Total consolidated assets for the Company were
The novel strain of coronavirus (“COVID-19”) continues to impact business throughout the country and in our financial markets. With the continued uncertainty regarding the duration of the pandemic and effectiveness of containment strategies, the overall impact to the Company’s financial position cannot be determined at this time. However, the Company continues to maintain strong asset quality, capital and liquidity. Management believes it is still well positioned to withstand the financial impact from this health crisis and continues to stand by and work hand in hand with local businesses to be stronger than ever.
Depending upon the duration of the COVID-19 pandemic and the adequacy of strategies put in place by local and federal governments, borrowers may not have the ability to repay their debt and may ultimately result in losses to the Company. Management continues to closely monitor credit relationships, particularly those on payment deferral or are currently adversely classified. As discussed under Asset Quality and Loan Loss Provision below, the Company has continued to increase its allowance for loan losses during the three months ended
Selected highlights for the three months ended
Net Interest Income and Margin
- Net interest income increased
$1.3 million to$11.8 million for the three months endedSeptember 30, 2020 from$10.5 million for the three months endedSeptember 30, 2019 . The increase in net interest income was primarily the result of the growth in the average balance of interest-earnings assets, which increased$408.5 million when comparing the three months endedSeptember 30, 2020 and 2019, offset by decreases in interest rates on interest-earning assets, which decreased 77 basis points when comparing the three months endedSeptember 30, 2020 and 2019, respectively. Of the$408.5 million increase in average interest-earning assets, average loan balances increased$225.3 million and the yield on loans decreased 72 basis points when comparing the three months endedSeptember 30, 2020 and 2019. Average securities increased$201.0 million and the yield on securities decreased 76 basis points when comparing the three months endedSeptember 30, 2020 and 2019. Included in interest-earning assets atSeptember 30, 2020 , are$100.5 million of SBA Paycheck Protection Program (PPP) loans at a rate of 1.00%. Cost of interest-bearing liabilities decreased 36 basis points when comparing the three months endedSeptember 30, 2020 and 2019, respectively The decrease in cost of interest-bearing liabilities was offset by growth in the average balance of interest-bearing liabilities of$349.3 million , most notably due to an increase in NOW deposits of$296.2 million , an increase in average savings and money market deposits of$48.7 million , and an increase in borrowings of$6.2 million when comparing the three months endedSeptember 30, 2020 and 2019, respectively. The interest rate on borrowings increased 98 basis points when comparing the three months endedSeptember 30, 2020 and 2019. The increase in interest rate on borrowings is due to the Company entering into Subordinated Note Purchase Agreements discussed within the borrowings section below. Yields on interest-earning assets and costs of interest bearing liabilities continue to decline as a result of the low interest rate environment brought on byFederal Reserve Board interest rate decreases during fiscal 2020. - Net interest rate spread and margin both decreased when comparing the three months ended
September 30, 2020 and 2019. Net interest rate spread decreased 41 basis points to 2.72% as compared to 3.13% when comparing the three months endedSeptember 30, 2020 and 2019, respectively. Net interest margin decreased 47 basis points to 2.79% for the three months endedSeptember 30, 2020 as compared to 3.26% for the three months endedSeptember 30, 2019 . Decreases in net interest rate spread and margin resulted primarily from lower yields on loans and securities as a result of the low interest rate environment, partially offset by growth in average loans and securities balances. - 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 and
New York State income taxes yielding the same after-tax income. Tax-equivalent net interest margin was 2.98% and 3.44% for the three months endedSeptember 30, 2020 and 2019, respectively.
Asset Quality and Loan Loss Provision
- Provision for loan losses amounted to
$1.2 million and$551,000 for the three months endedSeptember 30, 2020 and 2019, respectively. The increase in provision for loan loss was due to the impact of the COVID-19 pandemic as well as growth in gross loans and an increase in loans adversely classified. During fiscal 2020, the Company instituted a loan deferment program whereby short-term (3-6 months) deferral of principal and/or interest payments had been provided. AtSeptember 30, 2020 , the Company still had$67.4 million or 201 loans on payment deferral as a result of the pandemic, which is down from$193.5 million or 706 loans atJune 30, 2020 . Management continues to monitor these loans, however, it remains uncertain that all of these loans will continue to perform as agreed once they reach the end of the deferral period. As a result, the Company increased the provision for loan loss for the three months endedSeptember 30, 2020 . Loans classified as substandard or special mention totaled$38.9 million atSeptember 30, 2020 , compared to$32.8 million atJune 30, 2020 , an increase of$6.1 million . The increase in classified loans is due to a deterioration of borrowers’ cash flow in their most recent financial statements. These loans are performing as ofSeptember 30, 2020 . Reserves on loans classified as substandard or special mention totaled$3.9 million atSeptember 30, 2020 compared to$2.4 million atJune 30, 2020 , an increase of$1.5 million which is attributable to the increase in classified loans. No loans were classified as doubtful or loss atSeptember 30, 2020 orJune 30, 2020 . Allowance for loan losses to total loans receivable was 1.68% atSeptember 30, 2020 , and 1.62% atJune 30, 2020 . Total loans receivable included$100.5 million and$99.8 million of SBA Paycheck Protection Program (PPP) loans atSeptember 30, 2020 andJune 30, 2020 , respectively. Excluding these SBA guaranteed loans, the allowance for loan losses to total loans receivable would have been 1.85% and 1.80% atSeptember 30, 2020 andJune 30, 2020 , respectively. - Net charge-offs amounted to
$38,000 and$307,000 for the three months endedSeptember 30, 2020 and 2019, respectively, a decrease of$269,000 . The decrease in charge-off activity was primarily within the consumer and commercial loan portfolios. - Nonperforming loans amounted to
$4.3 million and$4.1 million atSeptember 30, 2020 andJune 30, 2020 , respectively. AtSeptember 30, 2020 andJune 30, 2020 , respectively, nonperforming assets were 0.24% of total assets. Nonperforming loans were 0.42% and 0.41% of net loans atSeptember 30, 2020 andJune 30, 2020 , respectively. AtSeptember 30, 2019 , nonperforming assets to total assets were 0.27% and nonperforming loans to net loans were 0.44%.
Noninterest Income and Noninterest Expense
- Noninterest income decreased
$188,000 , or 8.3%, and totaled$2.1 million and$2.3 million for the three months endedSeptember 30, 2020 and 2019, respectively. The decrease was primarily due to decreases in service charges on deposit accounts offset by an increase in debit card fees resulting from continued growth in the number of checking accounts with debit cards. - Noninterest expense increased
$711,000 or 11.1%, to$7.1 million for the three months endedSeptember 30, 2020 as compared to$6.4 million for the three months endedSeptember 30, 2019 . The increases during the three months endedSeptember 30, 2020 were primarily due to an increase in salaries and employee benefits expenses resulting from additional staffing for a new branch located inAlbany, New York , which opened inSeptember 2020 and increases inFDIC insurance premiums. The lowerFDIC insurance premiums for the three months endedSeptember 30, 2019 , was a result of a credit received totaling$108,000 .
Income Taxes
- 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 11.7% for the three months ended
September 30, 2020 , compared to 16.1% for the three months endedSeptember 30, 2019 . 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.
Balance Sheet Summary
- Total assets of the Company were
$1.8 billion atSeptember 30, 2020 and$1.7 billion atJune 30, 2020 , an increase of$122.3 million , or 7.3%. - Securities available-for-sale and held-to-maturity increased
$49.4 million , or 8.1%, to$659.8 million atSeptember 30, 2020 as compared to$610.4 million atJune 30, 2020 . This increase was the result of an increase in municipal deposits and the need to collateralize the uninsured portion of these deposits. Securities purchases totaled$132.7 million during the three months endedSeptember 30, 2020 and consisted of$93.8 million of state and political subdivision securities and$34.1 million of mortgage-backed securities,$2.5 million of corporate securities, and$2.3 million of other securities. Principal pay-downs and maturities during the three months amounted to$82.4 million , primarily consisting of$14.7 million of mortgage-backed securities,$65.3 million of state and political subdivision securities, and$1.3 million of other securities. - Net loans receivable increased
$35.3 million , or 3.5%, to$1.0 billion atSeptember 30, 2020 from$993.5 million atJune 30, 2020 . Of the$1.0 billion in net loans receivable atSeptember 30, 2020 ,$100.5 million were SBA Paycheck Protection Program loans. The loan growth experienced during the three months consisted primarily of$34.2 million in commercial real estate loans and$10.2 million in residential real estate loans. This growth was partially offset by a$2.1 million decrease in residential construction and land loans,$3.7 million decrease in commercial construction loans,$1.4 million decrease in home equity loans and$1.2 million increase in allowance for loan losses. - Deposits totaled
$1.6 billion atSeptember 30, 2020 and$1.5 billion atJune 30, 2020 , an increase of$117.9 million , or 7.9%. Noninterest-bearing deposits increased$17.5 million , or 12.7%, NOW deposits increased$103.0 million , or 10.8%, and savings deposits increased$2.2 million , or 0.9%, when comparingSeptember 30, 2020 andJune 30, 2020 . These increases were offset by a decrease in money market deposits of$4.3 million , or 3.2%, and a decrease in certificates of deposits of$442,000 , or 1.2%, when comparingSeptember 30, 2020 andJune 30, 2020 . Typically deposits increase during the first quarter of the Company’s fiscal year as a result of an increase in municipal deposits atGreene County Commercial Bank , primarily from tax collection, and new account relationships. - Borrowings for the Company amounted to
$25.7 million atSeptember 30, 2020 compared to$25.5 million atJune 30, 2020 , an increase of$249,000 . AtSeptember 30, 2020 , borrowing consisted of$6.1 million in term advances with theFederal Home Loan Bank of New York (“FHLB”), and$19.6 million of Fixed-to-Floating Rate Subordinated Notes. During the three months endedSeptember 30, 2020 , the Company repaid$10.9 million of Paycheck Protection Plan Lending Facility “(PPPLF”) proceeds,$7.0 million of short-term borrowings withAtlantic Central Bankers Bank and$1.5 million of term debt with the FHLB. The Company entered into Subordinated Note Purchase Agreements onSeptember 17, 2020 , issued at 4.75% Fixed-to-Floating Rate dueSeptember 15, 2030 , in the aggregate principal amount of$20.0 million . These notes are callable onSeptember 15, 2025 . - Shareholders’ equity increased to
$133.0 million atSeptember 30, 2020 from$128.8 million atJune 30, 2020 , resulting primarily from net income of$4.9 million , partially offset by dividends declared and paid of$468,000 and an increase in other accumulated comprehensive loss of$190,000 .
This press release contains statements about future events that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, general economic conditions, financial and regulatory changes related to the COVID-19 pandemic, changes in interest rates, regulatory considerations, competition, technological developments, retention and recruitment of qualified personnel, and market acceptance of the Company’s pricing, products and services.
In addition to presenting information in conformity with accounting principles generally accepted in
Consolidated Statements of Income, and Selected Financial Ratios (Unaudited)
At or for the three months | ||||||
Ended | ||||||
(Dollars in thousands, except per share data) | 2020 | 2019 | ||||
Interest income | ||||||
Interest expense | 1,522 | 2,108 | ||||
Net interest income | 11,816 | 10,500 | ||||
Provision for loan losses | 1,243 | 551 | ||||
Noninterest income | 2,078 | 2,266 | ||||
Noninterest expense | 7,133 | 6,422 | ||||
Income before taxes | 5,518 | 5,793 | ||||
Tax provision | 643 | 930 | ||||
Net Income | ||||||
Basic EPS | ||||||
Weighted average shares outstanding | 8,513,414 | 8,537,814 | ||||
Diluted EPS | ||||||
Weighted average diluted shares outstanding | 8,513,414 | 8,537,814 | ||||
Dividends declared per share | ||||||
Selected Financial Ratios | ||||||
Return on average assets1 | 1.14 | % | 1.49 | % | ||
Return on average equity1 | 14.89 | 17.00 | ||||
Net interest rate spread1 | 2.72 | 3.13 | ||||
Net interest margin1 | 2.79 | 3.26 | ||||
Fully taxable-equivalent net interest margin2 | 2.98 | 3.44 | ||||
Efficiency ratio3 | 51.34 | 50.31 | ||||
Non-performing assets to total assets | 0.24 | 0.27 | ||||
Non-performing loans to net loans | 0.42 | 0.44 | ||||
Allowance for loan losses to non-performing loans | 404.69 | 381.71 | ||||
Allowance for loan losses to total loans | 1.68 | 1.64 | ||||
Shareholders’ equity to total assets | 7.39 | 8.27 | ||||
Dividend payout ratio4 | 21.05 | 19.30 | ||||
Actual dividends paid to net income5 | 9.60 | 8.88 | ||||
Book value per share |
1 Ratios are annualized when necessary.
2 Interest income calculated on a taxable-equivalent basis includes the additional interest income that would have been earned if the Company’s investment in tax-exempt securities and loans had been subject to federal and
For the three months ended | ||||||
(Dollars in thousands) | 2020 | 2019 | ||||
Net interest income (GAAP) | ||||||
Tax-equivalent adjustment | 812 | 571 | ||||
Net interest income (fully taxable-equivalent basis) | ||||||
Average interest-earning assets | ||||||
Net interest margin (fully taxable-equivalent basis) | 2.98 | % | 3.44 | % |
3 The efficiency ratio has been calculated as noninterest expense divided by the sum of net interest income and noninterest income.
4 The dividend payout ratio has been calculated based on the dividends declared per share divided by basic earnings per share. No adjustments have been made to account for dividends waived by
5 Dividends declared divided by net income. The MHC waived its right to receive dividends declared during the three months ended
The above information is preliminary and based on the Company’s data available at the time of presentation.
Consolidated Statements of Financial Condition (Unaudited)
At | At | ||||||
(Dollars In thousands, except share data) | |||||||
Assets | |||||||
Total cash and cash equivalents | |||||||
Long term certificate of deposit | 4,094 | 4,070 | |||||
Securities- available for sale, at fair value | 269,670 | 226,709 | |||||
Securities- held to maturity, at amortized cost | 390,107 | 383,657 | |||||
Equity securities, at fair value | 273 | 267 | |||||
1,158 | 1,226 | ||||||
Gross loans receivable | 1,049,113 | 1,012,660 | |||||
Less: Allowance for loan losses | (17,596) | (16,391) | |||||
Unearned origination fees and costs, net | (2,735) | (2,747) | |||||
Net loans receivable | 1,028,782 | 993,522 | |||||
Premises and equipment | 14,097 | 13,658 | |||||
Accrued interest receivable | 8,395 | 8,207 | |||||
Prepaid expenses and other assets | 6,397 | 5,024 | |||||
Total assets | |||||||
Liabilities and shareholders’ equity | |||||||
Noninterest bearing deposits | |||||||
Interest bearing deposits | 1,463,324 | 1,362,888 | |||||
Total deposits | 1,618,993 | 1,501,075 | |||||
Borrowings from other banks, short-term | - | 17,884 | |||||
Borrowings from FHLB, long term | 6,100 | 7,600 | |||||
Subordinated notes payable | 19,633 | - | |||||
Accrued expenses and other liabilities | 21,392 | 21,439 | |||||
Total liabilities | 1,666,118 | 1,547,998 | |||||
Total shareholders’ equity | 133,022 | 128,805 | |||||
Total liabilities and shareholders’ equity | |||||||
Common shares outstanding | 8,513,414 | 8,513,414 | |||||
97,926 | 97,926 |
The above information is preliminary and based on the Company’s data available at the time of presentation.
For Further Information Contact:
President & CEO
(518) 943-2600
donaldg@tbogc.com
EVP, COO & CFO
(518) 943-2600
michellep@tbogc.com
Source:
2020 GlobeNewswire, Inc., source