U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2018
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT
GREENE COUNTY BANCORP, INC.
(Exact name of registrant 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 ☒
NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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, a smaller reporting company or
an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer ☐
|
Accelerated filer ☒
|
|
Non-accelerated filer ☐
|
Smaller reporting company ☒
|
|
Emerging Growth Company ☐
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒
As of November 8, 2018, the registrant had 8,537,814 shares of common stock outstanding at $ 0.10 par value per share.
|
GREENE COUNTY BANCORP, INC.
|
||
|
PART I.
|
FINANCIAL INFORMATION
|
|
|
Page
|
||
|
Item 1.
|
Financial Statements (unaudited)
|
|
|
3
|
||
|
4
|
||
|
5
|
||
|
6
|
||
|
7
|
||
|
8-30
|
||
|
Item 2.
|
30-42
|
|
|
Item 3.
|
43
|
|
|
Item 4.
|
43
|
|
|
PART II.
|
OTHER INFORMATION
|
|
|
Item 1.
|
44 | |
|
Item 1A.
|
44
|
|
|
Item 2.
|
44
|
|
|
Item 3.
|
44
|
|
|
Item 4.
|
44
|
|
|
Item 5.
|
44
|
|
|
Item 6.
|
44
|
|
| 45 |
Greene County Bancorp, Inc.
At September 30, 2018 and June 30, 2018
(Unaudited)
(In thousands, except share and per share amounts)
|
ASSETS
|
September 30, 2018
|
June 30, 2018
|
||||||
|
Total cash and cash equivalents
|
$
|
35,132
|
$
|
26,504
|
||||
|
Long term certificate of deposit
|
2,385
|
2,385
|
||||||
|
Securities available-for-sale, at fair value
|
119,600
|
120,806
|
||||||
|
Securities held-to-maturity, at amortized cost (fair value $279,061 at September 30, 2018; $274,177 at June 30, 2018)
|
280,774
|
274,550
|
||||||
|
Equity securities, at fair value
|
232
|
217
|
||||||
|
Federal Home Loan Bank stock, at cost
|
4,147
|
1,545
|
||||||
|
Loans
|
736,076
|
715,641
|
||||||
|
Allowance for loan losses
|
(12,308
|
)
|
(12,024
|
)
|
||||
|
Unearned origination fees and costs, net
|
758
|
814
|
||||||
|
Net loans receivable
|
724,526
|
704,431
|
||||||
|
Premises and equipment
|
13,267
|
13,304
|
||||||
|
Accrued interest receivable
|
5,437
|
5,057
|
||||||
|
Foreclosed real estate
|
79
|
119
|
||||||
|
Prepaid expenses and other assets
|
2,294
|
2,560
|
||||||
|
Total assets
|
$
|
1,187,873
|
$
|
1,151,478
|
||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
|
Noninterest-bearing deposits
|
$
|
109,358
|
$
|
102,694
|
||||
|
Interest-bearing deposits
|
893,103
|
922,540
|
||||||
|
Total deposits
|
1,002,461
|
1,025,234
|
||||||
|
Borrowings from Federal Home Loan Bank, short-term
|
58,800
|
-
|
||||||
|
Borrowings from Federal Home Loan Bank, long-term
|
17,150
|
18,150
|
||||||
|
Accrued expenses and other liabilities
|
9,821
|
11,903
|
||||||
|
Total liabilities
|
1,088,232
|
1,055,287
|
||||||
|
SHAREHOLDERS' EQUITY
|
||||||||
|
Preferred stock, Authorized - 1,000,000 shares; Issued - None
|
-
|
-
|
||||||
|
Common stock, par value $.10 per share; Authorized - 12,000,000 shares; Issued – 8,611,340 shares;
Outstanding - 8,537,814 shares at September 30, 2018, and June 30, 2018
|
861
|
861
|
||||||
|
Additional paid-in capital
|
11,017
|
11,017
|
||||||
|
Retained earnings
|
89,853
|
86,213
|
||||||
|
Accumulated other comprehensive loss
|
(1,813
|
)
|
(1,623
|
)
|
||||
|
Treasury stock, at cost 73,526 shares
at September 30, 2018, and June 30, 2018
|
(277
|
)
|
(277
|
)
|
||||
|
Total shareholders’ equity
|
99,641
|
96,191
|
||||||
|
Total liabilities and shareholders’ equity
|
$
|
1,187,873
|
$
|
1,151,478
|
||||
See notes to consolidated financial statements
Greene County Bancorp, Inc.
For the Three Months Ended September 30, 2018 and 2017
(Unaudited)
(In thousands, except share and per share amounts)
|
2018
|
2017
|
|||||||
|
Interest income:
|
||||||||
|
Loans
|
$
|
8,298
|
$
|
7,059
|
||||
|
Investment securities - taxable
|
194
|
165
|
||||||
|
Mortgage-backed securities
|
1,114
|
817
|
||||||
|
Investment securities - tax exempt
|
1,360
|
1,036
|
||||||
|
Interest-bearing deposits and federal funds sold
|
31
|
12
|
||||||
|
Total interest income
|
10,997
|
9,089
|
||||||
|
Interest expense:
|
||||||||
|
Interest on deposits
|
1,036
|
809
|
||||||
|
Interest on borrowings
|
304
|
110
|
||||||
|
Total interest expense
|
1,340
|
919
|
||||||
|
Net interest income
|
9,657
|
8,170
|
||||||
|
Provision for loan losses
|
354
|
347
|
||||||
|
Net interest income after provision for loan losses
|
9,303
|
7,823
|
||||||
|
Noninterest income:
|
||||||||
|
Service charges on deposit accounts
|
1,037
|
851
|
||||||
|
Debit card fees
|
640
|
566
|
||||||
|
Investment services
|
115
|
72
|
||||||
|
E-commerce fees
|
37
|
38
|
||||||
|
Other operating income
|
223
|
213
|
||||||
|
Total noninterest income
|
2,052
|
1,740
|
||||||
|
Noninterest expense:
|
||||||||
|
Salaries and employee benefits
|
3,478
|
2,882
|
||||||
|
Occupancy expense
|
402
|
356
|
||||||
|
Equipment and furniture expense
|
214
|
113
|
||||||
|
Service and data processing fees
|
495
|
487
|
||||||
|
Computer software, supplies and support
|
223
|
143
|
||||||
|
Advertising and promotion
|
120
|
55
|
||||||
|
FDIC insurance premiums
|
127
|
93
|
||||||
|
Legal and professional fees
|
329
|
231
|
||||||
|
Other
|
573
|
533
|
||||||
|
Total noninterest expense
|
5,961
|
4,893
|
||||||
|
Income before provision for income taxes
|
5,394
|
4,670
|
||||||
|
Provision for income taxes
|
1,014
|
1,198
|
||||||
|
Net income
|
$
|
4,380
|
$
|
3,472
|
||||
|
Basic earnings per share
|
$
|
0.51
|
$
|
0.41
|
||||
|
Basic average shares outstanding
|
8,537,814
|
8,502,734
|
||||||
|
Diluted earnings per share
|
$
|
0.51
|
$
|
0.41
|
||||
|
Diluted average shares outstanding
|
8,537,814
|
8,531,242
|
||||||
|
Dividends per share
|
$
|
0.1000
|
$
|
0.0975
|
||||
See notes to consolidated financial statements
Greene County Bancorp, Inc.
For the Three Months Ended September 30, 2018 and 2017
(Unaudited)
(In thousands)
|
2018
|
2017
|
|||||||
|
Net Income
|
$
|
4,380
|
$
|
3,472
|
||||
|
Other comprehensive income (loss) income:
|
||||||||
|
Unrealized holding (losses) gains on available-for-sale securities, net of income tax (benefit) expense of
($27) and $145, respectively
|
(76
|
)
|
235
|
|||||
|
Total other comprehensive (loss) income, net of taxes
|
(76
|
)
|
235
|
|||||
|
Comprehensive income
|
$
|
4,304
|
$
|
3,707
|
||||
See notes to consolidated financial statements.
Greene County Bancorp, Inc.
For the Three Months Ended September 30, 2018 and 2017
(Unaudited)
(In thousands)
|
Common
Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Treasury
Stock
|
Total
Shareholders'
Equity
|
|||||||||||||||||||
|
Balance at June 30, 2017
|
$
|
861
|
$
|
10,990
|
$
|
73,072
|
$
|
(992
|
)
|
$
|
(410
|
)
|
$
|
83,521
|
||||||||||
|
Options exercised
|
2
|
4
|
6
|
|||||||||||||||||||||
|
Dividends declared
|
(379
|
)
|
(379
|
)
|
||||||||||||||||||||
|
Net income
|
3,472
|
3,472
|
||||||||||||||||||||||
|
Other comprehensive income, net of taxes
|
235
|
235
|
||||||||||||||||||||||
|
Balance at September 30, 2017
|
$
|
861
|
$
|
10,992
|
$
|
76,165
|
$
|
(757
|
)
|
$
|
(406
|
)
|
$
|
86,855
|
||||||||||
|
Common
Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Treasury
Stock
|
Total
Shareholders'
Equity
|
|||||||||||||||||||
|
Balance at June 30, 2018
|
$
|
861
|
$
|
11,017
|
$
|
86,213
|
$
|
(1,623
|
)
|
$
|
(277
|
)
|
$
|
96,191
|
||||||||||
|
Impact of Adopting ASU 2016-01(1)
|
114
|
(114
|
)
|
-
|
||||||||||||||||||||
|
Dividends declared
|
(854
|
)
|
(854
|
)
|
||||||||||||||||||||
|
Net income
|
4,380
|
4,380
|
||||||||||||||||||||||
|
Other comprehensive loss, net of taxes
|
(76
|
)
|
(76
|
)
|
||||||||||||||||||||
|
Balance at September 30, 2018
|
$
|
861
|
$
|
11,017
|
$
|
89,853
|
$
|
(1,813
|
)
|
$
|
(277
|
)
|
$
|
99,641
|
||||||||||
| (1) |
See Note 9 Impact of Recent Accounting Pronouncements – cumulative effect of change in measurement of equity securities.
|
See notes to consolidated financial statements.
Greene County Bancorp, Inc.
For the Three Months Ended September 30, 2018 and 2017
(Unaudited)
(In thousands)
|
2018
|
2017
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net Income
|
$
|
4,380
|
$
|
3,472
|
||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
|
Depreciation
|
154
|
157
|
||||||
|
Deferred income tax (benefit) expense
|
(388
|
)
|
1,214
|
|||||
|
Net amortization of premiums and discounts
|
81
|
213
|
||||||
|
Net amortization of deferred loan costs and fees
|
110
|
134
|
||||||
|
Provision for loan losses
|
354
|
347
|
||||||
|
Net gain on equity securities
|
(15
|
)
|
-
|
|||||
|
Losses on sale of foreclosed real estate
|
9
|
37
|
||||||
|
Net increase (decrease) in accrued income taxes
|
426
|
(647
|
)
|
|||||
|
Net increase in accrued interest receivable
|
(380
|
)
|
(341
|
)
|
||||
|
Net decrease in prepaid and other assets
|
255
|
175
|
||||||
|
Net (decrease) increase in other liabilities
|
(2,082
|
)
|
1,717
|
|||||
|
Net cash provided by operating activities
|
2,904
|
6,478
|
||||||
|
Cash flows from investing activities:
|
||||||||
|
Securities available-for-sale:
|
||||||||
|
Proceeds from maturities
|
32,825
|
17,594
|
||||||
|
Purchases of securities
|
(32,921
|
)
|
(27,125
|
)
|
||||
|
Principal payments on securities
|
1,191
|
571
|
||||||
|
Securities held-to-maturity:
|
||||||||
|
Proceeds from maturities
|
4,519
|
4,137
|
||||||
|
Purchases of securities
|
(23,918
|
)
|
(12,050
|
)
|
||||
|
Principal payments on securities
|
13,102
|
5,851
|
||||||
|
Net (purchase) redemption of Federal Home Loan Bank Stock
|
(2,602
|
)
|
556
|
|||||
|
Net increase in loans receivable
|
(20,593
|
)
|
(14,768
|
)
|
||||
|
Proceeds from sale of foreclosed real estate
|
65
|
38
|
||||||
|
Purchases of premises and equipment
|
(117
|
)
|
(101
|
)
|
||||
|
Net cash used by investing activities
|
(28,449
|
)
|
(25,297
|
)
|
||||
|
Cash flows from financing activities
|
||||||||
|
Net increase (decrease) in short-term advances
|
58,800
|
(6,200
|
)
|
|||||
|
Repayment of long-term FHLB advances
|
(1,000
|
)
|
(2,500
|
)
|
||||
|
Payment of cash dividends
|
(854
|
)
|
(379
|
)
|
||||
|
Proceeds from issuance of stock options
|
-
|
6
|
||||||
|
Net (decrease) increase in deposits
|
(22,773
|
)
|
58,034
|
|||||
|
Net cash provided by financing activities
|
34,173
|
48,961
|
||||||
|
Net increase in cash and cash equivalents
|
8,628
|
30,142
|
||||||
|
Cash and cash equivalents at beginning of period
|
26,504
|
16,277
|
||||||
|
Cash and cash equivalents at end of period
|
$
|
35,132
|
$
|
46,419
|
||||
|
Non-cash investing activities:
|
||||||||
|
Foreclosed loans transferred to foreclosed real estate
|
$
|
34
|
$
|
28
|
||||
|
Cash paid during period for:
|
||||||||
|
Interest
|
$
|
1,332
|
$
|
931
|
||||
|
Income taxes
|
$
|
975
|
$
|
630
|
||||
See notes to consolidated financial statements
Greene County Bancorp, Inc.
At and for the Three Months Ended September 30, 2018 and 2017
| (1) |
Basis of Presentation
|
Within the accompanying unaudited consolidated statement of financial condition, and related notes to the consolidated financial statements, June 30, 2018
data was derived from the audited consolidated financial statements of Greene County Bancorp, Inc. (the “Company”) and its wholly owned subsidiaries, The Bank of Greene County (the “Bank”) and Greene Risk Management, Inc., and the Bank’s wholly
owned subsidiaries, Greene County Commercial Bank and Greene Property Holdings, Ltd. The consolidated financial statements at and for the three months ended September 30, 2018 and 2017 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 notes required by GAAP for complete financial statements. To the extent that
information and notes required by GAAP for complete financial statements are contained in or are consistent with the audited financial statements incorporated by reference to Greene County Bancorp, Inc.’s Annual Report on Form 10-K for the year
ended June 30, 2018, such information and notes 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, if any, 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
three months ended September 30, 2018 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2019. These consolidated financial statements consider events that occurred through the date the
consolidated financial statements were issued.
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 loan
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
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, 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. There have been no significant changes in the application
of this critical accounting policy during the three months ended September 30, 2018.
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, the 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 and Greene Risk Management,
Inc. The Bank of Greene County has 15 full-service offices, an operations center and lending center located in its market area within the Hudson Valley Region of New York State. 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 Risk Management, Inc. is a pooled captive
insurance company, which provides additional insurance coverage for the Company and its subsidiaries related to the operations of the Company for which insurance may not be economically feasible. The Bank of Greene County also owns and operates
two subsidiaries, Greene County Commercial Bank and Greene Property Holdings, Ltd. Greene County Commercial Bank’s primary business is to attract deposits from and provide banking services to local municipalities. Greene Property Holdings, Ltd. is
a real estate investment trust, which holds mortgages and notes which were originated through and serviced by The Bank of Greene County.
| (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 financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could materially 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 the Allowance. Such authorities may require the
Company 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 many factors including the severity and duration of the impairment; the intent and ability of the Company to hold the 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, whether it is more likely than not we will be required to sell the security before recovery, whether
loss is expected, external credit ratings and recent downgrades. Securities on which there is an unrealized loss that is deemed to be other-than-temporary are written down to fair value through earnings.
| (4) |
Securities
|
Securities at September 30, 2018 consisted of the following:
|
(In thousands)
|
Amortized Cost
|
Gross Unrealized
Gains
|
Gross Unrealized
Losses
|
Estimated Fair
Value
|
||||||||||||
|
Securities available-for-sale:
|
||||||||||||||||
|
U.S. government sponsored enterprises
|
$
|
5,539
|
$
|
2
|
$
|
45
|
$
|
5,496
|
||||||||
|
State and political subdivisions
|
92,149
|
173
|
2
|
92,320
|
||||||||||||
|
Mortgage-backed securities-residential
|
3,091
|
8
|
114
|
2,985
|
||||||||||||
|
Mortgage-backed securities-multi-family
|
17,296
|
50
|
251
|
17,095
|
||||||||||||
|
Corporate debt securities
|
1,769
|
-
|
65
|
1,704
|
||||||||||||
|
Total securities available-for-sale
|
119,844
|
233
|
477
|
119,600
|
||||||||||||
|
Securities held-to-maturity:
|
||||||||||||||||
|
U.S. government sponsored enterprises
|
9,247
|
-
|
356
|
8,891
|
||||||||||||
|
State and political subdivisions
|
142,647
|
2,501
|
827
|
144,321
|
||||||||||||
|
Mortgage-backed securities-residential
|
5,698
|
41
|
10
|
5,729
|
||||||||||||
|
Mortgage-backed securities-multi-family
|
120,333
|
75
|
3,134
|
117,274
|
||||||||||||
|
Corporate debt securities
|
1,469
|
7
|
2
|
1,474
|
||||||||||||
|
Other securities
|
1,380
|
9
|
17
|
1,372
|
||||||||||||
|
Total securities held-to-maturity
|
280,774
|
2,633
|
4,346
|
279,061
|
||||||||||||
|
Total securities
|
$
|
400,618
|
$
|
2,866
|
$
|
4,823
|
$
|
398,661
|
||||||||
Securities at June 30, 2018 consisted of the following:
|
(In thousands)
|
Amortized Cost
|
Gross Unrealized
Gains
|
Gross Unrealized
Losses
|
Estimated
Fair Value
|
||||||||||||
|
Securities available-for-sale:
|
||||||||||||||||
|
U.S. government sponsored enterprises
|
$
|
5,543
|
$
|
18
|
$
|
30
|
$
|
5,531
|
||||||||
|
State and political subdivisions
|
92,052
|
204
|
1
|
92,255
|
||||||||||||
|
Mortgage-backed securities-residential
|
3,332
|
13
|
98
|
3,247
|
||||||||||||
|
Mortgage-backed securities-multi-family
|
18,249
|
64
|
244
|
18,069
|
||||||||||||
|
Corporate debt securities
|
1,771
|
-
|
67
|
1,704
|
||||||||||||
|
Total securities available-for-sale
|
120,947
|
299
|
440
|
120,806
|
||||||||||||
|
Securities held-to-maturity:
|
||||||||||||||||
|
U.S. government sponsored enterprises
|
9,245
|
-
|
278
|
8,967
|
||||||||||||
|
State and political subdivisions
|
136,335
|
3,091
|
532
|
138,894
|
||||||||||||
|
Mortgage-backed securities-residential
|
6,472
|
72
|
7
|
6,537
|
||||||||||||
|
Mortgage-backed securities-multi-family
|
118,780
|
123
|
2,845
|
116,058
|
||||||||||||
|
Corporate debt securities
|
1,466
|
11
|
9
|
1,468
|
||||||||||||
|
Other securities
|
2,252
|
16
|
15
|
2,253
|
||||||||||||
|
Total securities held-to-maturity
|
274,550
|
3,313
|
3,686
|
274,177
|
||||||||||||
|
Total securities
|
$
|
395,497
|
$
|
3,612
|
$
|
4,126
|
$
|
394,983
|
||||||||
Greene County Bancorp, Inc.’s current policies generally limit securities investments to U.S. Government and securities of government sponsored
enterprises, federal funds sold, municipal bonds, corporate debt obligations and certain mutual funds. In addition, the Company’s policies permit investments in mortgage-backed securities, including securities issued and guaranteed by Fannie Mae,
Freddie Mac, and GNMA, and collateralized mortgage obligations issued by these entities. At September 30, 2018, all mortgage-backed securities including collateralized mortgage obligations were securities of government sponsored enterprises, no
private-label mortgage-backed securities or collateralized mortgage obligations were held in the securities portfolio. The Company’s investments in state and political subdivisions
securities generally are municipal obligations that are general obligations supported by the general taxing authority of the issuer, and in some cases are insured. The obligations issued by school districts are supported by state aid.
Primarily, these investments are issued by municipalities within New York State.
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 September 30, 2018.
|
Less Than 12 Months
|
More Than 12 Months
|
Total
|
||||||||||||||||||||||||||||||||||
|
(In thousands, except number of securities)
|
Fair
Value
|
Unrealized
Losses
|
Number
of
Securities
|
Fair
Value
|
Unrealized
Losses
|
Number of
Securities
|
Fair
Value
|
Unrealized
Losses
|
Number
of
Securities
|
|||||||||||||||||||||||||||
|
Securities available-for-sale:
|
||||||||||||||||||||||||||||||||||||
|
U.S. government sponsored enterprises
|
$
|
2,018
|
$
|
1
|
1
|
$
|
955
|
$
|
44
|
1
|
$
|
2,973
|
$
|
45
|
2
|
|||||||||||||||||||||
|
State and political subdivisions
|
8,928
|
2
|
10
|
-
|
-
|
-
|
8,928
|
2
|
10
|
|||||||||||||||||||||||||||
|
Mortgage-backed securities-residential
|
1,382
|
32
|
3
|
886
|
82
|
1
|
2,268
|
114
|
4
|
|||||||||||||||||||||||||||
|
Mortgage-backed securities-multi-family
|
2,429
|
31
|
2
|
6,330
|
220
|
4
|
8,759
|
251
|
6
|
|||||||||||||||||||||||||||
|
Corporate debt securities
|
1,452
|
63
|
6
|
252
|
2
|
1
|
1,704
|
65
|
7
|
|||||||||||||||||||||||||||
|
Total securities available-for-sale
|
16,209
|
129
|
22
|
8,423
|
348
|
7
|
24,632
|
477
|
29
|
|||||||||||||||||||||||||||
|
Securities held-to-maturity:
|
||||||||||||||||||||||||||||||||||||
|
U.S. government sponsored enterprises
|
3,120
|
126
|
1
|
5,770
|
230
|
2
|
8,890
|
356
|
3
|
|||||||||||||||||||||||||||
|
State and political subdivisions
|
44,063
|
605
|
221
|
8,735
|
222
|
71
|
52,798
|
827
|
292
|
|||||||||||||||||||||||||||
|
Mortgage-backed securities-residential
|
2,245
|
10
|
4
|
-
|
-
|
-
|
2,245
|
10
|
4
|
|||||||||||||||||||||||||||
|
Mortgage-backed securities-multi-family
|
81,835
|
2,204
|
37
|
22,372
|
930
|
15
|
104,207
|
3,134
|
52
|
|||||||||||||||||||||||||||
|
Corporate debt securities
|
467
|
2
|
1
|
-
|
-
|
-
|
467
|
2
|
1
|
|||||||||||||||||||||||||||
|
Other securities
|
805
|
15
|
3
|
159
|
2
|
3
|
964
|
17
|
6
|
|||||||||||||||||||||||||||
|
Total securities held-to-maturity
|
132,535
|
2,962
|
267
|
37,036
|
1,384
|
91
|
169,571
|
4,346
|
358
|
|||||||||||||||||||||||||||
|
Total securities
|
$
|
148,744
|
$
|
3,091
|
289
|
$
|
45,459
|
$
|
1,732
|
98
|
$
|
194,203
|
$
|
4,823
|
387
|
|||||||||||||||||||||
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, 2018.
|
Less Than 12 Months
|
More Than 12 Months
|
Total
|
||||||||||||||||||||||||||||||||||
|
(In thousands, except number of securities)
|
Fair
Value
|
Unrealized
Losses
|
Number of
Securities
|
Fair
Value
|
Unrealized
Losses
|
Number of
Securities
|
Fair
Value
|
Unrealized
Losses
|
Number
of
Securities
|
|||||||||||||||||||||||||||
|
Securities available-for-sale:
|
||||||||||||||||||||||||||||||||||||
|
U.S. government sponsored enterprises
|
$
|
969
|
$
|
30
|
1
|
$
|
-
|
$
|
-
|
-
|
$
|
969
|
$
|
30
|
1
|
|||||||||||||||||||||
|
State and political subdivisions
|
2,094
|
1
|
4
|
-
|
-
|
-
|
2,094
|
1
|
4
|
|||||||||||||||||||||||||||
|
Mortgage-backed securities-residential
|
2,420
|
98
|
3
|
-
|
-
|
-
|
2,420
|
98
|
3
|
|||||||||||||||||||||||||||
|
Mortgage-backed securities-multi-family
|
9,177
|
244
|
7
|
-
|
-
|
-
|
9,177
|
244
|
7
|
|||||||||||||||||||||||||||
|
Corporate debt securities
|
1,450
|
65
|
6
|
254
|
2
|
1
|
1,704
|
67
|
7
|
|||||||||||||||||||||||||||
|
Total securities available-for-sale
|
16,110
|
438
|
21
|
254
|
2
|
1
|
16,364
|
440
|
22
|
|||||||||||||||||||||||||||
|
Securities held-to-maturity:
|
||||||||||||||||||||||||||||||||||||
|
U.S. government sponsored enterprises
|
7,018
|
227
|
1
|
1,949
|
51
|
1
|
8,967
|
278
|
2
|
|||||||||||||||||||||||||||
|
State and political subdivisions
|
34,743
|
434
|
167
|
4,352
|
98
|
34
|
39,095
|
532
|
201
|
|||||||||||||||||||||||||||
|
Mortgage-backed securities-residential
|
1,403
|
7
|
3
|
-
|
-
|
-
|
1,403
|
7
|
3
|
|||||||||||||||||||||||||||
|
Mortgage-backed securities-multi-family
|
94,927
|
2,586
|
45
|
6,398
|
259
|
3
|
101,325
|
2,845
|
48
|
|||||||||||||||||||||||||||
|
Corporate debt securities
|
457
|
9
|
1
|
-
|
-
|
-
|
457
|
9
|
1
|
|||||||||||||||||||||||||||
|
Other securities
|
892
|
14
|
1
|
75
|
1
|
1
|
967
|
15
|
2
|
|||||||||||||||||||||||||||
|
Total securities held-to-maturity
|
139,440
|
3,277
|
218
|
12,774
|
409
|
39
|
152,214
|
3,686
|
257
|
|||||||||||||||||||||||||||
|
Total securities
|
$
|
155,550
|
$
|
3,715
|
239
|
$
|
13,028
|
$
|
411
|
40
|
$
|
168,578
|
$
|
4,126
|
279
|
|||||||||||||||||||||
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
other-than-temporary impairment (“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 before recovery of its amortized cost basis, (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 prepayment speeds, 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 earnings while noncredit related OTTI on securities not expected to be sold is recognized in
other comprehensive income/loss (“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. 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 September 30, 2018. Management believes that the reasons for the decline in fair value are due to interest rates, widening credit spreads and market illiquidity at the reporting date.
There were no transfers of securities available-for-sale to held-to-maturity during the three months ended September 30, 2018 or 2017. During the three
months ended September 30, 2018 and 2017, there were no sales of securities and no gains or losses were recognized. There was no other-than-temporary impairment loss recognized during the three months ended September 30, 2018 and 2017.
The estimated fair values of debt securities at September 30, 2018, 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.
(In thousands)
|
Available-for-sale debt securities
|
Amortized Cost
|
Fair Value
|
||||||
|
Within one year
|
$
|
92,403
|
$
|
92,572
|
||||
|
After one year through five years
|
4,539
|
4,541
|
||||||
|
After five years through ten years
|
2,515
|
2,407
|
||||||
|
After ten years
|
-
|
-
|
||||||
|
Total available-for-sale debt securities
|
99,457
|
99,520
|
||||||
|
Mortgage-backed securities
|
20,387
|
20,080
|
||||||
|
Total available-for-sale securities
|
119,844
|
119,600
|
||||||
|
Held-to-maturity debt securities
|
||||||||
|
Within one year
|
26,618
|
26,707
|
||||||
|
After one year through five years
|
64,460
|
64,834
|
||||||
|
After five years through ten years
|
46,008
|
46,020
|
||||||
|
After ten years
|
17,657
|
18,497
|
||||||
|
Total held-to-maturity debt securities
|
154,743
|
156,058
|
||||||
|
Mortgage-backed securities
|
126,031
|
123,003
|
||||||
|
Total held-to-maturity securities
|
280,774
|
279,061
|
||||||
|
Total debt securities
|
$
|
400,618
|
$
|
398,661
|
||||
At September 30, 2018 and June 30, 2018, respectively, securities with an aggregate fair value of $387.1 million and $383.0 million were pledged as collateral for deposits in excess of FDIC insurance limits for various municipalities placing deposits with Greene County Commercial Bank. At September 30, 2018 and June 30, 2018,
securities with an aggregate fair value of $1.7 million were pledged as collateral for potential borrowings at the Federal Reserve Bank discount window. Greene County Bancorp, Inc. did not participate in any securities lending programs during
the quarters ended September 30, 2018 or 2017.
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 three months ended
September 30, 2018 or 2017.
|
(5)
|
Loans and Allowance for Loan Losses
|
Loan segments and classes at September 30, 2018 and June 30, 2018 are summarized as follows:
|
(In thousands)
|
September 30, 2018
|
June 30, 2018
|
||||||
|
Residential real estate:
|
||||||||
|
Residential real estate
|
$
|
262,264
|
$
|
255,848
|
||||
|
Residential construction and land
|
9,803
|
9,951
|
||||||
|
Multi-family
|
21,076
|
14,961
|
||||||
|
Commercial real estate:
|
||||||||
|
Commercial real estate
|
289,425
|
283,935
|
||||||
|
Commercial construction
|
38,836
|
39,366
|
||||||
|
Consumer loan:
|
||||||||
|
Home equity
|
21,744
|
21,919
|
||||||
|
Consumer installment
|
5,217
|
5,017
|
||||||
|
Commercial loans
|
87,711
|
84,644
|
||||||
|
Total gross loans
|
736,076
|
715,641
|
||||||
|
Allowance for loan losses
|
(12,308
|
)
|
(12,024
|
)
|
||||
|
Deferred fees and costs
|
758
|
814
|
||||||
|
Loans receivable, net
|
$
|
724,526
|
$
|
704,431
|
||||
Management closely monitors the quality of the loan portfolio and has established a loan review process designed to help grade the quality and
profitability of the Company’s loan portfolio. The credit quality grade helps management make a consistent assessment of each loan relationship’s credit risk. Consistent with regulatory guidelines, The Bank of Greene County provides for the
classification of loans considered being of lesser quality. Such ratings coincide with the “Substandard,” “Doubtful” and “Loss” classifications used by federal regulators in their examination of financial institutions. Generally, an asset is
considered Substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. Substandard assets include those characterized by the distinct possibility that the insured
financial institution will sustain some loss if the deficiencies are not corrected. Assets classified as Doubtful have all the weaknesses inherent in assets classified Substandard with the added characteristic that the weaknesses present make
collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable. Assets classified as Loss are those considered uncollectible and of such little value that their continuance as assets without the
establishment of a full loss reserve and/or charge-off is not warranted. Assets that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories but otherwise possess weaknesses are
designated “Special Mention.” Management also maintains a listing of loans designated “Watch.” These loans represent borrowers with declining earnings, strained cash flow, increasing leverage and/or weakening market fundamentals that indicate
above average risk.
When The Bank of Greene County classifies problem assets as either Substandard or Doubtful, it generally establishes a specific valuation allowance or
“loss reserve” in an amount deemed prudent by management. General allowances represent loss allowances that have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not
been allocated to particular loans. When The Bank of Greene County identifies problem loans as being impaired, it is required to evaluate whether the Bank will be able to collect all amounts due either through repayments or the liquidation of
the underlying collateral. If it is determined that impairment exists, the Bank is required either to establish a specific allowance for losses equal to the amount of impairment of the assets, or to charge-off such amount. The Bank of Greene
County’s determination as to the classification of its loans and the amount of its valuation allowance is subject to review by its regulatory agencies, which can order the establishment of additional general or specific loss allowances. The Bank
of Greene County reviews its portfolio monthly to determine whether any assets require classification in accordance with applicable regulations.
The Bank primarily has four segments within its loan portfolio that it considers when measuring credit quality: residential real estate loans, commercial
real estate loans, consumer loans and commercial loans. The residential real estate portfolio consists of residential, construction, and multi-family loan classes. Commercial real estate loans consist of commercial real estate and commercial
construction loan classes. Consumer loans consist of home equity loan and consumer installment loan classes. The inherent risk within the loan portfolio varies depending upon each of these loan types.
The Bank of Greene County’s primary lending activity historically has been the origination of residential mortgage loans, including home equity loans,
which are collateralized by residences. Generally, residential mortgage loans are made in amounts up to 89.9% of the appraised value of the property. However, The Bank of Greene County will originate residential mortgage loans with
loan-to-value ratios of up to 95.0%, with private mortgage insurance. In the event of default by the borrower, The Bank of Greene County will acquire and liquidate the underlying collateral. By originating the loan at a loan-to-value ratio of
89.9% or less or obtaining private mortgage insurance, The Bank of Greene County limits its risk of loss in the event of default. However, the market values of the collateral may be adversely impacted by declines in the economy. Home equity
loans may have an additional inherent risk if The Bank of Greene County does not hold the first mortgage. The Bank of Greene County may stand in a secondary position in the event of collateral liquidation resulting in a greater chance of
insufficiency to meet all obligations.
Construction lending generally involves a greater degree of risk than other residential mortgage lending. The repayment of the construction loan is, to
a great degree, dependent upon the successful and timely completion of the construction of the subject property within specified cost limits. The Bank of Greene County completes inspections during the construction phase prior to any
disbursements. The Bank of Greene County limits its risk during the construction as disbursements are not made until the required work for each advance has been completed. Construction delays may further impair the borrower’s ability to repay
the loan.
Loans collateralized by commercial real estate, and multi-family dwellings, such as apartment buildings generally are larger than residential loans and
involve a greater degree of risk. Commercial real estate loans often involve large loan balances to single borrowers or groups of related borrowers. Payments on these loans depend to a large degree on the results of operations and management of
the properties or underlying businesses, and may be affected to a greater extent by adverse conditions in the real estate market or the economy in general. Accordingly, the nature of commercial real estate loans makes them more difficult for
management to monitor and evaluate.
Consumer loans generally have shorter terms and higher interest rates than residential mortgage loans. In addition, consumer loans expand the products
and services offered by The Bank of Greene County to better meet the financial services needs of its customers. Consumer loans generally involve greater credit risk than residential mortgage loans because of the difference in the nature of the
underlying collateral. Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance because of the greater likelihood of damage, loss or depreciation in the underlying
collateral. The remaining deficiency often does not warrant further substantial collection efforts against the borrower beyond obtaining a deficiency judgment. In addition, consumer loan collections depend on the borrower’s personal financial
stability. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.
Commercial lending generally involves greater risk than residential mortgage lending and involves risks that are different from those associated with
residential and commercial real estate mortgage lending. Real estate lending is generally considered to be collateral-based, with loan amounts based on fixed loan-to-collateral values, and liquidation of the underlying real estate collateral is
viewed as the primary source of repayment in the event of borrower default. Although commercial loans may be collateralized by equipment or other business assets, the liquidation of collateral in the event of a borrower default is often an
insufficient source of repayment because equipment and other business assets may be obsolete or of limited use, among other things. Accordingly, the repayment of a commercial loan depends primarily on the creditworthiness of the borrower (and any
guarantors), while liquidation of collateral is a secondary and often insufficient source of repayment. Over the past few years, The Bank of Greene County has shifted more focus on the origination of commercial loans including commercial real
estate. The Bank of Greene County has also formed relationships with other community banks within our region to participate in larger commercial loan relationships. These types of loans are generally considered to be riskier due to the size and
complexity of the loan relationship. By entering into a participation agreement with the other bank, The Bank of Greene County can obtain the loan relationship while limiting its exposure to credit loss. Management completes its due diligence
in underwriting these loans and monitors the servicing of these loans.
Loan balances by internal credit quality indicator at September 30, 2018 are shown below.
|
(In thousands)
|
Performing
|
Watch
|
Special Mention
|
Substandard
|
Total
|
|||||||||||||||
|
Residential real estate
|
$
|
259,668
|
$
|
343
|
$
|
88
|
$
|
2,165
|
$
|
262,264
|
||||||||||
|
Residential construction and land
|
9,803
|
-
|
-
|
-
|
9,803
|
|||||||||||||||
|
Multi-family
|
18,934
|
-
|
2,059
|
83
|
21,076
|
|||||||||||||||
|
Commercial real estate
|
278,842
|
312
|
8,756
|
1,515
|
289,425
|
|||||||||||||||
|
Commercial construction
|
38,660
|
-
|
-
|
176
|
38,836
|
|||||||||||||||
|
Home equity
|
20,894
|
-
|
-
|
850
|
21,744
|
|||||||||||||||
|
Consumer installment
|
5,187
|
13
|
-
|
17
|
5,217
|
|||||||||||||||
|
Commercial loans
|
86,542
|
-
|
513
|
656
|
87,711
|
|||||||||||||||
|
Total gross loans
|
$
|
718,530
|
$
|
668
|
$
|
11,416
|
$
|
5,462
|
$
|
736,076
|
||||||||||
Loan balances by internal credit quality indicator at June 30, 2018 are shown below.
|
(In thousands)
|
Performing
|
Watch
|
Special Mention
|
Substandard
|
Total
|
|||||||||||||||
|
Residential real estate
|
$
|
252,811
|
$
|
577
|
$
|
88
|
$
|
2,372
|
$
|
255,848
|
||||||||||
|
Residential construction and land
|
9,951
|
-
|
-
|
-
|
9,951
|
|||||||||||||||
|
Multi-family
|
12,743
|
-
|
2,132
|
86
|
14,961
|
|||||||||||||||
|
Commercial real estate
|
273,077
|
317
|
8,994
|
1,547
|
283,935
|
|||||||||||||||
|
Commercial construction
|
39,190
|
-
|
-
|
176
|
39,366
|
|||||||||||||||
|
Home equity
|
21,170
|
128
|
-
|
621
|
21,919
|
|||||||||||||||
|
Consumer installment
|
4,969
|
30
|
-
|
18
|
5,017
|
|||||||||||||||
|
Commercial loans
|
83,148
|
195
|
457
|
844
|
84,644
|
|||||||||||||||
|
Total gross loans
|
$
|
697,059
|
$
|
1,247
|
$
|
11,671
|
$
|
5,664
|
$
|
715,641
|
||||||||||
The Company had no loans classified doubtful or loss at September 30, 2018 or June 30, 2018.
Nonaccrual Loans
Management places loans on nonaccrual status once the loans have become 90 days or more delinquent. A nonaccrual loan is defined as a loan in which
collectability is questionable and therefore interest on the loan will no longer be recognized on an accrual basis. A loan is not placed back on accrual status until the borrower has demonstrated the ability and willingness to make timely
payments on the loan. A loan does not have to be 90 days delinquent in order to be classified as nonaccrual. Nonaccrual loans consisted primarily of loans secured by real estate at September 30, 2018 and June 30, 2018. Loans on nonaccrual
status totaled $3.4 million at September 30, 2018 of which $1.8 million were in the process of foreclosure. At September 30, 2018, there were 10 residential loans in the process of foreclosure totaling $1.2 million. Included in nonaccrual loans
were $1.6 million of loans which were less than 90 days past due at September 30, 2018, 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 $62,000 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 $3.5 million at June 30, 2018 of which $1.9 million were in the process of foreclosure. At June 30, 2018, there were 11 residential loans in the process of foreclosure totaling $1.2
million. Included in nonaccrual loans were $1.3 million of loans which were less than 90 days past due at June 30, 2018, but have a recent history of delinquency greater than 90 days past due.
The following table sets forth information regarding delinquent and/or nonaccrual loans at September 30, 2018:
|
(In thousands)
|
30-59 days
past due
|
60-89 days
past due
|
90 days or
more past
due
|
Total past
due
|
Current
|
Total Loans
|
Loans on
Non-accrual
|
|||||||||||||||||||||
|
Residential real estate
|
$
|
3,140
|
$
|
337
|
$
|
823
|
$
|
4,300
|
$
|
257,964
|
$
|
262,264
|
$
|
1,634
|
||||||||||||||
|
Residential construction and land
|
-
|
-
|
-
|
-
|
9,803
|
9,803
|
-
|
|||||||||||||||||||||
|
Multi-family
|
141
|
-
|
-
|
141
|
20,935
|
21,076
|
-
|
|||||||||||||||||||||
|
Commercial real estate
|
1,150
|
481
|
568
|
2,199
|
287,226
|
289,425
|
1,119
|
|||||||||||||||||||||
|
Commercial construction
|
-
|
-
|
-
|
-
|
38,836
|
38,836
|
-
|
|||||||||||||||||||||
|
Home equity
|
179
|
-
|
408
|
587
|
21,157
|
21,744
|
529
|
|||||||||||||||||||||
|
Consumer installment
|
19
|
13
|
8
|
40
|
5,177
|
5,217
|
17
|
|||||||||||||||||||||
|
Commercial loans
|
433
|
103
|
-
|
536
|
87,175
|
87,711
|
88
|
|||||||||||||||||||||
|
Total gross loans
|
$
|
5,062
|
$
|
934
|
$
|
1,807
|
$
|
7,803
|
$
|
728,273
|
$
|
736,076
|
$
|
3,387
|
||||||||||||||
The following table sets forth information regarding delinquent and/or nonaccrual loans at June 30, 2018:
|
(In thousands)
|
30-59 days
past due
|
60-89
days
past due
|
90 days
or more
past due
|
Total
past due
|
Current
|
Total Loans
|
Loans on
Non-accrual
|
|||||||||||||||||||||
|
Residential real estate
|
$
|
1,617
|
$
|
458
|
$
|
1,211
|
$
|
3,286
|
$
|
252,562
|
$
|
255,848
|
$
|
1,778
|
||||||||||||||
|
Residential construction and land
|
-
|
-
|
-
|
-
|
9,951
|
9,951
|
-
|
|||||||||||||||||||||
|
Multi-family
|
-
|
-
|
-
|
-
|
14,961
|
14,961
|
-
|
|||||||||||||||||||||
|
Commercial real estate
|
1,568
|
487
|
568
|
2,623
|
281,312
|
283,935
|
1,147
|
|||||||||||||||||||||
|
Commercial construction
|
-
|
-
|
-
|
-
|
39,366
|
39,366
|
-
|
|||||||||||||||||||||
|
Home equity
|
38
|
128
|
299
|
465
|
21,454
|
21,919
|
298
|
|||||||||||||||||||||
|
Consumer installment
|
3
|
30
|
8
|
41
|
4,976
|
5,017
|
18
|
|||||||||||||||||||||
|
Commercial loans
|
250
|
195
|
182
|
627
|
84,017
|
84,644
|
276
|
|||||||||||||||||||||
|
Total gross loans
|
$
|
3,476
|
$
|
1,298
|
$
|
2,268
|
$
|
7,042
|
$
|
708,599
|
$
|
715,641
|
$
|
3,517
|
||||||||||||||
The Bank of Greene County had no accruing loans delinquent more than 90 days at September 30, 2018 and $62,000 at June 30, 2018, respectively. The
loans delinquent more than 90 days and accruing consist of loans that are well collateralized and the borrowers have demonstrated the ability and willingness to pay. The borrower has made arrangements with the Bank to bring the loan current
within a specified time period and has made a series of payments as agreed.
The table below details additional information related to nonaccrual loans for the three months ended September 30:
|
(In thousands)
|
2018
|
2017
|
||||||
|
Interest income that would have been recorded if loans had been performing in accordance with original
terms
|
$
|
71
|
$
|
78
|
||||
|
Interest income that was recorded on nonaccrual loans
|
32
|
34
|
||||||
Impaired Loan Analysis
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 reviewed individually and considered impaired if it is probable that The 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 of The 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. Loans that have been modified as a troubled debt restructuring are included in impaired loans. The measurement of impairment is generally based on the discounted cash flows based on the original rate of the loan before the
restructuring, unless it is determined that the restructured loan is collateral dependent. If the restructured loan is deemed to be collateral dependent, impairment is based on the fair value of the underlying collateral.
The tables below detail additional information on impaired loans at the date or periods indicated:
|
At September 30, 2018
|
For the three months ended
September 30, 2018
|
|||||||||||||||||||
|
(In thousands)
|
Recorded
Investment
|
Unpaid
Principal
|
Related
Allowance
|
Average Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||
|
With no related allowance recorded:
|
||||||||||||||||||||
|
Residential real estate
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
7
|
$
|
3
|
||||||||||
|
Commercial real estate
|
794
|
794
|
-
|
796
|
8
|
|||||||||||||||
|
Home equity
|
309
|
309
|
-
|
224
|
-
|
|||||||||||||||
|
Commercial loans
|
155
|
155
|
-
|
157
|
||||||||||||||||