form10qmarch312010.htm
 
 
 

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------

FORM 10-Q

[x] QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes:               No:        

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   _____                                                                           Accelerated filer _____
Non-accelerated filer     _____                                                                           Smaller reporting company          X       
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 12, 2010, the registrant had 4,118,912 shares of common stock outstanding at $ .10 par value.

 
 

 


 
GREENE COUNTY BANCORP, INC.
     
         
         
         
 
INDEX
     
         
         
         
PART I.
FINANCIAL INFORMATION
     
     
Page
 
Item 1.
Financial Statements (unaudited)
     
 
*   Consolidated Statements of Financial Condition
   
 
*   Consolidated Statements of Income
   
 
*   Consolidated Statements of Comprehensive Income
   
 
*   Consolidated Statements of Changes in Shareholders’ Equity
   
 
*   Consolidated Statements of Cash Flows
   
 
*   Notes to Consolidated Financial Statements
   
         
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operation
   
         
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
   
         
Item 4.
Controls and Procedures
   
         
PART II.
OTHER INFORMATION
     
         
Item 1.
Legal Proceedings
   
         
Item 1A.
Risk Factors
   
         
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
   
         
Item 3.
Defaults Upon Senior Securities
   
         
Item 4.
Other Information
   
         
Item 5.
Exhibits
   
         
 
Signatures
   
 
   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
   

 
 









Greene County Bancorp, Inc.
Consolidated Statements of Financial Condition
As of March 31, 2010 and June 30, 2009
(Unaudited)
 (In thousands, except share and per share amounts)

ASSETS
 
March 31, 2010
   
June 30, 2009
 
Cash and due from banks
  $ 19,738     $ 8,639  
Federal funds sold
    4,630       804  
    Total cash and cash equivalents
    24,368       9,443  
                 
Long term certificate of deposit
    1,000       1,000  
Securities available for sale, at fair value
    83,406       98,271  
Securities held to maturity, at amortized cost
    60,643       63,336  
Federal Home Loan Bank stock, at cost
    1,405       1,495  
                 
Loans
    291,397       271,001  
  Allowance for loan losses
    (3,865 )     (3,420 )
  Unearned origination fees and costs, net
    439       321  
    Net loans receivable
    287,971       267,902  
                 
Premises and equipment
    14,932       15,274  
Accrued interest receivable
    2,733       2,448  
Prepaid expenses and other assets
    2,421       1,152  
Foreclosed real estate
    65       215  
               Total assets
  $ 478,944     $ 460,536  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Noninterest bearing deposits
  $ 40,488     $ 39,772  
Interest bearing deposits
    375,439       358,957  
    Total deposits
    415,927       398,729  
                 
Borrowings from FHLB, long-term
    17,000       19,000  
Accrued expenses and other liabilities
    2,516       2,543  
                Total liabilities
    435,443       420,272  
                 
Shareholders’ equity:
               
Preferred stock,
               
  Authorized    -   1,000,000 shares; Issued - none
    ---       ---  
Common stock, par value $.10 per share;
               
   Authorized   - 12,000,000 shares
               
   Issued           -   4,305,670 shares
               
   Outstanding  -   4,118,912 shares at March 31, 2010
               
                             and 4,105,312 shares at June 30, 2009;
    431       431  
Additional paid-in capital
    10,610       10,508  
Retained earnings
    32,750       30,045  
Accumulated other comprehensive income
    1,119       792  
Treasury stock, at cost, 186,758 shares at March 31, 2010
               
                                      and 200,358 shares at June 30, 2009
    (1,409 )     (1,512 )
               Total shareholders’ equity
    43,501       40,264  
               Total liabilities and shareholders’ equity
  $ 478,944     $ 460,536  
                 
See notes to consolidated financial statements.

 
 

 

       Greene County Bancorp, Inc.
Consolidated Statements of Income
For the Nine Months Ended March 31, 2010 and 2009 (Unaudited)
 (In thousands, except share and per share amounts)
Interest income:
 
2010
   
2009
 
    Loans
  $ 12,830     $ 12,101  
    Investment securities - taxable
    852       1,170  
    Mortgage-backed securities
    2,805       2,843  
    Investment securities - tax exempt
    783       669  
    Interest bearing deposits and federal funds sold
    13       41  
Total interest income
    17,283       16,824  
                 
Interest expense:
               
    Interest on deposits
    3,596       4,681  
    Interest on borrowings
    486       503  
Total interest expense
    4,082       5,184  
                 
Net interest income
    13,201       11,640  
Provision for loan losses
    984       1,764  
Net interest income after provision for loan losses
    12,217       9,876  
                 
Non-interest income:
               
    Service charges on deposit accounts
    2,105       2,194  
    Debit card fees
    784       660  
    Investment services
    207       180  
    E-commerce fees
    78       181  
    Net loss on sale of available-for-sale securities
    (5 )     (15 )
    Write-down of impairment of available-for-sale security
    ---       (221 )
    Sale of merchant bank card processing
    ---       1,650  
    Other operating income
    357       306  
Total non-interest income
    3,526       4,935  
                 
Non-interest expense:
               
    Salaries and employee benefits
    5,353       5,527  
    Occupancy expense
    945       858  
    Equipment and furniture expense
    487       499  
    Service and data processing fees
    999       1,000  
    Computer software, supplies and support
    258       222  
    Advertising and promotion
    192       271  
    FDIC insurance premiums
    422       131  
    Legal and professional fees
    315       350  
    Other
    1,247       1,142  
Total non-interest expense
    10,218       10,000  
                 
Income before provision for income taxes
    5,525       4,811  
Provision for income taxes
    1,899       1,814  
Net income
  $ 3,626     $ 2,997  
                 
Basic EPS
  $ 0.88     $ 0.73  
Basic average shares outstanding
    4,110,014       4,100,072  
Diluted EPS
  $ 0.88     $ 0.73  
Diluted average shares outstanding
    4,135,000       4,119,973  
Dividends per share
  $ 0.51     $ 0.51  
See notes to consolidated financial statements.

Greene County Bancorp, Inc.
Consolidated Statements of Income
For the Three Months Ended March 31, 2010 and 2009 (Unaudited)
(In thousands, except share and per share amounts)
Interest income:
 
2010
   
2009
 
    Loans
  $ 4,374     $ 4,112  
    Investment securities - taxable
    260       371  
    Mortgage-backed securities
    993       978  
    Investment securities - tax exempt
    267       214  
    Interest bearing deposits and federal funds sold
    3       11  
Total interest income
    5,897       5,686  
                 
Interest expense:
               
    Interest on deposits
    1,130       1,581  
    Interest on borrowings
    153       161  
Total interest expense
    1,283       1,742  
                 
Net interest income
    4,614       3,944  
Provision for loan losses
    307       1,151  
Net interest income after provision for loan losses
    4,307       2,793  
                 
Non-interest income:
               
    Service charges on deposit accounts
    599       632  
    Debit card fees
    257       208  
    Investment services
    73       46  
    E-commerce fees
    25       51  
    Net loss on sale of available-for-sale securities
    ---       (3 )
    Sale of merchant bank card processing
    ---       1,650  
    Other operating income
    132       122  
Total non-interest income
    1,086       2,706  
                 
Non-interest expense:
               
    Salaries and employee benefits
    1,792       1,792  
    Occupancy expense
    333       307  
    Equipment and furniture expense
    189       157  
    Service and data processing fees
    343       368  
    Computer software, supplies and support
    79       67  
    Advertising and promotion
    77       127  
    FDIC insurance premiums
    151       62  
    Legal and professional fees
    130       222  
    Other
    437       385  
Total non-interest expense
    3,531       3,487  
                 
Income before provision for income taxes
    1,862       2,012  
Provision for income taxes
    636       856  
Net income
  $ 1,226     $ 1,156  
                 
Basic EPS
  $ 0.30     $ 0.28  
Basic average shares outstanding
    4,116,779       4,104,119  
Diluted EPS
  $ 0.30     $ 0.28  
Diluted average shares outstanding
    4,137,447       4,121,186  
Dividends per share
  $ 0.17     $ 0.17  
See notes to consolidated financial statements.


 Greene County Bancorp, Inc.
Consolidated Statements of Comprehensive Income
For the Nine Months Ended March 31, 2010 and 2009
(Unaudited)
(In thousands)
   
2010
   
2009
 
Net income
  $ 3,626     $ 2,997  
                 
Other comprehensive income:
               
Securities:
               
Unrealized holding gains on available for sale securities, arising
               
  during the nine months ended March 31, 2010 and 2009,
               
  net of income taxes of $173 and $195, respectively.
    274       310  
                 
Accretion of unrealized loss on securities transferred to held-to-maturity,
               
  net of income taxes of $31 and $9, respectively.
    50       14  
                 
Reclassification adjustment for loss on sale of available-for-sale securities
               
  realized in net income, net of income taxes of $2, and $6, respectively.
    3       9  
                 
Reclassification adjustment for impairment write-down on available-for-sale
               
  securities realized in net income, net of income taxes of $0, and $86,
               
  respectively.
    ---       135  
                 
Other comprehensive income
    327       468  
                 
Comprehensive income
  $ 3,953     $ 3,465  

Greene County Bancorp, Inc.
Consolidated Statements of Comprehensive Income
For the Three Months Ended March 31, 2010 and 2009
(Unaudited)
(In thousands)
   
2010
   
2009
 
Net income
  $ 1,226     $ 1,156  
                 
Other comprehensive (loss) income:
               
Securities:
               
Unrealized holding (losses) gains on available-for-sale securities, arising
               
  during the three months ended March 31, 2010 and 2009,
               
  net of income taxes of ($75) and $53, respectively.
    (119 )     84  
                 
Accretion of unrealized loss on securities transferred to held-to-maturity,
               
  net of income taxes of $13 and $7, respectively.
    21       11  
                 
Reclassification adjustment for loss on sale of available-for-sale securities
               
  realized in net income, net of income taxes of $0, and $1, respectively,
    ---       2  
                 
Other comprehensive (loss) income
    (98 )     97  
                 
Comprehensive income
  $ 1,128     $ 1,253  
See notes to consolidated financial statements.


 
 

 


Greene County Bancorp, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
For the Nine Months Ended March 31, 2010 and 2009
(Unaudited)
(In thousands)


                     
Accumulated
                   
         
Additional
         
Other        
         
Unearned
   
Total       
 
   
Common
   
Paid – In 
   
Retained
   
Comprehensive
   
Treasury
   
ESOP   
   
Shareholders’
 
   
Stock   
   
Capital  
   
Earnings
   
Income (Loss) 
   
Stock   
   
Shares  
   
Equity      
 
                                           
Balance at
                                         
June 30, 2008
  $ 431     $ 10,267     $ 27,183     $ (9 )   $ (1,586 )   $ (19 )   $ 36,267  
                                                         
ESOP shares earned
            44                               19       63  
                                                         
Options exercised
            (35 )                     74               39  
                                                         
Tax effect of stock options
            28                                       28  
                                                         
Stock options compensation
            149                                       149  
                                                         
Dividends declared
                    (917 )                             (917 )
                                                         
Net income
                    2,997                               2,997  
                                                         
Total other comprehensive income, net of taxes
                            468                       468  
Balance at
                                                       
March 31, 2009
  $ 431     $ 10,453     $ 29,263     $ 459     $ (1,512 )   $ ---     $ 39,094  
Balance at
June 30, 2009
  $ 431     $ 10,508     $ 30,045     $ 792     $ (1,512 )   $ ---     $ 40,264  
                                                         
Options exercised
            (66 )                     103               37  
                                                         
Stock options compensation
            168                                       168  
                                                         
Dividends declared
                    (921 )                             (921 )
                                                         
Net income
                    3,626                               3,626  
                                                         
Total other comprehensive income, net of taxes
                            327                       327  
Balance at
                                                       
March 31, 2010
  $ 431     $ 10,610     $ 32,750     $ 1,119     $ (1,409 )   $ ---     $ 43,501  
                                                         

See notes to consolidated financial statements.

 
 

 

Greene County Bancorp, Inc.
Consolidated Statements of Cash Flows
For the Nine Months Ended March 31, 2010 and 2009
(Unaudited)
(In thousands)
   
2010
   
2009
 
Cash flows from operating activities:
           
Net Income
  $ 3,626     $ 2,997  
Adjustments to reconcile net income to net cash provided by operating activities:
               
     Depreciation
    700       652  
     Net amortization of premiums and discounts
    616       187  
     Net amortization of deferred loan costs and fees
    135       116  
     Provision for loan losses
    984       1,764  
     ESOP compensation earned
    ---       63  
     Stock option compensation
    168       149  
     Write-down of impairment of available-for-sale security
    ---       221  
     Net loss on sale of available-for-sale securities
    5       15  
     Net loss on sale of foreclosed real estate
    8       ---  
     Gain on sale of merchant bank card processing
    ---       (1,650 )
     Excess tax benefit from share-based payment arrangements
    ---       (28 )
     Net increase (decrease) in accrued income taxes
    1,007       (41 )
     Net increase in accrued interest receivable
    (285 )     (471 )
     Net increase in prepaid and other assets
    (1,863 )     (97 )
     Net (decrease) increase in other liabilities
    (646 )     421  
          Net cash provided by operating activities
    4,455       4,298  
                 
Cash flows from investing activities:
               
   Securities available-for-sale:
               
     Proceeds from maturities
    7,000       14,440  
     Proceeds from sale of securities
    1,820       5,522  
     Purchases of securities
    (1,069 )     (54,978 )
     Principal payments on securities
    7,272       6,812  
   Securities held-to-maturity:
               
     Proceeds from maturities
    7,327       2,118  
     Purchases of securities
    (9,403 )     (15,435 )
     Principal payments on securities
    4,523       2,583  
   Net redemption of Federal Home Loan Bank Stock
    90       45  
   Net increase in loans receivable
    (21,253 )     (27,978 )
   Proceeds from sale of merchant bank card processing
    ---       1,650  
   Proceeds from sale of foreclosed real estate
    207       ---  
   Purchases of premises and equipment
    (358 )     (1,148 )
          Net cash used in investing activities
    (3,844 )     (66,369 )
                 
Cash flows from financing activities:
               
     Net decrease in short-term borrowings
    (2,000 )     (1,000 )
     Payment of cash dividends
    (921 )     (917 )
     Proceeds from stock options exercised
    37       39  
     Excess tax benefit from stock based compensation
    ---       28  
     Net increase in deposits
    17,198       76,699  
          Net cash provided by financing activities
    14,314       74,849  
                 
Net increase in cash and cash equivalents
    14,925       12,778  
Cash and cash equivalents at beginning of period
    9,443       8,662  
Cash and cash equivalents at end of period
  $ 24,368     $ 21,440  
                 
Non-cash investing activities:
               
Foreclosed loans transferred to foreclosed real estate
  $ 65     $ 100  
Reclassification of available-for-sale securities to held to maturity
    ---       23,754  
See notes to consolidated financial statements.

 
 

 

Greene County Bancorp, Inc.
Notes to Consolidated Financial Statements
As of and for the Nine Months and Quarter Ended March 31, 2010 and 2009


(1)      Basis of Presentation

The accompanying consolidated statement of financial condition  as of June 30, 2009 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 nine and three months ended March 31, 2010 and 2009 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-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements.  To the extent that information and footnotes required by GAAP for complete consolidated 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-K for the year ended June 30, 2009, 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 and three months ended March 31, 2010 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2010.   These consolidated financial statements consider events that occurred through the date the consolidated financial statements were issued.

REFERENCING GAAP

Beginning with periods ending after September 15, 2009, the Financial Accounting Standards Board (“FASB”) has implemented the FASB Accounting Standards Codification™ (“Codification” or “ASC”) as the single source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification supersedes all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification will become non-authoritative.

Following the Codification, the FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates, which will serve to update the Codification, provide background information about the guidance and provide the basis for conclusions on the changes to the Codification.

GAAP is not intended to be changed as a result of the FASB's Codification project, but it will change the way the guidance is organized and presented. As a result, these changes will have a significant impact on how companies reference GAAP in their consolidated financial statements and in their accounting policies for consolidated financial statements issued for interim and annual periods ending after September 15, 2009. The Company has updated references to GAAP in its consolidated financial statements issued beginning with the period ended September 30, 2009.




CRITICAL ACCOUNTING POLICIES

Greene County Bancorp, Inc.’s critical accounting policies relate to the allowance for loan losses and the evaluation of securities for other-than-temporary impairment.

The allowance for loan losses 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.

Securities are evaluated for other-than-temporary impairment by performing periodic reviews of individual securities in the investment portfolio.  Greene County Bancorp, Inc. makes an assessment to determine whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is 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 the equity security for a period of time sufficient for a recovery in value; recent events specific to the issuer or industry; and for debt securities, intent to sell the security, the likelihood to be required to sell the security before it recovers the entire amortized cost, external credit ratings and recent downgrades.  The Company is required to record other-than-temporary impairment charges through earnings, if it has the intent to sell, or will more likely than not be required to sell an impaired debt security before a recovery of its amortized cost basis.  In addition, the Company is required to record other-than-temporary impairment charges through earnings for the amount of credit losses, regardless of the intent or requirement to sell.  Credit loss is measured as the difference between the present value of an impaired debt security’s cash flows and its amortized cost basis.  Non-credit related write-downs to fair value must be recorded as decreases to accumulated other comprehensive income as long as the Company has no intent or requirement to sell an impaired security before a recovery of amortized cost basis.
 
 
(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 eleven 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 consolidated 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 consolidated 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 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 (the “Allowance”) 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 an assessment to determine whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is impaired on an other-than-temporary basis.  The Company considers numerous factors when determining whether a potential other-than-temporary impairment (“OTTI”) exists and the period over which the debt security is expected to recover.  The principal factors considered are (1) the length of time and the extent to which the fair value has been less than the amortized cost basis, (2) the financial condition of the issuer (and guarantor, if any) and adverse conditions specifically related to the security, industry or geographic area, (3) failure of the issuer of the security to make scheduled interest or principal payments, (4) any changes to the rating of the security by a rating agency, and (5) the presence of credit enhancements, if any, including the guarantee of the federal government or any of its agencies. Securities on which there is an unrealized loss that is deemed to be other-than-temporary are written down to fair value.

 
 

 

 
(4)      Securities

Securities at March 31, 2010 consisted of the following:
   
 
   
Gross    
   
Gross    
   
Estimated
 
   
Amortized
   
Unrealized
   
Unrealized
   
Fair    
 
   
Cost    
   
Gains    
   
Losses   
   
Value   
 
(In thousands)
                       
Securities available-for-sale:
                       
  U.S. government sponsored enterprises
  $ 12,904     $ 65     $ ---     $ 12,969  
  State and political subdivisions
    9,292       345       ---       9,637  
  Mortgage-backed securities-residential
    26,780       928       ---       27,708  
  Mortgage-backed securities-multi-family
    24,878       1,151       ---       26,029  
  Asset-backed securities
    33       ---       1       32  
  Corporate debt securities
    6,913       81       74       6,920  
Total debt securities
    80,800       2,570       75       83,295  
  Equity securities and other
    67       44       ---       111  
Total securities available-for-sale
    80,867       2,614       75       83,406  
Securities held-to-maturity:
                               
  U.S. government sponsored enterprises
    5,015       20       ---       5,035  
  State and political subdivisions
    26,427       16       ---       26,443  
  Mortgage-backed securities-residential
    28,738       801       ---       29,539  
  Mortgage-backed securities-multi-family
    91       4       ---       95  
  Other securities
    372       ---       ---       372  
Total securities held-to-maturity
    60,643       841       ---       61,484  
Total securities
  $ 141,510     $ 3,455     $ 75     $ 144,890  


Securities at June 30, 2009 consisted of the following:
   
 
   
Gross    
   
Gross    
   
Estimated
 
   
Amortized
   
Unrealized
   
Unrealized
   
Fair    
 
   
Cost     
   
Gains    
   
Losses   
   
Value   
 
(In thousands)
                       
Securities available-for-sale:
                       
  U.S. government sponsored enterprises
  $ 19,985     $ 164     $ 22     $ 20,127  
  State and political subdivisions
    9,303       284       1       9,586  
  Mortgage-backed securities-residential
    32,468       952       ---       33,420  
  Mortgage-backed securities-multi-family
    25,556       1,153       ---       26,709  
  Asset-backed securities
    46       ---       2       44  
  Corporate debt securities
    8,759       13       480       8,292  
Total debt securities
    96,117       2,566       505       98,178  
  Equity securities and other
    68       25       ---       93  
Total securities available-for-sale
    96,185       2,591       505       98,271  
Securities held-to-maturity:
                               
  U.S. government sponsored enterprises
    7,049       1       9       7,041  
  State and political subdivisions
    23,303       3       6       23,300  
  Mortgage-backed securities-residential
    30,034       553       8       30,579  
  Mortgage-backed securities-multi-family
    2,285       68       ---       2,353  
  Other securities
    665       ---       ---       665  
Total securities held-to-maturity
    63,336       625       23       63,938  
Total securities
  $ 159,521     $ 3,216     $ 528     $ 162,209  


The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2010.  There were no unrealized losses on securities held-to-maturity at March 31, 2010.

   
Less Than 12 Months
   
More Than 12 Months
   
Total
 
   
Fair
   
Unrealized
   
Fair
   
Unrealized
   
Fair
   
Unrealized
 
   
Value
   
Losses
   
Value
   
Losses
   
Value
   
Losses
 
(in thousands)
                                   
Securities available-for-sale:
                                   
  Asset-backed securities
  $ ---     $ ---     $ 32     $ 1     $ 32     $ 1  
  Corporate debt securities
    ---       ---       2,481       74       2,481       74  
Total securities
  $ ---     $ ---     $ 2,513     $ 75     $ 2,513     $ 75  

The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2009.

   
Less Than 12 Months
   
More Than 12 Months
   
Total
 
   
Fair
   
Unrealized
   
Fair
   
Unrealized
   
Fair
   
Unrealized
 
   
Value
   
Losses
   
Value
   
Losses
   
Value
   
Losses
 
(in thousands)
                                   
Securities available-for-sale:
                                   
  U.S. government sponsored enterprises
  $ 6,038     $ 22     $ ---     $ ---     $ 6,038     $ 22  
  State and political subdivisions
    202       1       ---       ---       202       1  
  Asset-backed securities
    ---       ---       44       2       44       2  
  Corporate debt securities
    ---       ---       7,220       480       7,220       480  
Total securities available-for-sale
    6,240       23       7,264       482       13,504       505  
Securities held-to-maturity:
                                               
  U.S. government sponsored enterprises
    6,010       9       ---       ---       6,010       9  
  State and political subdivisions
    668       6       ---       ---       668       6  
  Mortgage-backed securities-residential
    2,581       8       ---       ---       2,581       8  
Total securities held-to-maturity
    9,259       23       ---       ---       9,259       23  
Total securities
  $ 15,499     $ 46     $ 7,264     $ 482     $ 22,763     $ 528  

At March 31, 2010, there were no securities which had been in a continuous unrealized loss position for less than 12 months and 7 securities with a continuous unrealized loss position of more than 12 months.  At March 31, 2010, the Company had $6.9 million in corporate debt securities of which $2.5 million had an unrealized loss of $74,000 for more than 12 months.  When the fair value of a held-to-maturity or available-for-sale security is less than its amortized cost basis, an assessment is made as to whether OTTI is present.  The Company considers numerous factors when determining whether a potential OTTI exists and the period over which the debt security is expected to recover.  The principal factors considered are (1) the length of time and the extent to which the fair value has been less than the amortized cost basis, (2) the financial condition of the issuer (and guarantor, if any) and adverse conditions specifically related to the security, industry or geographic area, (3) failure of the issuer of the security to make scheduled interest or principal payments, (4) any changes to the rating of the security by a rating agency, and (5) the presence of credit enhancements, if any, including the guarantee of the federal government or any of its agencies.

For debt securities, OTTI is considered to have occurred if (1) the Company intends to sell the security, (2) it is more likely than not the Company will be required to sell the security before recovery of its amortized cost basis, or (3) if the present value of expected cash flows is not sufficient to recover the entire amortized cost basis.  In determining the present value of expected cash flows, the Company discounts the expected cash flows at the effective interest rate implicit in the security at the date of acquisition.  In estimating cash flows expected to be collected, the Company uses available information with respect to security prepayments, default rates and severity.  In determining whether OTTI has occurred for equity securities, the Company considers the applicable factors described above and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

For debt securities, credit-related OTTI is recognized in income while noncredit related OTTI on securities not expected to be sold is recognized in other comprehensive income (“OCI”).  Credit-related OTTI is measured as the difference between the present value of an impaired security’s expected cash flows and its amortized cost basis.  Noncredit-related OTTI is measured as the difference between the fair value of the security and its amortized cost less any credit-related losses recognized.  For securities classified as held-to-maturity, the amount of OTTI recognized in OCI is accreted to the credit-adjusted expected cash flow amounts of the securities over future periods.  For equity securities, the entire amount of OTTI is recognized in income.  Management evaluated securities considering the factors as outlined above, and based on this evaluation the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2010.  Management believes that the reasons for the decline in fair value are due to interest rates, widening credit spreads and market illiquidity at the end of the quarter.

Gross realized gains and losses on sales of securities or other-than-temporary impairment of securities recognized in income during the nine months ended March 31, 2010 and 2009 are as follows:

   
Nine months ended March 31,
 
(in thousands)
 
2010
   
2009
 
Gross realized gains
  $ 32     $ 13  
Gross realized losses
    (37 )     (28 )
Other-than-temporary impairment losses
    ---       (221 )
Net losses recognized
  $ (5 )   $ (236 )

During the nine months ended March 31, 2010, the Company sold $1.8 million of corporate debt securities which resulted in the recognition of a net loss of $5,000.  During the nine months ended March 31, 2009, the Company sold $4.6 million of mortgage-backed securities and $900,000 of state and political subdivision securities which resulted in the recognition of a net loss of $15,000.   Also during the nine months ended March 31, 2009, a loss of $221,000 ($135,000 net of tax) related to the other-than-temporary impairment of a Lehman Brothers Holdings, Inc. debt security held by the Company was recognized.  The loss on this debt security was determined by obtaining a market quote as of the date of impairment.   The decline in the value of this security was solely due to credit losses, and therefore the entire loss was recognized in income. There was no other-than-temporary impairment loss recognized during the quarter and nine months ended March 31, 2010.

During the nine months ended March 31, 2009, $23.8 million of securities available-for-sale were transferred to held-to-maturity and included primarily mortgage-backed securities.  These securities were transferred at fair value which reflected a net unrealized loss of $338,000.  This unrealized loss is being accreted to other comprehensive income over the remaining average lives of these securities.


 
 

 

The estimated fair value of debt securities at March 31, 2010, by contractual maturity are shown below.  Expected maturities may differ from contractual maturities, because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

         
After   
   
After    
             
   
 In       
   
One Year
   
Five Years
             
   
One Year
   
Through 
   
Through  
   
After     
       
   
Or Less  
   
Five Years
   
Ten Years
   
Ten Years
   
Total
 
(Dollars in thousands)
                             
Securities available-for-sale:
                             
  U.S. Government sponsored enterprises
  $ 1,903     $ 9,063     $ 2,003     $ ---     $ 12,969  
  State and political subdivisions
    2,490       6,590       557       ---       9,637  
  Mortgage-backed securities-residential
    1,707       2,650       9,080       14,271       27,708  
  Mortgage-backed securities-multi-family
    284       22,837       2,908       ---       26,029  
  Asset-backed securities
    ---       ---       ---       32       32  
  Corporate debt securities
    ---       2,886       4,034       ---       6,920  
Total debt securities
    6,384       44,026       18,582       14,303       83,295  
  Equity securities
    ---       ---       ---       111       111  
Total securities available-for-sale
    6,384       44,026       18,582       14,414       83,406  
Securities held-to-maturity:
                                       
  U.S. government sponsored enterprises
    1,005       4,030       ---       ---       5,035  
  State and political subdivisions
    12,890       7,303       3,524       2,726       26,443  
  Mortgage-backed securities-residential
    ---       2,641       14,497       12,401       29,539  
  Mortgage-backed securities-multi-family
    ---       95       ---       ---       95  
  Other securities
    5       3       ---       364       372  
Total securities held-to-maturity
    13,900       14,072       18,021       15,491       61,484  
Total securities
  $ 20,284     $ 58,098     $ 36,603     $ 29,905     $ 144,890  

As of March 31, 2010 and June 30, 2009, securities with an aggregate fair value of $97.0 million and $106.9 million, respectively, were pledged as collateral for deposits in excess of FDIC insurance limits for various municipalities placing deposits with Greene County Commercial Bank.  Greene County Bancorp, Inc. did not participate in any securities lending programs during the quarters ended March 31, 2010 or 2009.

Federal Home Loan Bank Stock

Federal law requires a member institution of the Federal Home Loan Bank (“FHLB”) system to hold stock of its district FHLB according to a predetermined formula.  This stock is restricted in that it can only be sold to the FHLB or to another member institution, and all sales of FHLB stock must be at par.  As a result of these restrictions, FHLB stock is carried at cost.  FHLB stock is held as a long-term investment and its value is determined based on the ultimate recoverability of the par value.  Impairment of this investment is evaluated quarterly and is a matter of judgment that reflects management’s view of the FHLB’s long-term performance, which includes factors such as the following:   its operating performance; the severity and duration of declines in the fair value of its net assets related to its capital stock amount; its commitment to make payments required by law or regulation and the level of such payments in relation to its operating performance; the impact of legislative and regulatory changes on the FHLB, and accordingly, on the members of the FHLB; and its liquidity and funding position.  After evaluating these considerations, Greene County Bancorp, Inc. concluded that the par value of its investment in FHLB stock will be recovered and, therefore, no other-than-temporary impairment charge was recorded during the nine months ended March 31, 2010 and 2009.

 
 

 
 
 
(5)      Fair Value Measurements and Fair Value of Financial Instruments

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique.  Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sale transaction on the dates indicated.  The estimated fair value amounts have been measured as of March 31, 2010 and June 30, 2009 and have not been re-evaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates.  As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.

 
The FASB ASC Topic on “Fair Value Measurement” established a fair value hierarchy that prioritized the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are as follows:
 
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
 
Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.
 
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).
 
An asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

For assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used are as follows:
 
   
Fair Value Measurements Using
   
    Quoted Prices
    Significant
  Significant
   
 In Active Markets
Other Observable
Unobservable
   
For Identical Assets
Inputs
Inputs
(In thousands)
March 31, 2010
(Level 1)
(Level 2)
(Level 3)
Assets:
       
Securities available-for-sale
$83,406
$47,568
$35,838
$---


   
Fair Value Measurements Using
   
    Quoted Prices
    Significant
  Significant
   
 In Active Markets
Other Observable
Unobservable
   
For Identical Assets
Inputs
Inputs
(In thousands)
June 30, 2009
(Level 1)
(Level 2)
(Level 3)
Assets:
       
Securities available-for-sale
$98,271
$56,320
$41,951
$---

Certain investments that are actively traded and have quoted market prices have been classified as Level 1 valuations.  Other available-for-sale investment securities have been valued by reference to prices for similar securities or through model-based techniques in which all significant inputs are observable and, therefore, such valuations have been classified as Level 2.   There were no transfers between Level 1 and Level 2 during the quarter ended March 31, 2010.

In addition to disclosures of the fair value of assets on a recurring basis, FASB ASC Topic on “Fair Value Measurement” requires disclosures for assets and liabilities measured at fair value on a nonrecurring basis, such as impaired assets, in the period in which a re-measurement at fair value is performed.  Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral-dependent loans calculated as required by the “Receivables –Loan Impairment” subtopic of the FASB ASC when establishing the allowance for credit losses.  Impaired loans are those loans for which the Company has re-measured impairment generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using independent appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace and the related nonrecurring fair value measurement adjustments have generally been classified as Level 3. Estimates of fair value used for other collateral supporting commercial loans generally are based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3.  At March 31, 2010, there were no loans subject to nonrecurring fair value measurement and no associated valuation allowance. At June 30, 2009, loans subject to nonrecurring fair value measurement had a gross carrying amount of $98,000 and a fair value of $88,000 with an associated valuation allowance of $10,000.  These loans were classified as a Level 3 valuation.    No other financial assets or liabilities (such as Foreclosed Real Estate) were re-measured during the quarter on a nonrecurring basis.

The carrying amounts reported in the consolidated statements of financial condition for cash and cash equivalents, long term certificate of deposits, accrued interest receivable and accrued interest payable approximate their fair values.  Fair values of securities are based on quoted market prices (Level 1), where available, or matrix pricing (Level 2), which is a mathematical technique, used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.  The carrying amount of Federal Home Loan Bank stock approximates fair value.  Fair values for variable rate loans that reprice frequently, with no significant credit risk, are based on carrying value.  Fair value for fixed rate loans are estimated using discounted cash flows and interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.  Fair values disclosed for demand and savings deposits are equal to carrying amounts at the reporting date.  The carrying amounts for variable rate money market deposits approximate fair values at the reporting date.  Fair values for fixed rate certificates of deposit are estimated using discounted cash flows and interest rates currently being offered in the market on similar certificates.  Fair value for Federal Home Loan Bank borrowings are estimated using discounted cash flows and interest rates currently being offered on similar advances.

The fair value of commitments to extend credit is estimated based on an analysis of the interest rates and fees currently charged to enter into similar transactions, considering the remaining terms of the commitments and the credit-worthiness of the potential borrowers.  At March 31, 2010 and June 30, 2009, the estimated fair values of these off-balance sheet financial instruments were immaterial, and are therefore excluded from the table below.


 
 

 

The carrying amounts and estimated fair value of financial instruments are as follows:

(in thousands)
 
March 31, 2010
   
June 30, 2009
 
   
Carrying
   
Fair
   
Carrying
   
Fair
 
   
Amount
   
Value
   
Amount
   
Value
 
Cash and cash equivalents
  $ 24,368     $ 24,368     $ 9,443     $ 9,443  
Long term certificate of deposit
    1,000       1,000       1,000       1,000  
Securities available-for-sale
    83,406       83,406       98,271       98,271  
Securities held-to-maturity
    60,643       61,484       63,336       63,938  
Federal Home Loan Bank stock
    1,405       1,405       1,495       1,495  
Net loans receivable
    287,971       295,134       267,902       275,369  
Accrued interest receivable
    2,733       2,733       2,448       2,448  
Deposits
    415,927       417,008       398,729       399,796  
Borrowings
    17,000       17,490       19,000       19,632  
Accrued interest payable
    114       114       114       114  
                                 
 
 
(6)      Earnings Per Share (“EPS”)

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period.  Diluted earnings per share is computed in a manner similar to that of basic earnings per share 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) issued became vested during the period.  The 164,500 options granted during the nine months ended March 31, 2009 (see note 11) were anti-dilutive in the three and nine months ended March 31, 2009.  There were no anti-dilutive securities or contracts outstanding during the quarter and nine months ended March 31, 2010.


         
Weighted Average Number
       
   
Net Income
   
Of Shares Outstanding
   
Earnings per Share     
 
Nine months ended
                 
March 31, 2010
  $ 3,626,000              
   Basic
            4,110,014     $ 0.88  
   Effect of dilutive stock options
            24,986       (0.00 )
   Diluted
            4,135,000     $ 0.88  
                         
Nine months ended
                       
March 31, 2009
  $ 2,997,000                  
   Basic
            4,100,072     $ 0.73  
   Effect of dilutive stock options
            19,901       (0.00 )
   Diluted
            4,119,973     $ 0.73  

         
Weighted Average Number
       
   
Net Income
   
Of Shares Outstanding
   
Earnings per Share    
 
Three months ended
                 
March 31, 2010
  $ 1,226,000              
   Basic
            4,116,779     $ 0.30  
   Effect of dilutive stock options
            20,668       (0.00 )
   Diluted
            4,137,447     $ 0.30  
                         
Three months ended
                       
March 31, 2009
  $ 1,156,000                  
   Basic
            4,104,119     $ 0.28  
   Effect of dilutive stock options
            17,067       (0.00 )
   Diluted
            4,121,186     $ 0.28  
 
 
(7)      Dividends

On January 19, 2010, the Board of Directors declared a quarterly dividend of $0.17 per share of Greene County Bancorp, Inc.’s common stock.  The dividend reflected an annual cash dividend rate of $0.68 cents per share and was unchanged from the dividend declared during the previous quarter. The dividend was payable to stockholders of record as of February 12, 2010, and was paid on March 2, 2010.  It should be noted that Greene County Bancorp, Inc.’s mutual holding company continued to waive receipt of dividends for the current period.
 
(8)      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 generally accepted accounting principles in the United States of America, 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.
 
(9)      Impact of Recent Accounting Pronouncements

In June 2009, the FASB issued its first Accounting Standards Update, “Generally Accepted Accounting PrinciplesÓ, which establishes the FASB Accounting Standards Codification as the sole source of authoritative generally accepted accounting principles. Pursuant to the provisions of the new Codification, the Company has updated references to GAAP in its consolidated financial statements issued beginning with the period ended September 30, 2009. The adoption of the new Codification did not impact the Company’s consolidated financial position or consolidated results of operations.

In December 2008, the FASB issued an amendment to its guidance on “Compensation – Retirement Benefits”.  This amendment requires that information about plan assets of a postretirement benefit plan be disclosed, on an annual basis, based on the fair value disclosure requirements of “Fair Value Measurement”.  The disclosures about plan assets required by this amendment shall be provided for fiscal years ending after December 15, 2009.  The adoption of the new Codification will not impact the Company’s consolidated financial position or consolidated results of operations.

In June 2009, the FASB issued an amendment to its guidance on “Transfers and Servicing”.  This guidance prescribes the information that a reporting entity must provide in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance and cash flows; and a transferor’s continuing involvement in transferred financial assets.  Specifically, among other aspects, the guidance removes the concept of a qualifying special-purpose entity. It also modifies the financial-components approach used in this standard.   The new guidance is effective for fiscal years beginning after November 15, 2009.  We have not determined the effect that the adoption of this guidance will have on our consolidated results of operations or financial position.

In June 2009, the FASB issued an amendment to its guidance on “Consolidation of Variable Interest Entities”, to require an enterprise to determine whether it’s variable interest or interests give it a controlling financial interest in a variable interest entity.  The primary beneficiary of a variable interest entity is the enterprise that has both (1) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (2) the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity.  This amendment also requires ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity.  This new guidance is effective for fiscal years beginning after November 15, 2009.  We have not determined the effect that the adoption of this guidance will have on our consolidated financial position or results of operations.

In November 2008, the SEC released a proposed roadmap regarding the potential use by U.S. issuers of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”). IFRS is a comprehensive series of accounting standards published by the International Accounting Standards Board (“IASB”). Under the proposed roadmap, the Company may be required to prepare financial statements in accordance with IFRS as early as 2014. The SEC will make a determination in 2011 regarding the mandatory adoption of IFRS. The Company is currently assessing the impact that this potential change would have on its consolidated financial statements, and it will continue to monitor the development of the potential implementation of IFRS.

In January, 2010, the FASB issued updated guidance on “Equity, Accounting for Distributions to Shareholders with Components of Stock and Cash”.  The amendments in this update clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in earnings per share prospectively and is not a stock dividend.  This update codifies the consensus reached in EITF Issue No. 09-E, Accounting for Stock Dividends, Including Distributions to Shareholders with Components of Stock and Cash.  This update is effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis.  The adoption of this guidance did not have a material effect on our consolidated results of operations or financial position.

In January 2010, the FASB issued updated guidance on “Consolidation, Accounting and Reporting for Decreases in Ownership of a Subsidiary – A Scope Clarification”.  This update clarifies that the scope of the decrease in ownership provisions of Subtopic 810-10 and related guidance applies to a subsidiary or group of assets that is a business or nonprofit activity; a subsidiary that is a business or nonprofit activity that is transferred to an equity method investee or joint venture; and an exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity (including an equity method investee or joint venture.  This update also clarifies that the decrease in ownership guidance in Subtopic 810-10 does not apply to: (a) sales of insubstance real estate; and (b) conveyances of oil and gas mineral rights, even if these transfers involve businesses.  The amendments in this update expand the disclosure requirements about deconsolidation of a subsidiary or derecognition of a group of assets to include the valuation techniques used to measure the fair value of any retained investment; the nature of any continuing involvement with the subsidiary or entity acquiring the group of assets; and whether the transaction that resulted in the deconsolidation or derecognition was with a related party or whether the former subsidiary or entity acquiring the assets will become a related party after the transaction.  This update is effective beginning in the period that the entity adopts the amendments to guidance on “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB 51)”. If an entity has previously adopted this guidance, the amendments are effective beginning in the first interim or annual reporting period ending on or after December 15, 2009.  The amendments in this update should be applied retrospectively to the first period that an entity adopts the guidance on “Noncontrolling Interests in Consolidated Financial Statements”   The Company does not believe that the adoption of this guidance will have a material effect on our consolidated results of operations or financial position.

In January 2010, the FASB issued amendments to its guidance on “Fair Value Measurements and Disclosures – Overall Subtopic”  The amendment requires new disclosures as follows:  (1) For transfers in and out of Level 1 and 2 fair value measurements, a reporting entity should disclose separately the amounts of significant transfers and describe the reasons for the transfers, and (2) for the reconciliation for value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number).  The amendment also clarifies existing disclosure requirements relating to the level of disaggregation of each class of assets or liabilities within a line item in the statement of financial position and the inputs and valuation techniques utilized to measure fair value for both recurring and nonrecurring fair value measurements.  Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3. &