
3.46
|
%
|
|
|
|
|
|
|
|
3.76
|
%
|
Net
interest margin
|
|
|
|
|
|
|
|
|
3.57
|
%
|
|
|
|
|
|
|
|
3.85
|
%
|
Average
interest earning assets to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average
interest bearing liabilities
|
|
|
104.86
|
%
|
|
|
|
|
|
|
|
106.06
|
%
|
|
|
|
|
|
|
________________________________________________
1Calculated
net of deferred loan fees and costs, loan discounts, loans in process and loan
loss reserves.
2Includes
tax-exempt securities, mortgage-backed securities and debt
securities.
|
Three
Months
Ended
March 31,
|
(Dollars
in thousands)
|
2007
versus 2006
|
|
Increase/(Decrease)
|
Total
|
|
Due
to
|
Increase/
|
Interest-earning
assets:
|
Volume
|
Rate
|
(Decrease)
|
Loans
receivable, net1
|
$415
|
$59
|
$474
|
Securities2
|
(78)
|
109
|
31
|
Federal
funds
|
(33)
|
15
|
(18)
|
Interest-bearing
bank balances
|
8
|
5
|
13
|
FHLB
stock
|
---
|
5
|
5
|
Total
interest-earning assets
|
312
|
193
|
505
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
Savings
deposits
|
(83)
|
123
|
40
|
Demand
and NOW deposits
|
35
|
245
|
280
|
Certificates
of deposit
|
76
|
178
|
254
|
Borrowings
|
---
|
1
|
1
|
Total
interest-bearing liabilities
|
28
|
547
|
575
|
Net
interest income
|
$284
|
$(354)
|
$(70)
|
________________________________________
1
Calculated net of deferred loan fees, loan discounts, loans in process and
loan
loss reserves.
2
Includes
tax-exempt securities, mortgage-backed securities and debt
securities.
GENERAL
Return
on
average assets and return on average equity are common methods of measuring
operating results. Return on average assets increased to 0.81% for the nine
months ended March 31, 2007 as compared to 0.80% for the nine months ended
March
31, 2006. Return on average equity increased to 7.28% for the nine months ended
March 31, 2007 as compared to 7.08% for the nine months ended March 31, 2006.
The increase in return on average assets and return on average equity was
primarily the result of higher noninterest income. Net income amounted to $1.9
million and $1.8 million for the nine months ended March 31, 2007 and 2006,
respectively, an increase of $133,000 or 7.6%. Average assets amounted to $311.8
million for the nine month period ended March 31, 2007 as compared to $294.4
million for the same period ended March 31, 2006, an increase of $17.4 million
or 5.9%. Average equity amounted to $34.6 million for the nine month period
ended March 31, 2007 as compared to $33.1 million for the same period ended
March 31, 2006, an increase of $1.5 million or 4.5%.
Return
on
average assets decreased to 0.48% for the quarter ended March 31, 2007 as
compared to 0.77% for the quarter ended March 31, 2006. Return on average equity
decreased to 4.30% for the quarter ended March 31, 2007 as compared to 6.86%
for
the quarter ended March 31, 2006. The decrease in return on average assets
and
return on average equity was primarily the result of higher noninterest expense.
Net income amounted to $379,000 and $574,000 for the quarters ended March 31,
2007 and 2006, respectively, a decrease of $195,000 or 34.0%. Average assets
amounted to $316.2 million for the quarter ended March 31, 2007 as compared
to
$296.9 million for the quarter ended March 31, 2006, an increase of $19.3
million or 6.5%. Average equity amounted to $35.2 million for the quarter ended
March 31, 2007 as compared to $33.5 million for the quarter ended March 31,
2006, an increase of $1.7 million or 5.1%.
INTEREST
INCOME
Interest
income amounted to $12.5 million for the nine months ended March 31, 2007 as
compared to $10.9 million for the nine months ended March 31, 2006, an increase
of $1.6 million or 14.7%. Interest income amounted to $4.2 million for the
quarter ended March 31, 2007 as compared to $3.7 million for the quarter ended
March 31, 2006, an increase of $505,000 or 13.5%. The increase in loan volume
complemented by an increase in the yield on interest earning assets had the
greatest impact on interest income when comparing the nine months and quarters
ended March 31, 2007 and 2006. Average loan balances increased $26.1 million
for
the nine months ended March 31, 2007 as compared to March 31, 2006 and the
yield
increased by 15 basis points when comparing the same periods. Average loan
balances increased $25.1 million for the quarter ended March 31, 2007 as
compared to the quarter ended March 31, 2006 and the yield increased by 13
basis
points when comparing the same periods. The overall impact on interest income
from securities was positive despite a decline in average balances which was
offset by a 58 basis point increase in yield when comparing the nine months
ended March 31, 2007 and 2006 and a 53 basis point increase when comparing
the
quarters ended March 31, 2007 and 2006. The average balance of securities
decreased $8.2 million for the nine months ended March 31, 2007 compared to
March 31, 2006, and decreased $8.8 million for the quarter ended March 31,
2007
compared to March 31, 2006. Short term investments such as interest bearing
bank
balances and federal funds sold were utilized to fund loan growth, and
therefore, interest income from these investments decreased due to the $3.5
million and $2.0 million decreases in average balances when comparing the nine
months and quarters ended March 31, 2007 and 2006. Most of the decrease in
income from short term investments was offset by a higher yield on such
investments, primarily as a result of the short-term interest rate hikes
implemented by the Federal Open Market Committee during 2006. Although the
Federal Open Market Committee increased short-term rates several times during
calendar 2006, the long-term rates continue to remain relatively unchanged
and
low.
INTEREST
EXPENSE
Interest
expense amounted to $4.7 million for the nine months ended March 31, 2007 as
compared to $2.9 million for the nine months ended March 31, 2006, an increase
of $1.8 million. Interest expense amounted to $1.6 million for the quarter
ended
March 31, 2007 as compared to $1.1 million for the quarter ended March 31,
2006,
an increase of $575,000. Changes in rates on interest-bearing liabilities had
the greatest impact on overall interest expense. The average balance of interest
bearing liabilities amounted to $275.5 million and the average rate increased
to
2.25% for the nine months ended March 31, 2007 as compared to an average balance
of $259.2 million with an average rate of 1.50% for the nine months ended March
31, 2006, an increase in average interest bearing liabilities of $16.2 million
and an increase in average rate of 75 basis points. The average balance of
interest bearing liabilities amounted to $277.8 million and the average rate
increased to 2.36% for the quarter ended March 31, 2007 as compared to an
average balance of $261.2 million with an average rate of 1.63% for the quarter
ended March 31, 2006, an increase in average interest bearing liabilities of
$16.6 million and an increase in average rate of 73 basis points. The average
rate paid on demand and NOW deposits increased 108 basis points and 110 basis
points, respectively, when comparing the nine months and quarters ended March
31, 2007 and 2006, and the average balance of such accounts grew by $22.8
million and $26.3 million, respectively, when comparing the same periods,
contributing to the overall increase in interest expense. The average balance
of
certificates of deposit grew by $7.9 million and the average rate paid increased
by 107 basis points when comparing the nine months ended March 31, 2007 and
2006. The average balance of certificates of deposit grew by $9.3 million and
the average rate paid increased by 112 basis points when comparing the quarters
ended March 31, 2007 and 2006. The average balance of savings and money market
deposits fell by $13.6 million and $18.9 million when comparing the nine months
and quarters ended March 31, 2007 and 2006 but was offset by increases of 57
basis points and 41 basis points in average rate paid when comparing the same
periods. The level of interest paid on borrowings was lower when comparing
the
nine months ended March 31, 2007 and 2006 due to the repayment of a $2.5 million
borrowing with a rate of 6.80% on October 4, 2005 and there were no significant
additional borrowings.
NET
INTEREST INCOME
Net
interest income was $7.9 million and $2.6 million for the nine months and
quarter ended March 31, 2007, respectively, which decreased by $134,000 and
$70,000 from the same periods ended March 31, 2006. Net interest spread
decreased 26 basis points to 3.52% for the nine months ended March 31, 2007
from
3.78% for the nine months ended March 31, 2006, and 30 basis points to 3.46%
for
the quarter ended March 31, 2007 as compared to 3.76% for the quarter ended
March 31, 2006. Net interest margin decreased 24 basis points to 3.63% for
the
nine months ended March 31, 2007 from 3.87% for the nine months ended March
31,
2006, and 28 basis points to 3.57% for the quarter ended March 31, 2007 as
compared to 3.85% for the quarter ended March 31, 2006. The tightening of the
net interest spread and margin hindered net interest income growth when
comparing the nine months and quarters ended March 31, 2007 and
2006.
Due
to
the large portion of fixed rate residential mortgages in the Company’s asset
portfolio, interest rate risk is a concern and the Company will continue to
monitor the situation and attempt to 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
The
provision for loan losses amounted to $194,000 and $100,000 for the nine months
ended March 31, 2007 and 2006, respectively, an increase of $94,000. The
provision for loan losses amounted to $83,000 and $40,000 for the quarters
ended
March 31, 2007 and 2006, respectively, an increase of $43,000. The increase
in
the level of provision was partially a result of growth in the loan portfolio
and an increase in the amount of loan charge-offs, which were associated with
the overdraft protection program. Net charge-offs associated with the overdraft
protection program increased $41,000, or 128.1%, to $73,000, when comparing
the
nine months ended March 31, 2007 and 2006.
NONINTEREST
INCOME
Noninterest
income amounted to $2.9 million for the nine months ended March 31, 2007 as
compared to $2.3 million for the nine months ended March 31, 2006, an increase
of $609,000 or 26.2%. A pretax gain of approximately $257,000 related to the
sale of the old Coxsackie branch building was the most significant item
contributing to the improvement in noninterest income. Noninterest income
amounted to $840,000 on for the quarter ended March 31, 2007 as compared to
$762,000 for the quarter ended March 31, 2006, an increase of $78,000 or 10.2%.
Service charges on deposit accounts increased $236,000 and $92,000 for the
nine
months and quarter ended March 31, 2007, respectively, due to higher levels
of
insufficient funds charges due to changes implemented in the Overdraft Privilege
Program.
NONINTEREST
EXPENSE
Noninterest
expense amounted to $8.0 million for the nine months ended March 31, 2007 as
compared to $7.8 million for the nine months ended March 31, 2006, an increase
of $205,000 or 2.6%. Noninterest expense amounted to $2.9 million for the
quarter ended March 31, 2007 as compared to $2.6 million for the quarter ended
March 31, 2006, an increase of $295,000 or 11.3%. Salaries and employee benefits
increased $25,000 when comparing nine months ended March 31, 2007 and 2006,
and
increased $90,000 when comparing the quarters ended March 31 2007 and 2006.
Retirement expense decreased $143,000 and $40,000 for the nine months and
quarter ended March 31, 2007, respectively, primarily as a result of
discontinuing the accrual of benefits under the defined benefit pension plan
beginning July 1, 2006. This decrease was partially offset by an increase in
401(k) contribution expense of $39,000 and $19,000 for the nine months and
quarter ended March 31, 2007, respectively, resulting from increases in employer
match beginning July 1, 2006 and January 1, 2007. Also contributing to the
increase in salaries and employee benefits was higher salaries expenses which
increased $164,000 and $132,000 for the nine months and quarter ended March
31,
2007, respectively, due primarily to the staffing of two new branch offices
which opened in February and March 2007 as well as several new positions within
the commercial lending department. Occupancy expense and equipment and furniture
expense increased approximately $138,000 and $45,000, respectively, when
comparing the nine months ended March 31, 2007 and 2006 and $74,000 and $44,000,
respectively, when comparing the quarter ended March 31, 2007 and 2006 due
to
higher utility costs, building maintenance and increased depreciation expense
associated with the relocated Cairo and Coxsackie branches, the opening of
the
new operations center in Catskill and the opening of two new branches in
Catskill and Greenport. Service and data processing fees decreased approximately
$16,000 when comparing the nine months ended March 31, 2007 and 2006 resulting
from the discontinuation of the outsourcing of the data processing system
following the implementation of the new system, which was partially offset
by an
increase in internet banking fees and debit card costs associated with the
Visa
Rewards program. Service and data processing fees increased approximately
$31,000 when comparing the quarters ended March 31, 2007 and 2006 resulting
from
higher internet banking fees and debit card costs associated with the Visa
Rewards program. Other noninterest expenses decreased approximately $86,000
and
$5,000 when comparing the nine months and quarters ended March 31, 2007 and
2006. These expenses were higher for the nine months ended March 31, 2006 as
a
result of expenses associated with the data processing system conversion such
as
training costs, licensing fees, and professional fees.
INCOME
TAXES
The
provision for income taxes reflected the expected tax associated with the
revenue generated for the given period and certain regulatory requirements.
The
effective tax rate was 28.1% for the nine months ended March 31, 2007, compared
to 28.3% for the nine months ended March 31, 2006. The effective tax rate was
17.4% for the quarter ended March 31, 2007, compared to 27.2% for the quarter
ended March 31, 2006. The decrease in effective rate for the quarter ended
March
31, 2007 was the result of decreased pre-tax income and the resultant increased
percentage of tax exempt interest earned in total taxable income.
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 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 met all regulatory capital requirements at March 31, 2007
and
June 30, 2006. The Bank’s consolidated shareholder’s equity represented 11.0% of
total assets at March 31, 2007 and 10.9% of total assets of June 30,
2006.
OFF-BALANCE
SHEET ARRANAGEMENTS
In
addition to the normal course of operations, we engage in a variety of financial
transactions that, in accordance with generally accepted accounting principles
are not recorded in our financial statements. These transactions involve, to
varying degrees, elements of credit, interest rate, and liquidity risks. Such
transactions are used primarily to manage customers’ requests for funding and
take the form of loan commitments, lines of credit, and letters of
credit.
For
the
nine months ended March 31, 2007, we engaged in no off-balance sheet
transactions reasonably likely to have a material effect on our financial
condition, results of operations of cash flow.
Mortgage
loan commitments totaled $9.0 million at March 31, 2007. The unused portion
of
overdraft lines of credit amounted to $7.9 million, the unused portion of home
equity lines of credit amounted to $5.7 million, and the unused portion of
commercial lines of credit amounted to $3.9 million at March 31, 2007. 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
from
Federal Home Loan Bank of New York.
Under
the
supervision and with the participation of the Company's management,
including its Principal 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 Principal 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.
Item
1.
Legal Proceedings
Greene County Bancorp, Inc. and its subsidiaries are not engaged in any
material
legal proceedings at the present time.
Item
2.
Unregistered Sales of Equity Securities and Use of Proceeds
During the quarter ended March 31, 2007, no purchases of registrant’s
equity
securities were completed by the registrant or any affiliate.
Item
3.
Defaults Upon Senior Securities
Not applicable
Item
4.
Submission of Matters to a Vote of Security Holders
Not applicable
Item
5.
Other Information
Not applicable
Item
6.
Exhibits
31.1
Certification of Chief Executive Officer, adopted pursuant to Rule
13a-14(a)/15d-14(a)
31.2
Certification of Chief Financial Officer, adopted pursuant to Rule
13a-14(a)/15d-14(a)
32.1
Statement of Chief Executive Officer, furnished pursuant to U.S.C. section
1350
32.2
Statement of Chief Financial Officer, furnished pursuant to U.S.C. section
1350
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
15, 2007
By:
/s/ J. Bruce Whittaker
J.
Bruce
Whittaker
President
and Chief Executive Officer
Date:
May
15, 2007
By:
/s/ Michelle M. Plummer
Michelle
M. Plummer
Chief
Financial Officer and Treasurer
Certification
of Chief Executive Officer
Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
I,
J.
Bruce Whittaker certify that:
1.
|
I
have reviewed this quarterly report on Form 10-QSB 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 financial statements, and other financial information
included in this quarterly report, fairly present in all material
respects
the financial condition, results of operations and cash flows of
the small
business issuer as of, and for, the periods presented in this report;
|
4.
|
The
small business issuer’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)) for the small
business issuer 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 small business issuer, 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)
evaluated the effectiveness of the small business issuer’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
c)
disclosed
in this report any change in the small business issuer’s internal control over
financial reporting that occurred during the small business issuer’s most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the small business issuer’s internal control over financial
reporting; and
5.
|
The
small business issuer’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the small business issuer’s auditors and the audit committee
of the small business issuer’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 small business issuer’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 small business issuer’s internal control over
financial reporting.
Date:
May
15,
2007
_/s/
J.
Bruce Whittaker
J.
Bruce
Whittaker
President and Chief
Executive Officer
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-QSB 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 financial statements, and other financial information
included in this quarterly report, fairly present in all material
respects
the financial condition, results of operations and cash flows of
the small
business issuer as of, and for, the periods presented in this report;
|
4.
|
The
small business issuer’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)) for the small
business issuer 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 small business issuer, 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)
evaluated the effectiveness of the small business issuer’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
c)
disclosed
in this report any change in the small business issuer’s internal control over
financial reporting that occurred during the small business issuer’s most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the small business issuer’s internal control over financial
reporting; and
5.
|
The
small business issuer’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the small business issuer’s auditors and the audit committee
of the small business issuer’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 small business issuer’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 small business issuer’s internal control over
financial reporting.
Date:
May
15,
2007
/s/
Michelle M. Plummer
Michelle
M. Plummer
Chief
Financial Officer
Statement
of Chief Executive Officer
Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
J.
Bruce
Whittaker, 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-QSB for the quarter
ended March 31, 2007 and that to the best of his knowledge:
1.
|
the
report fully complies with the requirements of Section 13(a) or 15(d)
of
the Securities Exchange Act of 1934; and
|
2.
|
the
information contained in the report fairly presents, in all material
respects, the financial condition and 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:
May
15,
2007
_/s/
J.
Bruce Whittaker
J.
Bruce
Whittaker
President and Chief
Executive Officer
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-QSB for the quarter
ended March 31, 2007 and that to the best of her
knowledge:
1.
|
the
report fully complies with the requirements of Section 13(a) or 15(d)
of
the Securities Exchange Act of 1934; and
|
2.
|
the
information contained in the report fairly presents, in all material
respects, the financial condition and 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:
May
15,
2007
/s/
Michelle M. Plummer
Michelle
M. Plummer
Chief
Financial Officer