GREENE COUNTY BANCORP, INC. 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 onGreene 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 byGreene 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 affectGreene 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 includeGreene County Bancorp, Inc.'s expectations of future financial results. The words "believe," "expect," "anticipate," "project," and similar expressions identify forward-looking statements.Greene County Bancorp, Inc.'s ability to predict results or the effect of future plans or strategies or qualitative or quantitative changes based on market risk exposure is inherently uncertain. Factors that could affect actual results include but are not limited to:
(a) changes in general market interest rates,
(b) general economic conditions, including unemployment rates and real estate
values,
(c) legislative and regulatory changes,
(d) monetary and fiscal policies of the
(e) changes in the quality or composition of
portfolio or the consolidated investment portfolios of
(f) deposit flows, (g) competition, and
(h) demand for financial services in
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.
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Index
Non-GAAP Financial Measures
Regulation G, a rule adopted by theSecurities and Exchange Commission (SEC), applies to certainSEC filings, including earnings releases, made by registered companies that contain "non-GAAP financial measures." GAAP is generally accepted accounting principles inthe United States of America . Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure (if a comparable GAAP measure exists) and a statement of the Company's reasons for utilizing the non-GAAP financial measure as part of its financial disclosures. TheSEC has exempted from the definition of "non-GAAP financial measures" certain commonly used financial measures that are not based on GAAP. When these exempted measures are included in public disclosures, supplemental information is not required. Financial institutions like the Company and its subsidiary banks are subject to an array of bank regulatory capital measures that are financial in nature but are not based on GAAP and are not easily reconcilable to the closest comparable GAAP financial measures, even in those cases where a comparable measure exists. The Company follows industry practice in disclosing its financial condition under these various regulatory capital measures in its periodic reports filed with theSEC , including period-end regulatory capital ratios for itself and its subsidiary banks, and does so without compliance with Regulation G, on the widely-shared assumption that theSEC regards such non-GAAP measures to be exempt from Regulation G. The Company uses in this Report additional non-GAAP financial measures that are commonly utilized by financial institutions and have not been specifically exempted by theSEC from RegulationG. The Company provides, as supplemental information, such non-GAAP measures included in this Report as described immediately below. Tax-Equivalent Net Interest Income and Net Interest Margin: Net interest income, as a component of the tabular presentation by financial institutions of Selected Financial Information regarding their recently completed operations, as well as disclosures based on that tabular presentation, is commonly presented on a tax-equivalent basis. That is, to the extent that some component of the institution's net interest income, which is presented on a before-tax basis, is exempt from taxation (e.g., is received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added to the actual before-tax net interest income total. This adjustment is considered helpful in comparing one financial institution's net interest income to that of another institution or in analyzing any institution's net interest income trend line over time, to correct any analytical distortion that might otherwise arise from the fact that financial institutions vary widely in the proportions of their portfolios that are invested in tax-exempt securities, and that even a single institution may significantly alter over time the proportion of its own portfolio that is invested in tax-exempt obligations. Moreover, net interest income is itself a component of a second financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average earning assets. For purposes of this measure as well, tax-equivalent net interest income is generally used by financial institutions, again to provide a better basis of comparison from institution to institution and to better demonstrate a single institution's performance over time. While we present net interest income and net interest margin utilizing GAAP measures (no tax-equivalent adjustments) as a component of the tabular presentation within our disclosures, we do provide as supplemental information net interest income and net interest margin on a tax-equivalent basis. 33
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Index
Comparison of Financial Condition at
ASSETS
Total assets of the Company were$1.4 billion atDecember 31, 2019 and$1.3 billion atJune 30, 2019 , an increase of$174.5 million , or 13.8%. Securities available-for-sale and held-to-maturity amounted to$525.0 million atDecember 31, 2019 as compared to$426.9 million atJune 30, 2019 , an increase of$98.1 million , or 23.0%. Net loans grew by$65.4 million , or 8.3%, to$851.1 million atDecember 31, 2019 as compared to$785.7 million atJune 30, 2019 .
CASH AND CASH EQUIVALENTS
Total cash and cash equivalents increased$5.0 million to$34.5 million atDecember 31, 2019 from$29.5 million atJune 30, 2019 . The level of cash and cash equivalents is a function of the daily account clearing needs and deposit levels as well as activities associated with securities transactions and loan funding. All of these items can cause cash levels to fluctuate significantly on a daily basis. SECURITIES Securities available-for-sale and held-to-maturity increased$98.1 million , or 23.0%, to$525.0 million atDecember 31, 2019 as compared to$426.9 million atJune 30, 2019 . Securities purchases totaled$184.3 million during the six months endedDecember 31, 2019 and consisted of$132.5 million of state and political subdivision securities and$41.0 million of mortgage-backed securities,$7.3 million of other securities, and$3.5 million of corporate securities. Principal pay-downs and maturities during the six months amounted to$85.4 million , of which$18.0 million were mortgage-backed securities,$58.5 million were state and political subdivision securities,$8.3 million wereU.S. government sponsored enterprises and$0.6 million were other securities. AtDecember 31, 2019 , 61.4% of our securities portfolio consisted of state and political subdivision securities to take advantage of tax savings and to promoteGreene County Bancorp, Inc.'s participation in the communities in which it operates. Mortgage-backed securities and asset-backed securities held within the portfolio do not contain sub-prime loans and are not exposed to the credit risk associated with such lending. December 31, 2019 June 30, 2019 Percentage of Percentage of (Dollars in thousands) Balance portfolio Balance portfolio Securities available-for-sale: U.S. government sponsored enterprises$ 4,530 0.9 %$ 5,553 1.3 % State and political subdivisions 148,332 28.2 96,570 22.6 Mortgage-backed securities-residential 10,316 2.0 2,645 0.6 Mortgage-backed securities-multifamily 25,282 4.8 16,410 3.8 Corporate debt securities 4,539 0.9 1,550 0.4 Total securities available-for-sale 192,999 36.8 122,728 28.7 Securities held-to-maturity: U.S. government sponsored enterprises 2,000 0.4 9,249 2.2 State and political subdivisions 174,165 33.2 152,358 35.7 Mortgage-backed securities-residential 11,302 2.1 4,570 1.1 Mortgage-backed securities-multifamily 137,193 26.1 134,970 31.6 Corporate debt securities 1,993 0.4 1,478 0.3 Other securities 5,336 1.0 1,583 0.4 Total securities held-to-maturity 331,989 63.2 304,208 71.3 Total securities$ 524,988 100.0 %$ 426,936 100.0 % LOANS Net loans receivable increased$65.4 million , or 8.3%, to$851.1 million atDecember 31, 2019 from$785.7 million atJune 30, 2019 . The loan growth experienced during the six months consisted primarily of$20.3 million in commercial construction loans,$30.8 million in commercial real estate loans,$10.7 million in commercial loans,$2.1 million in residential mortgages,$1.2 million in multi-family loans and$1.2 million in residential construction and land loans. This growth was partially offset by a$441,000 decrease in home equity loans, and$784,000 increase in allowance for loan losses. We believe that the continued low interest rate environment and strong customer satisfaction from personal service continued to enhance loan growth. If long term rates begin to rise, the Company anticipates some slowdown in new loan demand as well as refinancing activities.The Bank of Greene County continues to use a conservative underwriting policy in regard to all loan originations, and does not engage in sub-prime lending or other exotic loan products. A significant decline in home values, however, in the Company's markets could have a negative effect on the consolidated results of operations, as any such decline in home values would likely lead to a decrease in residential real estate loans and new home equity loan originations and increased delinquencies and defaults in both the consumer home equity loan and the residential real estate loan portfolios and result in increased losses in these portfolios. Updated appraisals are obtained on loans when there is a reason to believe that there has been a change in the borrower's ability to repay the loan principal and interest, generally, when a loan is in a delinquent status. Additionally, if an existing loan is to be modified or refinanced, generally, an appraisal is ordered to ensure continued collateral adequacy. 34
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Index
(Dollars in thousands) December 31, 2019 June 30, 2019
Percentage of Percentage of
Balance Portfolio Balance Portfolio
Residential real estate $ 269,925 31.2 % $ 267,802 33.6 %
Residential construction and land 8,667 1.0 7,462 0.9
Multi-family 25,789 3.0 24,592 3.1
Commercial real estate 360,424 41.7 329,668 41.3
Commercial construction 56,648 6.6 36,361 4.5
Home equity 22,744 2.6 23,185 2.9
Consumer installment 5,769 0.7 5,481 0.7
Commercial loans 114,220 13.2 103,554 13.0
Total gross loans 864,186 100.0 % 798,105 100.0 %Allowance for loan losses (13,984 ) (13,200 ) Deferred fees and costs 863 833 Total net loans$ 851,065 $ 785,738 ALLOWANCE FOR LOAN LOSSES The allowance for loan losses is established through a provision for loan losses based on management's evaluation of the risk inherent in the loan portfolio, the composition of the loan portfolio, specific impaired loans and current economic conditions. Such evaluation, which includes a review of certain identified loans on which full collectability may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, payment status of the loan, historical loan loss experience and other factors that warrant recognition in providing for an allowance for loan loss. In addition, various regulatory agencies, as an integral part of their examination process, periodically reviewThe Bank of Greene County's allowance for loan losses. Such agencies may requireThe Bank of Greene County to recognize additions to the allowance based on their judgment about information available to them at the time of their examination.The Bank of Greene County considers smaller balance residential mortgages, home equity loans and installment loans to customers as small, homogeneous loans, which are evaluated for impairment collectively based on historical loss experience. Larger balance residential and commercial mortgage and business loans are viewed individually and considered impaired if it is probable thatThe Bank of Greene County will not be able to collect scheduled payments of principal and interest when due, according to the contractual terms of the loan agreements. The measurement of impaired loans is generally based on the fair value of the underlying collateral.The Bank of Greene County charges loans off against the allowance for loan losses when it becomes evident that a loan cannot be collected within a reasonable amount of time or that it will cost the Bank more than it will receive, and all possible avenues of repayment have been analyzed, including the potential of future cash flow, the value of the underlying collateral, and strength of any guarantors or co-borrowers. Generally, consumer loans and smaller business loans (not secured by real estate) in excess of 90 days are charged-off against the allowance for loan losses, unless equitable arrangements are made. For loans secured by real estate, a charge-off is recorded when it is determined that the collection of all or a portion of a loan may not be collected and the amount of that loss can be reasonably estimated. The allowance for loan losses is increased by a provision for loan losses (which results in a charge to expense) and recoveries of loans previously charged off and is reduced by charge-offs. 35
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Index
Analysis of allowance for loan losses activity
At or for the six months ended
December 31,
(Dollars in thousands) 2019 2018
Balance at the beginning of the period $ 13,200 $ 12,024
Charge-offs:
Residential real estate 101 96
Consumer installment 248 188
Commercial loans 204 -
Total loans charged off 553 284
Recoveries:
Residential real estate mortgages 10 13
Consumer installment 50 59
Commercial loans 36 153
Total recoveries 96 225
Net charge-offs 457 59
Provisions charged to operations 1,241 708
Balance at the end of the period $
13,984
Net charge-offs to average loans outstanding (annualized) 0.11 % 0.02 % Net charge-offs to nonperforming assets (annualized) 24.83 % 3.20 % Allowance for loan losses to nonperforming loans 413.85 % 350.66 % Allowance for loan losses to total loans receivable 1.62 % 1.66 %
Nonaccrual Loans and Nonperforming Assets
Loans are reviewed on a regular basis to assess collectability of all principal and interest payments due. Management determines that a loan is impaired or nonperforming when it is probable at least a portion of the principal or interest will not be collected in accordance with contractual terms of the note. When a loan is determined to be impaired, the measurement of the loan is based on present value of estimated future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral. Generally, management places loans on nonaccrual status once the loans have become 90 days or more delinquent or sooner if there is a significant reason for management to believe the collectability is questionable and, therefore, interest on the loan will no longer be recognized on an accrual basis. The Company identifies impaired loans and measures the impairment in accordance with FASB ASC subtopic "Receivables - Loan Impairment." Management may consider a loan impaired once it is classified as nonaccrual and when it is probable that the borrower will be unable to repay the loan according to the original contractual terms of the loan agreement or the loan is restructured in a troubled debt restructuring. It should be noted that management does not evaluate all loans individually for impairment. Generally,The Bank of Greene County considers residential mortgages, home equity loans and installment loans as small, homogeneous loans, which are evaluated for impairment collectively based on historical loan experience and other factors. In contrast, large commercial mortgage, construction, multi-family, business loans and select larger balance residential mortgage loans are viewed individually and considered impaired if it is probable thatThe Bank of Greene County will not be able to collect scheduled payments of principal and interest when due, according to the contractual terms of the loan agreement. The measurement of impaired loans is generally based on the fair value of the underlying collateral. The majority ofThe Bank of Greene County loans, including most nonaccrual loans, are small homogenous loan types adequately supported by collateral. Management considers the payment status of loans in the process of evaluating the adequacy of the allowance for loan losses among other factors. Based on this evaluation, a delinquent loan's risk rating may be downgraded to either pass-watch, special mention, or substandard, and the allocation of the allowance for loan loss is based upon the risk associated with such designation. A loan does not have to be 90 days delinquent in order to be classified as nonperforming. Foreclosed real estate is considered to be a nonperforming asset. 36
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Index
Analysis of Nonaccrual Loans and Nonperforming Assets
December 31, June 30,
(Dollars in thousands) 2019 2019
Nonaccruing loans:
Residential real estate $ 1,691 $ 2,474
Multi-family 131 -
Commercial real estate 984 598
Home equity 311 452
Consumer installment - 6
Commercial 262 108
Total nonaccruing loans 3,379 3,638
90 days & accruing
Residential real estate - -
Total 90 days & accruing - -
Total nonperforming loans 3,379 3,638
Foreclosed real estate:
Residential real estate 303 53
Total foreclosed real estate 303 53
Total nonperforming assets $
3,682
Troubled debt restructuring: Nonperforming (included above) $ 326$ 531 Performing (accruing and excluded above)
1,047 1,368
Total nonperforming assets as a percentage of total assets 0.25 % 0.29 % Total nonperforming loans to net loans
0.40 % 0.46 %
The table below details additional information related to nonaccrual loans for
the three and six months ended
For the three months For the six months
ended December 31, ended December 31
(In thousands) 2019 2018 2019 2018
Interest income that would have been
recorded if loans had been performing in
accordance with original terms $ 53 $ 58 $ 154 $ 129
Interest income that was recorded on
nonaccrual loans 42 23 92 55
Nonperforming assets amounted to $3.7 million at December 31, 2019 and June 30,
2019 . Nonaccrual loans consisted primarily of loans secured by real estate at
December 31, 2019 and June 30, 2019 . Loans on nonaccrual status totaled $3.4
million at December 31, 2019 of which $1.1 million were in the process of
foreclosure. At December 31, 2019 , there were 10 residential loans in the
process of foreclosure totaling $801,000 . Included in nonaccrual loans were
$1.2 million of loans which were less than 90 days past due at December 31,
2019 , but have a recent history of delinquency greater than 90 days past due.
These loans will be returned to accrual status once they have demonstrated a
history of timely payments. Included in total loans past due were $151,000 of
loans which were making payments pursuant to forbearance agreements. Under the
forbearance agreements, the customers have made arrangements with the Bank to
bring the loans current over a specified period of time (resulting in an
insignificant delay in repayment). During this term of the forbearance
agreement, the Bank has agreed not to continue foreclosure proceedings. Loans
on nonaccrual status totaled $3.6 million at June 30, 2019 of which $1.6 million
were in the process of foreclosure. At June 30, 2019 , there were 12 residential
loans in the process of foreclosure totaling $1.5 million . Included in
nonaccrual loans were $1.8 million of loans which were less than 90 days past
due at June 30, 2019 , but have a recent history of delinquency greater than 90
days past due.
Impaired Loans
The Company identifies impaired loans and measures the impairment in accordance
with FASB ASC subtopic "Receivables - Loan Impairment". A loan is considered
impaired when it is probable that the borrower will be unable to repay the loan
according to the original contractual terms of the loan agreement or the loan is
restructured in a troubled debt restructuring.
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Index
The table below details additional information on impaired loans atDecember 31, 2019 andJune 30, 2019 : (In thousands) December 31, 2019 June 30, 2019 Balance of impaired loans, with a valuation allowance $
2,183 $ 2,000 Allowances relating to impaired loans included in allowance for loan losses
217 262
Balance of impaired loans, without a valuation allowance 1,208 1,894
Total impaired loans 3,391 3,894
For the three months For the six months
ended December 31, ended December 31,
(In thousands) 2019 2018 2019 2018
Average balance of impaired loans for
the periods ended $ 3,272 $ 3,920 $ 3,150 $ 3,938
Interest income recorded on impaired
loans during the periods ended 41 25 108 63
DEPOSITS
Deposits totaled $1.2 billion at December 31, 2019 and $1.1 billion at June 30,
2019 , an increase of $124.1 million , or 11.1%. Noninterest-bearing deposits
increased $2.6 million , or 2.4%, NOW deposits increased $123.1 million , or
19.0%, and savings deposits increased $2.3 million , or 1.1% when comparing
December 31, 2019 and June 30, 2019 . These increases were offset by a decrease
in money market deposits of $3.4 million , or 3.0%, and a decrease in
certificates of deposits of $564,000 , or 1.5%, when comparing December 31, 2019
and June 30, 2019 .
Percentage Percentage
(In thousands) December 31, 2019 of Portfolio June 30, 2019 of Portfolio
Noninterest-bearing deposits $ 110,100 8.8 % $ 107,469 9.6 %
Certificates of deposit 35,978 2.9 36,542 3.3
Savings deposits 216,966 17.4 214,680 19.2
Money market deposits 111,500 9.0 114,915 10.2
NOW deposits 770,114 61.9 646,963 57.7
Total deposits $ 1,244,658 100.0 % $ 1,120,569 100.0 %
BORROWINGS
At December 31, 2019 , The Bank of Greene County had pledged approximately $312.5
million of its residential and commercial mortgage portfolio as collateral for
borrowing and irrevocable stand-by letters of credit at the Federal Home Loan
Bank of New York ("FHLB"). The maximum amount of funding available from the
FHLB was $232.1 million at December 31, 2019 , of which $12.6 million in
borrowings and $75.6 million in irrevocable stand-by letters of credit were
outstanding at December 31, 2019 . There were $48.9 million of short-term or
overnight borrowings outstanding at December 31, 2019 . The $12.6 million
consisted of long-term fixed rate advances with a weighted average rate of 1.68%
and a weighted average maturity of 13 months. The $75.6 million of irrevocable
stand-by letters of credit with the FHLB have been issued to secure municipal
transactional deposit accounts, on behalf of Greene County Commercial Bank .
The Bank of Greene County also pledges securities and certificates of deposit as
collateral at the Federal Reserve Bank discount window for overnight
borrowings. At December 31, 2019 , approximately $5.3 million of collateral
consisting of $4.5 million in securities and $752,000 of certificates of
deposit, was available to be pledged against potential borrowings at the Federal
Reserve Bank discount window. There were no balances outstanding with the
Federal Reserve Bank at December 31, 2019 or June 30, 2019 .
The Bank of Greene County has established unsecured lines of credit with
Atlantic Central Bankers Bank for $10.0 million and two other financial
institutions for $40.0 million . Greene County Bancorp, Inc. has also
established an unsecured line of credit with Atlantic Central Bankers Bank for
$7.5 million . The lines of credit provide for overnight borrowing and the
interest rate is determined at the time of the borrowing. At December 31, 2019
and June 30, 2019 , there were no balances outstanding on any of these lines of
credit.
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Index
Scheduled maturities of long-term borrowings at
(In thousands) Within the twelve months endedDecember 31, 2020 $ 6,500 2021 2,950 2022 3,150$ 12,600 EQUITY
Shareholders' equity increased to
OnSeptember 17, 2019 , the Board of Directors of the Company adopted a stock repurchase program. Under the repurchase program, the Company may repurchase up to 200,000 shares of its common stock. Repurchases will be made at management's discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company's financial performance. AtDecember 31, 2019 , the Company had repurchased 1,400 shares.
Selected Equity Data:
December 31, 2019 June 30, 2019
Shareholders' equity to total assets, at end of period 8.35 % 8.85 %
Book value per share $ 14.12 $ 13.16
Closing market price of common stock $ 28.79 $ 29.42
For the
six months ended
2019 2018
Average shareholders' equity to average assets 8.52 % 8.60 %
Dividend payout ratio1 18.80 % 19.05 %
Actual dividends paid to net income2 13.79 % 13.96 %
1The dividend payout ratio has been calculated based on the dividends declared
per share divided by basic earnings per share. No adjustments have been made
for dividends waived by Greene County Bancorp, MHC ("MHC"), the owner of 54.0%
of the Company's shares outstanding.
2 Dividends declared divided by net income. The MHC waived its right to receive
dividends declared during the three months ended September 30, 2019 . Dividends
declared during the three months ended December 31, 2019 were paid to the MHC.
Dividends declared during the three months ended September 30, 2018 were paid to
the MHC. The MHC waived its right to receive dividends during the three months
ended December 31, 2018 . The MHC's ability to waive the receipt of dividends is
dependent upon annual approval of its members as well as receiving the
non-objection of the Federal Reserve Board .
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Index
Comparison of Operating Results for the Three and Six Months Ended
Average Balance Sheet The following table sets forth certain information relating toGreene County Bancorp, Inc. for the three and six months endedDecember 31, 2019 and 2018. For the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, are expressed both in dollars and rates. No tax equivalent adjustments were made. Average balances were based on daily averages. Average loan balances include nonperforming loans. The loan yields include net amortization of certain deferred fees and costs that are considered adjustments to yields. Three months ended December 31, 2019 2018 Average Interest Average Average Interest Average Outstanding Earned Yield Outstanding Earned Yield / (Dollars in thousands) Balance / Paid / Rate Balance / Paid Rate Interest-earning Assets: Loans receivable, net1$ 841,604 $ 9,801 4.66 %$ 750,182 $ 8,696 4.64 % Securities2 516,840 3,166 2.45 393,525 2,624 2.67 Interest-bearing bank balances and federal funds 43,559 207 1.90 5,111 28 2.19 FHLB stock 1,619 23 5.68 1,950 58 11.90 Total interest-earning assets 1,403,622 13,197 3.76 % 1,150,768 11,406 3.96 % Cash and due from banks 10,328 9,633 Allowance for loan losses (13,525 ) (12,452 ) Other noninterest-earning assets 23,445 20,186 Total assets$ 1,423,870 $ 1,168,135 Interest-Bearing Liabilities: Savings and money market deposits$ 318,522 $ 323 0.41 %$ 325,726 $ 295 0.36 % NOW deposits 808,219 1,760 0.87 554,996 832 0.60 Certificates of deposit 36,374 122 1.34 45,335 144 1.27 Borrowings 18,485 81 1.75 27,171 140 2.06 Total interest-bearing liabilities 1,181,600 2,286 0.77 % 953,228 1,411 0.59 % Noninterest-bearing deposits 108,256 102,467 Other noninterest-bearing liabilities 15,760 10,744 Shareholders' equity 118,254 101,696 Total liabilities and equity$ 1,423,870 $ 1,168,135 Net interest income$ 10,911 $ 9,995 Net interest rate spread 2.99 % 3.37 % Net earnings assets$ 222,022 $ 197,540 Net interest margin 3.11 % 3.47 % Average interest-earning assets to average interest-bearing liabilities 118.79 % 120.72 %
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1Calculated net of deferred loan fees and costs, loan discounts, and loans in
process.
2Includes tax-free securities, mortgage-backed securities, and asset-backed
securities.
For the three months ended
Taxable-equivalent net interest income and net interest margin December 31,
(Dollars in thousands) 2019 2018
Net interest income (GAAP) $ 10,911 $ 9,995
Tax-equivalent adjustment(1) 627 493
Net interest income (fully taxable-equivalent) $
11,538
Average interest-earning assets$ 1,403,622 $ 1,150,768 Net interest margin (fully taxable-equivalent) 3.29 % 3.65 % 1Net interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if the Company's investment in tax-exempt securities and loans had been subject to federal andNew York State income taxes yielding the same after-tax income. The rate used for this adjustment was 21% for federal income taxes and 3.98% forNew York State income taxes for the periods endedDecember 31, 2019 and 2018. 40
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Index
Six months ended December 31,
2019 2018
Average Interest Average Average Interest Average
Outstanding Earned Yield Outstanding Earned Yield /
(Dollars in thousands) Balance / Paid / Rate Balance / Paid Rate
Interest-earning Assets:
Loans receivable, net1 $ 823,051 $ 19,206 4.67 % $ 737,662 $ 16,994 4.61 %
Securities2 479,199 6,148 2.57 396,196 5,264 2.66
Interest-bearing bank balances and
federal funds 41,533 405 1.95 5,945 59 1.98
FHLB stock 1,512 46 6.08 2,631 86 6.54
Total interest-earning assets 1,345,295 25,805 3.84 % 1,142,434 22,403 3.92 %
Cash and due from banks 10,532 9,629
Allowance for loan losses (13,377 ) (12,284 )
Other noninterest-earning assets 22,547 19,671
Total assets $ 1,364,997 $ 1,159,450
Interest-Bearing Liabilities:
Savings and money market deposits $ 324,109 $ 664 0.41 % $ 334,362 $ 588 0.35 %
NOW deposits 748,421 3,346 0.89 527,348 1,473 0.56
Certificates of deposit 36,679 245 1.34 42,453 246 1.16
Borrowings 16,110 139 1.73 42,298 444 2.10
Total interest-bearing liabilities 1,125,319 4,394 0.78 % 946,461 2,751 0.58 %
Noninterest-bearing deposits 107,465 102,341
Other noninterest-bearing
liabilities 15,917 10,915
Shareholders' equity 116,296 99,733
Total liabilities and equity $ 1,364,997 $ 1,159,450
Net interest income $ 21,411 $ 19,652
Net interest rate spread 3.06 % 3.34 %
Net earnings assets $ 219,976 $ 195,973
Net interest margin 3.18 % 3.44 %
Average interest-earning assets to
average interest-bearing
liabilities 119.55 % 120.71 %
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1Calculated net of deferred loan fees and costs, loan discounts, and loans in
process.
2Includes tax-free securities, mortgage-backed securities, and asset-backed
securities.
For the six months ended
Taxable-equivalent net interest income and net interest margin December 31,
(Dollars in thousands) 2019 2018
Net interest income (GAAP) $ 21,411 $ 19,652
Tax-equivalent adjustment(1) 1,203 962
Net interest income (fully taxable-equivalent) $
22,614
Average interest-earning assets$ 1,345,295 $ 1,142,434 Net interest margin (fully taxable-equivalent)
3.36 % 3.61 %
1Net interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if the Company's investment in tax-exempt securities and loans had been subject to federal andNew York State income taxes yielding the same after-tax income. The rate used for this adjustment was 21% for federal income taxes and 3.98% forNew York State income taxes for the periods endedDecember 31, 2019 and 2018. 41
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Rate / Volume Analysis
The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affectedGreene County Bancorp, Inc.'s interest income and interest expense during the periods indicated. Information is provided in each category with respect to:
(i) Change attributable to changes in volume (changes in volume multiplied by
prior rate);
(ii) Change attributable to changes in rate (changes in rate multiplied by prior
volume); and
(iii) The net change.
The changes attributable to the combined impact of volume and rate have been
allocated proportionately to the changes due to volume and the changes due to
rate.
Three Months Ended December 31, Six Months Ended December 31,
(Dollars in thousands) 2019 versus 2018 2019 versus 2018
Increase/(Decrease) Total Increase/(Decrease) Total
Due To Increase/ Due To Increase/
Volume Rate (Decrease) Volume Rate (Decrease)
Interest Earning Assets:
Loans receivable, net1 $ 1,067 $ 38 $ 1,105 $ 1,988 $ 224 $ 2,212
Securities2 772 (230 ) 542 1,068 (184 ) 884
Interest-bearing bank
balances and federal
funds 183 (4 ) 179 347 (1 ) 346
FHLB stock (8 ) (27 ) (35 ) (35 ) (5 ) (40 )
Total interest-earning
assets 2,014 (223 ) 1,791 3,368 34 3,402
Interest-Bearing
Liabilities:
Savings and money market
deposits (7 ) 35 28 (19 ) 95 76
NOW deposits 467 461 928 779 1,094 1,873
Certificates of deposit (30 ) 8 (22 ) (35 ) 34 (1 )
Borrowings (40 ) (19 ) (59 ) (237 ) (68 ) (305 )
Total interest-bearing
liabilities 390 485 875 488 1,155 1,643
Net change in net
interest income $ 1,624 $ (708 ) $ 916 $ 2,880 $ (1,121 ) $ 1,759 --------------------------------------------------------------------------------
1 Calculated net of deferred loan fees, loan discounts, and loans in process. 2 Includes tax-free securities, mortgage-backed securities, and asset-backed securities. GENERAL Return on average assets and return on average equity are common methods of measuring operating results. Annualized return on average assets decreased to 1.44% for the three months endedDecember 31, 2019 as compared to 1.57% for the three months endedDecember 31, 2018 , and was 1.46% and 1.55% for the six months endedDecember 31, 2019 and 2018, respectively. Annualized return on average equity decreased to 17.29% for the three months and 17.16% for the six months endedDecember 31, 2019 , as compared to 18.03% for the three months and 17.98% for the six months endedDecember 31, 2018 . The decrease in return on average assets and return on average equity was primarily the result of balance sheet growth outpacing growth in net income. Net income amounted to$5.1 million and$4.6 million for the three months endedDecember 31, 2019 and 2018, respectively, an increase of$529,000 , or 11.5%, and amounted to$10.0 million and$9.0 million for the six months endedDecember 31, 2019 and 2018, respectively, an increase of$1.0 million , or 11.1%. Average assets increased$255.7 million , or 21.9%, to$1.4 billion for the three months endedDecember 31, 2019 as compared to$1.2 billion for the three months endedDecember 31, 2018 . Average equity increased$16.6 million , or 16.3%, to$118.3 million for the three months endedDecember 31, 2019 as compared to$101.7 million for the three months endedDecember 31, 2018 . Average assets increased$205.5 million , or 17.7%, to$1.4 billion for the six months endedDecember 31, 2019 as compared to$1.2 billion for the six months endedDecember 31, 2018 . Average equity increased$16.6 million , or 16.6%, to$116.3 million for the six months endedDecember 31, 2019 as compared to$99.7 million for the six months endedDecember 31, 2018 . 42
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INTEREST INCOME
Interest income amounted to$13.2 million for the three months endedDecember 31, 2019 as compared to$11.4 million for the three months endedDecember 31, 2018 , an increase of$1.8 million , or 15.8%. Interest income amounted to$25.8 million for the six months endedDecember 31, 2019 as compared to$22.4 million for the six months endedDecember 31, 2018 , an increase of$3.4 million , or 15.2%. The increase in average loan and securities balances had the greatest impact on interest income when comparing the three and six months endedDecember 31, 2019 and 2018. Average loan balances increased$91.4 million and$85.4 million while the yield on loans increased two basis points and six basis points when comparing the three and six months endedDecember 31, 2019 and 2018, respectively. Average securities increased$123.3 million and$83.0 million and the yield on such securities decreased 22 basis points and nine basis points when comparing the three and six months endedDecember 31, 2019 and 2018.
INTEREST EXPENSE
Interest expense amounted to$2.3 million for the three months endedDecember 31, 2019 as compared to$1.4 million for the three months endedDecember 31, 2018 , an increase of$875,000 or 62.0%. Interest expense amounted to$4.4 million for the six months endedDecember 31, 2019 as compared to$2.8 million for the six months endedDecember 31, 2018 , an increase of$1.6 million , or 57.1%. Increases in both the rate paid and the increase in average balances of NOW accounts had the greatest impact on interest expense and was the result of promotions within the Company's newer markets targeting new businesses, municipal and retail customers as well as the impact from increased market interest rates during fiscal 2019. As illustrated in the rate/volume table, interest expense increased$485,000 and$1.2 million when comparing the three and six months endedDecember 31, 2019 and 2018 due to the increase in the rate paid on interest-bearing liabilities. Interest expense increased$390,000 and$488,000 when comparing these same periods due to the increased average balances. Average interest-bearing liabilities increased$228.4 million and$178.9 million when comparing the three and six months endedDecember 31, 2019 , respectively. The average rate paid on interest-bearing liabilities increased 18 basis points to 0.77% from 0.59% when comparing the three months endedDecember 31, 2019 and 2018, respectively, and increased 20 basis points to 0.78% from 0.58% when comparing the six months endedDecember 31, 2019 and 2018. Average deposits increased$237.1 million and$205.0 million for the three and six months endedDecember 31, 2019 and 2018, respectively, as a result of continued growth across all three of our primary banking lines - retail, commercial and municipal. The average rate paid on NOW deposits increased 27 basis points when comparing the three months endedDecember 31, 2019 and 2018, and the average balance of such accounts grew by$253.2 million when comparing these same periods. The average rate paid on NOW deposits increased 33 basis points when comparing the six months endedDecember 31, 2019 and 2018, and the average balance of such accounts increased$221.1 million when comparing these same periods. The average balance of savings and money market deposits decreased$7.2 million and$10.3 million when comparing the three and six months endedDecember 31, 2019 and 2018, respectively. The rates paid on savings and money market deposits increased five basis points and six basis points when comparing the three and six months endedDecember 31, 2019 and 2018, respectively. The average balance of certificates of deposit decreased$9.0 million and$5.8 million when comparing the three and six months endedDecember 31, 2019 and 2018, respectively. The average rate paid on certificate of deposits increased seven basis and 18 basis points when comparing the three and six months endedDecember 31, 2019 and 2018. The average balance on borrowings decreased$8.7 million and$26.2 million when comparing the three and six months endedDecember 31, 2019 and 2018. The rate decreased 31 basis points and 37 basis points when comparing the three and six months endedDecember 31, 2019 and 2018.
NET INTEREST INCOME
Net interest income increased$916,000 million to$10.9 million for the three months endedDecember 31, 2019 from$10.0 million for the three months endedDecember 31, 2018 . Net interest income increased$1.7 million to$21.4 million for the six months endedDecember 31, 2019 from$19.7 million for the six months endedDecember 31, 2018 . These increases in net interest income were primarily the result of growth in the average balance of interest-earning assets, with continued growth in loans and securities, funded primarily from growth in deposits. Net interest spread decreased 38 basis points to 2.99% for the three months endedDecember 31, 2019 compared to 3.37% for the three months endedDecember 31, 2018 . Net interest margin decreased 36 basis points to 3.11% for the three months endedDecember 31, 2019 compared to 3.47% for the three months endedDecember 31, 2018 . Net interest spread and margin decreased 28 basis points and 26 basis points to 3.06% and 3.18%, respectively, for the six months endedDecember 31, 2019 compared to 3.34% and 3.44%, respectively, for the six months endedDecember 31, 2018 . Decreases in net interest spread and margin are primarily the result of the higher cost of interest-bearing liabilities and lower yields on securities, partially offset by growth in average loan and securities balances. 43
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Net interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if the Company's investment in tax-exempt securities and loans had been subject to federal andNew York State income taxes yielding the same after-tax income. Tax equivalent net interest margin was 3.29% and 3.65% for the three months endedDecember 31, 2019 and 2018, respectively, and was 3.36% and 3.61% for the six months endedDecember 31, 2019 and 2018, respectively. As a result of the enactment of the Tax Cut and Jobs Act of 2017 ("TCJA") inDecember 2017 , which permanently reduces the maximum corporate income tax rate from 35% to 21% effective for tax years beginning afterDecember 31, 2017 , the tax benefits derived from tax-exempt securities and loans is lower for the three and six months endedDecember 31, 2018 compared toDecember 31, 2017 . However, beginningJanuary 1, 2018 , pricing of tax-exempt securities and loan originations have been adjusted to reflect the change in the corporate tax rate, thereby producing a tax-equivalent yield on these securities and loans that are comparable to yields obtained on similar taxable investments. Due to the large portion of fixed-rate residential mortgages in the Company's portfolio, interest rate risk is a concern and the Company will continue to monitor and adjust the asset and liability mix as much as possible to take advantage of the benefits and reduce the risks or potential negative effects of a rising rate environment. Management attempts to mitigate the interest rate risk through balance sheet composition. Several strategies are used to help manage interest rate risk such as maintaining a high level of liquid assets such as short-term federal funds sold and various investment securities and maintaining a high concentration of less interest-rate sensitive and lower-costing core deposits.
PROVISION FOR LOAN LOSSES
Management continues to closely monitor asset quality and adjust the level of the allowance for loan losses when necessary. The amount recognized for the provision for loan losses is determined by management based on its ongoing analysis of the adequacy of the allowance for loan losses. Provision for loan losses amounted to$690,000 and$354,000 for the three months endedDecember 31, 2019 and 2018, respectively, and amounted to$1.2 million and$708,000 for the six months endedDecember 31, 2019 and 2018, respectively. This increase was due to the growth in gross loans as well as an increase in loans adversely classified. Loans classified as substandard or special mention totaled$24.7 million atDecember 31, 2019 compared to$17.1 million atJune 30, 2019 , an increase of$7.6 million . Reserves on these loans totaled$1.9 million atDecember 31, 2019 compared to$1.5 million atJune 30, 2019 , an increase of$395,000 . The increase in classified loans is primarily due to the downgrade of a construction loan to special mention during the six months endedDecember 31, 2019 as a result of project cost overruns and several delinquent payment. No loans were classified as doubtful or loss atDecember 31, 2019 orJune 30, 2019 . Allowance for loan losses to total loans receivable was 1.62% atDecember 31, 2019 , and 1.65% atJune 30, 2019 . Net charge-offs for the three months endedDecember 31, 2019 totaled$149,000 compared to a net recovery for the three months endedDecember 31, 2018 of$11,000 . Net charge-offs totaled$457,000 and$59,000 for the six months endedDecember 31, 2019 and 2018, respectively. This increase in charge-off activity was primarily within the commercial loan and consumer loan portfolios. Commercial loan net charge-offs totaled$168,000 for the six months endedDecember 31, 2019 compared to a net recovery of$153,000 for the six months endedDecember 31, 2018 . Consumer loan net charge-offs totaled$198,000 and$129,000 for the six months endedDecember 31, 2019 and 2018, respectively, an increase of$69,000 . The increase in the consumer loan portfolio is the result of an increase in charge-offs related to the deposit overdraft protection program, and is due to the significant growth in the number of checking accounts with overdraft protection as well as a recent increase in the amount of protection provided per account. Nonperforming loans amounted to$3.4 million and$3.6 million atDecember 31, 2019 andJune 30, 2019 , respectively. AtDecember 31, 2019 andJune 30, 2019 , nonperforming assets were 0.25% and 0.29% of total assets, and nonperforming loans were 0.40% and 0.46% of net loans. AtDecember 31, 2018 , nonperforming assets to total assets were 0.31% and nonperforming loans to net loans were 0.48%. The Company has not been an originator of "no documentation" mortgage loans, and the loan portfolio does not include any mortgage loans that the Company classifies as sub-prime. NONINTEREST INCOME For the three months For the six months (In thousands) ended December 31, Change from Prior Year ended December 31, Change from Prior Year Noninterest income: 2019 2018 Amount Percent 2019 2018 Amount Percent
Service charges on deposit accounts
5 0.45 %$ 2,236 $ 2,143 $ 93 4.34 % Debit card fees 755 685 70 10.22 1,498 1,325 173 13.06 Investment services 168 136 32 23.53 313 251 62 24.70 E-commerce fees 31 34 (3 ) (8.82 ) 66 71 (5 ) (7.04 ) Other operating income 251 180 71 39.44 469 403 66 (16.38 ) Total noninterest income$ 2,316 $ 2,141 $ 175 8.17 %$ 4,582 $ 4,193 $ 389 9.28 % 44
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Noninterest income increased$175,000 , or 8.2%, and totaled$2.3 million and$2.1 million for the three months endedDecember 31, 2019 and 2018. Noninterest income increased$389,000 , or 9.3%, and totaled$4.6 million and$4.2 million for the six months endedDecember 31, 2019 and 2018. This increase was primarily due to increases in debit card fees and service charges on deposit accounts resulting from continued growth in the number of checking accounts with debit cards, as well as increased monthly or transactional service charges on deposit accounts. Investment services income also increased during the period due to higher sales volume of investment products. NONINTEREST EXPENSE For the three months For the six months (In thousands) ended December 31 Change from Prior Year ended December 31, Change from Prior Year Noninterest expense: 2019 2018 Amount Percent 2019 2018 Amount Percent Salaries and employee benefits$ 3,992 $ 3,677 $ 315 8.57 %$ 7,934 $ 7,155 $ 779 10.89 % Occupancy expense 441 414 27 6.52 907 816 91 11.15 Equipment and furniture expense 126 127 (1 ) (0.79 ) 407 341 66
19.35
Service and data processing fees 638 542 96 17.71 1,212 1,037 175
16.88
Computer software, supplies and support 264 200 64 32.00 506 423 83
19.62
Advertising and promotion 142 76 66 86.84 258 196 62
31.63
FDIC insurance premiums 12 100 (88 ) (88.00 ) (27 ) 227 (254 ) (111.89 ) Legal and professional fees 325 283 42 14.84 604 612 (8 ) (1.31 ) Other 595 828 (233 ) (28.14 ) 1,156 1,401 (245 ) (17.49 ) Total noninterest expense$ 6,535 $ 6,247 $ 288 4.61 %$ 12,957 $ 12,208 $ 749 6.14 % Noninterest expense increased$288,000 or 4.6%, to$6.5 million for the three months endedDecember 31, 2019 as compared to$6.2 million for the three months endedDecember 31, 2018 . Noninterest expense increased$749,000 , or 6.1%, to$13.0 million for the six months endedDecember 31, 2019 , compared to$12.2 million for the six months endedDecember 31, 2018 . This increase, during the three and six months endedDecember 31, 2019 , was primarily due to an increase in salaries and employee benefits expenses, resulting from additional staffing for the addition of a new branch located inKinderhook -Valatie, New York , which opened inJuly 2019 . As the Company continues to grow, staffing was also increased within our lending department, customer service center and investment center. This increase was partially offset by a decrease inFDIC insurance premiums. InJanuary 2019 , theFDIC provided notification to the Company that a credit in the amount of$177,000 was calculated forThe Bank of Greene County , and a credit in the amount of$91,000 was calculated forGreene County Commercial Bank , based on a change in assessments underFDIC regulations resulting from the Deposit Insurance Fund Reserve Ratio reaching 1.36. TheDeposit Insurance Fund reserve ratio was above 1.38% as ofJune 30, 2019 andSeptember 30, 2019 , and therefore, theFDIC offset regular deposit insurance assessments with credits on the September andDecember 2019 invoices. The Company received credits totaling$120,000 and$228,000 during the three and six months endedDecember 31, 2019 . This credit was applied againstFDIC insurance premiums expense. Other noninterest expense also decreased for both the three and six months endedDecember 31, 2019 and was due to a charitable donation made to the Company'sCharitable Foundation during the three and six months endedDecember 31, 2018 . INCOME TAXES The provision for income taxes directly reflects the expected tax associated with the pre-tax income generated for the given year and certain regulatory requirements. The effective tax rate was 14.8% and 15.4% for the three and six months endedDecember 31, 2019 , compared to 17.2% and 18.0% for the three and six months endedDecember 31, 2018 . The statutory tax rate is impacted by the benefits derived from tax exempt bond and loan income, the Company's real estate investment trust subsidiary income, as well as the tax benefits derived from premiums paid to the Company's pooled captive insurance subsidiary to arrive at the effective tax rate.
LIQUIDITY AND CAPITAL RESOURCES
Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates or prices such as interest rates, foreign currency exchange rates, commodity prices, and equity prices.Greene County Bancorp, Inc.'s most significant form of market risk is interest rate risk since the majority ofGreene 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 theFederal Home Loan Bank andAtlantic Central Bankers Bank as needed. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit outflows, mortgage prepayments, and lending activities are greatly influenced by general interest rates, economic conditions and competition. 45
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(In thousands) 2019 Unfunded loan commitments$ 73,667 Unused lines of credit 60,110 Total commitments$ 133,777
Risk Participation Agreements
Risk participation agreements ("RPAs") are guarantees issued by the Company to
other parties for a fee, whereby the Company agrees to participate in the credit
risk of a derivative customer of the other party. Under the terms of these
agreements, the "participating bank" receives a fee from the "lead bank" in
exchange for the guarantee of reimbursement if the customer defaults on an
interest rate swap. The interest rate swap is transacted such that any and all
exchanges of interest payments (favorable and unfavorable) are made between the
lead bank and the customer. In the event that an early termination of the swap
occurs and the customer is unable to make a required close out payment, the
participating bank assumes that obligation and is required to make this payment.
RPAs where the Company acts as the lead bank are referred to as
"participations-out," in reference to the credit risk associated with the
customer derivatives being transferred out of the Company. Participations-out
generally occur concurrently with the sale of new customer derivatives. The
Company had no participations-out at December 31, 2019 or June 30, 2019 . RPAs
where the Company acts as the participating bank are referred to as
"participations-in," in reference to the credit risk associated with the
counterparty's derivatives being assumed by the Company. The Company's maximum
credit exposure is based on its proportionate share of the settlement amount of
the referenced interest rate swap. Settlement amounts are generally calculated
based on the fair value of the swap plus outstanding accrued interest
receivables from the customer. The Company's estimate of the credit exposure
associated with its risk participations-in was $2.1 million and $1.2 million at
December 31, 2019 and June 30, 2019 , respectively. The current amount of credit
exposure is spread out over five counterparties, and terms range between five to
ten years.
Greene County Bancorp, Inc. anticipates that it will have sufficient funds
available to meet current loan commitments based on the level of cash and cash
equivalents as well as the available-for-sale investment portfolio and borrowing
capacity.
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The Bank of Greene County andGreene County Commercial Bank met all applicable regulatory capital requirements atDecember 31, 2019 andJune 30, 2019 . Consolidated shareholders' equity represented 8.4% and 8.9% of total assets atDecember 31, 2019 and atJune 30, 2019 , respectively. To Be Well Capitalized Under (Dollars in thousands) For Capital Prompt Corrective Capital Conservation Actual Adequacy Purposes Action Provisions Buffer The Bank of Greene County Amount Ratio Amount Ratio Amount Ratio Actual Required As ofDecember 31, 2019 : Total risk-based capital$ 128,629 15.45 %$ 66,590 8.0 %$ 83,238 10.0 % 7.45 % 2.50 % Tier 1 risk-based capital 118,181 14.20 49,943 6.0 66,590 8.0 8.20 2.50 Common equity tier 1 capital 118,181 14.20 37,457 4.5 54,104 6.5 9.70 2.50 Tier 1 leverage ratio 118,181 8.32 56,788 4.0 70,985 5.0 4.32 2.50 As of June 30, 2019: Total risk-based capital$ 118,113 15.8 %$ 59,842 8.0 %$ 74,802 10.0 % 7.79 % 2.50 % Tier 1 risk-based capital 108,716 14.5 44,881 6.0 59,842 8.0 8.53 2.50 Common equity tier 1 capital 108,716 14.5 33,661 4.5 48,621 6.5 10.03 2.50 Tier 1 leverage ratio 108,716 8.7 50,049 4.0 62,561 5.0 4.69 2.50Greene County Commercial Bank As ofDecember 31, 2019 : Total risk-based capital$ 51,204 43.1 %$ 9,499 8.0 %$ 11,874 10.0 % 35.12 % 2.50 % Tier 1 risk-based capital 51,204 43.1 7,124 6.0 9,499 8.0 37.12 2.50 Common equity tier 1 capital 51,204 43.1 5,343 4.5 7,718 6.5 38.62 2.50 Tier 1 leverage ratio 51,204 8.4 24,464 4.0 30,580 5.0 4.37 2.50 As of June 30, 2019: Total risk-based capital$ 47,366 47.4 %$ 7,996 8.0 %$ 9,996 10.0 % 39.39 % 2.50 % Tier 1 risk-based capital 47,366 47.4 5,997 6.0 7,996 8.0 41.39 2.50 Common equity tier 1 capital 47,366 47.4 4,498 4.5 6,497 6.5 42.89 2.50 Tier 1 leverage ratio 47,366 9.6 19,678 4.0 24,597 5.0 5.63 2.50
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