form10qsbmarch312008.htm
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------

FORM 10-QSB

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT


GREENE COUNTY BANCORP, INC.

(Exact name of small business issuer as specified in its charter)

Commission file number  0-25165


       United States                                                                                                                     14-1809721
(State or other jurisdiction of incorporation or organization)                  (I.R.S. Employer  Identification Number)


302 Main Street, Catskill, New York                                                                                    12414
(Address of principal executive office)                                                                           (Zip code)

Registrant's telephone number, including area code: (518) 943-2600

Check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes:       X                                No:                       

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes:                           No:     X                      

As of May 13, 2008, the registrant had 4,305,670 shares of common stock issued at $ 0.10 par value, and 4,094,528 shares were outstanding.

Transitional Small Business Disclosure
Format:  Yes:                                     No:       X                      

 
 

 


 
GREENE COUNTY BANCORP, INC.
     
         
         
         
INDEX
       
         
         
         
PART I.
FINANCIAL INFORMATION
     
     
Page
 
Item 1.
Financial Statements
     
 
*   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 or Plan of Operation
   
         
Item 3.
Controls and Procedures
   
         
PART II.
OTHER INFORMATION
     
         
Item 1.
Legal Proceedings
   
         
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
   
         
Item 3.
Defaults Upon Senior Securities
   
         
Item 4.
Submission of Matters to a Vote of Security Holders
   
         
Item 5.
Other Information
   
         
Item 6.
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
   


 
 

 

Part I.    Item 1.
Greene County Bancorp, Inc.
Consolidated Statements of Financial Condition
As of March 31, 2008 and June 30, 2007
(Unaudited)
(In thousands, except share and per share amounts)

ASSETS
 
March 31, 2008
   
June 30, 2007
 
Cash and due from banks
  $ 8,960     $ 11,127  
Federal funds sold
    15,426       2,899  
    Total cash and cash equivalents
    24,386       14,026  
                 
Securities available for sale, at fair value
    90,349       87,184  
Securities held to maturity, at amortized cost
    16,753       ---  
Federal Home Loan Bank stock, at cost
    1,287       657  
                 
Loans
    230,521       208,705  
Less: Allowance for loan losses
    (1,803 )     (1,486 )
         Unearned origination fees and costs, net
    117       61  
    Net loans receivable
    228,835       207,280  
                 
Premises and equipment
    15,204       13,712  
Accrued interest receivable
    2,145       1,955  
Prepaid expenses and other assets
    642       1,012  
               Total assets
  $ 379,601     $ 325,826  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Noninterest bearing deposits
  $ 41,294     $ 44,020  
Interest bearing deposits
    280,773       240,156  
    Total deposits
    322,067       284,176  
                 
Borrowings from FHLB
    19,000       5,000  
Accrued expenses and other liabilities
    1,703       1,235  
                Total liabilities
    342,770       290,411  
                 
SHAREHOLDERS’ EQUITY
               
Preferred stock,
               
  Authorized 1,000,000 shares; none issued
    ---       ---  
Common stock, par value $.10 per share;
               
   Authorized:12,000,000 shares
               
   Issued: 4,305,670 shares
               
   Outstanding:  4,110,388 shares at March 31, 2008
               
          and 4,151,066 shares at June 30, 2007;
    431       431  
Additional paid-in capital
    10,253       10,319  
Retained earnings
    26,628       25,962  
Accumulated other comprehensive income (loss)
    928       (400 )
Treasury stock, at cost 195,282 shares at March 31,
               
        2008, and 154,604 shares at June 30, 2007
    (1,380 )     (828 )
 Unearned ESOP shares, at cost
    (29 )     (69 )
               Total shareholders’ equity
    36,831       35,415  
               Total liabilities and shareholders’ equity
  $ 379,601     $ 325,826  
                 
See notes to consolidated financial statements.
               


 
 

 

Greene County Bancorp, Inc.
Consolidated Statements of Income
For the Nine Months Ended March 31, 2008 and 2007
(Unaudited)
(In thousands, except share and per share amounts)
                 
       
2008
   
2007
 
Interest income:
             
Loans
    $ 10,922     $ 9,835  
Investment securities – taxable
      916       487  
Mortgage-backed securities
      1,416       1,079  
Tax exempt securities
      804       833  
Interest bearing deposits and federal funds sold
      341       297  
Total interest income
      14,399       12,531  
                     
Interest expense:
                 
Interest on deposits
      5,420       4,514  
Interest on borrowings
      237       139  
Total interest expense
      5,657       4,653  
                     
Net interest income
      8,742       7,878  
                     
Provision for loan losses
      449       194  
                     
Net interest income after provision for loan losses
      8,293       7,684  
                     
Noninterest income:
                 
Service charges on deposit accounts
      2,006       1,566  
Debit card fees
      581       436  
Investment services
      255       201  
Gain on sale of premises and equipment
      ---       257  
Other operating income
      561       474  
Total noninterest income
      3,403       2,934  
                     
Noninterest expense:
                 
Salaries and employee benefits
      4,776       4,339  
Occupancy expense
      725       589  
Equipment and furniture expense
      631       632  
Service and data processing fees
      821       719  
Computer supplies and support
      237       194  
Office supplies
      157       149  
Other
      1,689       1,369  
Total noninterest expense
      9,036       7,991  
                     
Income before provision for income taxes
      2,660       2,627  
Provision for income taxes
      781       737  
Net income
    $ 1,879     $ 1,890  
                     
Basic EPS
    $ 0.45     $ 0.46  
Basic shares outstanding
      4,131,089       4,122,500  
Diluted EPS
    $ 0.45     $ 0.45  
Diluted average shares outstanding
      4,171,626       4,192,002  
Dividends per share
    $ 0.54     $ 0.48  
See notes to consolidated financial statements.
                 

 
 

 

Greene County Bancorp, Inc.
Consolidated Statements of Income
For the Three Months Ended March 31, 2008 and 2007
(Unaudited)
(Dollars in thousands, except per share amounts)
                 
       
2008
   
2007
 
Interest income:
             
Loans
    $ 3,708     $ 3,353  
Investment securities – taxable
      412       167  
Mortgage-backed securities
      548       328  
Tax exempt securities
      265       282  
Interest bearing deposits and federal funds sold
      85       107  
Total interest income
      5,018       4,237  
                     
Interest expense:
                 
Interest on deposits
      1,694       1,592  
Interest on borrowings
      144       46  
Total interest expense
      1,838       1,638  
                     
Net interest income
      3,180       2,599  
                     
Provision for loan losses
      171       83  
                     
Net interest income after provision for loan losses
      3,009       2,516  
                     
Noninterest income:
                 
Service charges on deposit accounts
      679       509  
Debit card fees
      194       146  
Investment services
      68       38  
Other operating income
      206       147  
Total noninterest income
      1,147       840  
                     
Noninterest expense:
                 
Salaries and employee benefits
      1,668       1,549  
Occupancy expense
      267       236  
Equipment and furniture expense
      207       236  
Service and data processing fees
      296       245  
Computer supplies and support
      79       76  
Office supplies
      73       69  
Other
      592       486  
Total noninterest expense
      3,182       2,897  
                     
Income before provision for income taxes
      974       459  
Provision for income taxes
      290       80  
Net income
    $ 684     $ 379  
                     
Basic EPS
    $ 0.17     $ 0.09  
Basic shares outstanding
      4,118,958       4,127,946  
Diluted EPS
    $ 0.16     $ 0.09  
Diluted average shares outstanding
      4,149,745       4,195,761  
Dividends per share
    $ 0.15     $ 0.25  
See notes to consolidated financial statements.
                 

 
 

 

 Greene County Bancorp, Inc.
Consolidated Statements of Comprehensive Income
For the Nine Months Ended March 31, 2008 and 2007
(Unaudited)
(In thousands)


 
2008
 
2007
       
Net income
$1,879
 
$1,890
       
Other comprehensive income:
     
       
Unrealized holding gain arising during the nine months
     
  ended March 31, 2008 and 2007, net of income
     
  tax expense of $841 and $381, respectively.
1,328
 
595
       
       
Total other comprehensive income
1,328
 
595
       
Comprehensive income
$3,207
 
$2,485
       
Greene County Bancorp, Inc.
Consolidated Statements of Comprehensive Income
For the Three Months Ended March 31, 2008 and 2007
(Unaudited)
(In thousands)


 
2008
 
2007
       
Net income
$684
 
$379
       
Other comprehensive income:
     
       
Unrealized holding gain arising during the three months
     
  ended March 31, 2008 and 2007, net of income
     
  tax expense of $281 and $51, respectively.
451
 
80
       
       
Total other comprehensive income
451
 
80
       
Comprehensive income
$1,135
 
$459
       


See notes to consolidated financial statements.

 
 

 


Greene County Bancorp, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
For the Nine Months Ended March 31, 2008 and 2007
(Unaudited)
(In thousands)


       
Accumulated
     
   
Additional
 
Other
 
Unearned
Total
 
Capital
Paid – In
Retained
Comprehensive
Treasury
ESOP
Shareholders’
 
Stock
Capital
Earnings
Income
Stock
Shares
Equity
       
(loss)
     
Balance at
             
June 30, 2006
$431
$10,300
$24,588
($747)
($860)
($131)
$33,581
               
ESOP shares earned
 
111
     
47
158
               
Options exercised
 
(7)
   
26
 
19
               
Tax effect, options
 
14
       
14
               
Dividends declared
   
(885)
     
(885)
               
Net income
   
1,890
     
1,890
               
Unrealized gain on securities,  net
     
 
595
   
 
595
               
Balance at
             
March 31, 2007
$431
$10,418
$25,593
($152)
($834)
($84)
$35,372
               
Balance at
             
June 30, 2007
$431
$10,319
$25,962
($400)
($828)
($69)
$35,415
               
ESOP shares earned
 
72
     
40
112
               
Options exercised
 
(9)
   
31
 
22
               
Options surrendered
 
(215)
       
(215)
               
Tax effect, Options
 
86
       
86
               
Shares repurchased
       
(583)
 
(583)
               
Dividends declared
   
(995)
     
(995)
               
Net income
   
1,879
     
1,879
               
Adoption of FIN 48
   
(218)
     
(218)
               
Unrealized gain on securities,  net
     
 
1,328
   
 
1,328
               
Balance at
             
March 31, 2008
$431
$10,253
$26,628
$928
($1,380)
($29)
$36,831

See notes to consolidated financial statements.

 
 

 

Greene County Bancorp, Inc.
Consolidated Statements of Cash Flows
For the Nine Months Ended March 31, 2008 and 2007
(Unaudited)
(In thousands)

       
2008
   
2007
 
Cash flows from operating activities:
             
Net Income
    $ 1,879     $ 1,890  
Adjustments to reconcile net income to net cash provided by operating activities:
                 
Depreciation
      766       713  
Net amortization of security premiums and discounts
      41       575  
Net amortization of deferred loan costs and fees
      56       22  
Provision for loan losses
      449       194  
ESOP compensation earned
      112       158  
Gain on sale of premises and equipment
      ---       (257 )
Net decrease in accrued income taxes
      (204 )     (105 )
Net increase in accrued interest receivable
      (190 )     (165 )
Net increase in prepaid and other assets
      (15 )     (58 )
Net (decrease) increase in other liabilities
      (2 )     86  
Net cash provided by operating activities
      2,892       3,053  
                     
Cash flows from investing activities:
                 
Available for sale securities:
                 
Proceeds from maturities and calls of securities
      13,282       4,124  
Purchases of securities
      (38,499 )     (7,559 )
Principal payments on securities
      7,015       11,713  
Held to maturity securities:
                 
Proceeds from maturities and calls of securities
      211       ---  
Purchases of securities
      (710 )     ---  
Principal payments on securities
      281       ---  
Net increase in loans receivable
      (22,060 )     (14,988 )
Proceeds from sale of premises and equipment
      2       350  
Purchases of premises and equipment
      (2,260 )     (3,704 )
Net cash used in investing activities
      (42,738 )     (10,064 )
                     
Cash flows from financing activities:
                 
Proceeds of FHLB borrowings
      14,000       ---  
Dividends paid
      (995 )     (885 )
Proceeds from exercise of stock options
      22       19  
Payment for stock options surrendered
      (215 )     ---  
Excess tax benefit from stock based compensation
      86       14  
Repurchase of common stock
      (583 )     ---  
Net increase in deposits
      37,891       11,963  
Net cash provided by financing activities
      50,206       11,111  
                     
Net increase in cash and cash equivalents
      10,360       4,100  
                     
Cash and cash equivalents at beginning of period
      14,026       15,852  
                     
Cash and cash equivalents at end of period
    $ 24,386     $ 19,952  

See notes to consolidated financial statements.
     

 
 

 

Greene County Bancorp, Inc.
Notes to Consolidated Financial Statements
As of and for the Nine Months and Three Months Ended March 31, 2008 and 2007


(1)  Basis of Presentation

The accompanying consolidated balance sheet information as of June 30, 2007 was derived from the audited consolidated financial statements of Greene County Bancorp, Inc. (the “Company”) and its wholly owned subsidiary, The Bank of Greene County (the “Bank”) and the Bank’s wholly owned subsidiary, Greene County Commercial Bank.  The consolidated financial statements at and for the three and nine months ended March 31, 2008 and 2007 are unaudited.

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions to Form 10-QSB and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  To the extent that information and footnotes required by GAAP for complete financial statements are contained in or are consistent with the audited financial statements incorporated by reference to Greene County Bancorp, Inc.’s Annual Report on Form 10-KSB for the year ended June 30, 2007, 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 three and nine month periods ended March 31, 2008 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2008.


CRITICAL ACCOUNTING POLICY

Greene County Bancorp, Inc.’s most critical accounting policy relates to the allowance for loan losses.  It is based on management’s estimation of an amount that is intended to absorb losses in the existing portfolio.  The allowance for loan losses is established through a provision for losses based on management’s evaluation of the risk inherent in the loan portfolio, the composition of the portfolio, specific impaired loans and current economic conditions.  Such evaluation, which includes a review of all loans for which full collectibility may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, historical loan loss experience, management’s estimate of probable credit losses and other factors that warrant recognition in providing for the allowance of loan losses.  However, this evaluation involves a high degree of complexity and requires management to make subjective judgments that often require assumptions or estimates about highly uncertain matters.  This critical accounting policy and its application are periodically reviewed with the Audit Committee and the Board of Directors.

Statement of Financial Accounting Standards (“SFAS”) No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and Staff Accounting Bulletin 59, “Noncurrent Marketable Equity Securities,” the Company performs periodic reviews of individual securities in their investment portfolios to determine whether decline in the value of a security is other than temporary.  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, external credit ratings and recent downgrades.  Securities on which there is an unrealized loss that is deemed to be other-than-temporary are written down to fair value with the write-down recorded as a realized loss.
 
(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 ten full-service offices and an operations center located in its market area consisting of Greene County, Columbia County and southern Albany County, New York.    The Bank of Greene County is primarily engaged in the business of attracting deposits from the general public in The Bank of Greene County’s market area, and investing such deposits, together with other sources of funds, in loans and investment securities.  Greene County Commercial Bank’s primary business is to attract deposits from and provide banking services to local municipalities.
 
(3)  Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses 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 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, external credit ratings and recent downgrades.  Securities on which there is an unrealized loss that is deemed to be other-than-temporary are written down to fair value with the write-down recorded as a realized loss.
 
(4)      Earnings Per Share

Basic earnings per share (“EPS”) 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.  Unallocated common shares held by the ESOP are not included in the weighted-average number of common shares outstanding for either the basic or diluted earnings per share calculations.

 
 

 


 
 
 
 
Net Income
Weighted Average Number of Shares
Outstanding
 
 
Earnings Per Share
Nine Months Ended
     
       
March 31, 2008:
$1,879,000
   
   Basic
 
4,131,089
$0.45
   Effect of dilutive stock options
 
40,537
(0.00)
   Diluted
 
4,171,626
$0.45
       
March 31, 2007:
$1,890,000
   
   Basic
 
4,122,500
$0.46
   Effect of dilutive stock options
 
69,502
(0.01)
   Diluted
 
4,192,002
$0.45
       
       
 
 
 
 
Net Income
Weighted Average Number of Shares
Outstanding
 
 
Earnings Per Share
Three Months Ended
     
       
March 31, 2008:
$684,000
   
   Basic
 
4,118,958
$0.17
   Effect of dilutive stock options
 
30,787
(0.01)
   Diluted
 
4,149,745
$0.16
       
March 31, 2007:
$379,000
   
   Basic
 
4,127,946
$0.09
   Effect of dilutive stock options
 
67,815
(0.00)
   Diluted
 
4,195,761
$0.09
 
(5)      Dividends

On January 16, 2008, the Board of Directors declared a quarterly cash dividend of $0.15 per share of Greene County Bancorp, Inc. common stock.  The dividend reflected an annual cash dividend rate of $0.60 cents per share, which represented an increase from the annual cash dividend rate of $0.56 per share.  The dividend was payable to stockholders of record as of February 15, 2008, and paid on March 1, 2008.  It should be noted that Greene County Bancorp, Inc.’s mutual holding company continued to waive receipt of dividends on the 2,304,632 shares of Company common stock it owns for the current period.

(6)      Impact of Inflation and Changing Prices

The consolidated financial statements of Greene County Bancorp, Inc. and notes thereto, presented elsewhere herein, have been prepared in accordance with 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.


(7)       Impact of Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements”, which defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. SFAS No. 157 applies to other accounting pronouncements that require or permit fair value measurements. The new guidance is effective for financial statements issued for fiscal years beginning after November 15, 2007, and for interim periods within those fiscal years.  The Company is currently evaluating the potential impact, if any, of the adoption of SFAS No. 157 on its consolidated financial statements.

In February 2008, the FASB issued FASB Staff Position (FSP) 157-2, “Effective Date of FASB Statement No. 157,” that permits a one-year deferral in applying the measurement provisions of Statement No. 157 to non-financial assets and non-financial liabilities (non-financial items) that are not recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually). Therefore, if the change in fair value of a non-financial item is not required to be recognized or disclosed in the financial statements on an annual basis or more frequently, the effective date of application of Statement 157 to that item is deferred until fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. The Company is currently evaluating the impact, if any, that the adoption of FSP 157-2 will have on the Company’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115”  SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value.  Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings at each subsequent reporting date.  SFAS No. 159 is effective for the Company beginning July 1, 2008.  The Company is evaluating the impact, if any, the adoption of SFAS No. 159 will have on its consolidated financial statements.

In March 2007, the FASB ratified Emerging Issues Task Force (“EITF”) Issue No. 06-11 “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards.”  EITF 06-11 requires companies to recognize the income tax benefit realized from dividends or dividend equivalents that are charged to retained earnings and paid to employees for non-vested equity-classified employee share-based payment awards as an increase to additional paid-in capital.  EITF 06-11 is effective for fiscal years beginning after September 15, 2007.  The Company does not expect EITF 06-11 will have a material impact on its consolidated financial statements.

In December 2007, the FASB issued statement No. 141 (R) “Business Combinations”. This Statement establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The Statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The guidance will become effective as of the beginning of a company’s fiscal year beginning after December 15, 2008. The Company, based on current circumstances, believes that this new pronouncement will not have a material impact on the Company’s financial statements.

In December 2007, the FASB issued statement No. 160 “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51”. This Statement establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance will become effective as of the beginning of a company’s fiscal year beginning after December 15, 2008. The Company believes that this new pronouncement will not have a material impact on the Company’s consolidated financial statements.

Staff Accounting Bulletin No. 110 (SAB 110) amends and replaces Question 6 of Section D.2 of Topic 14,Share-Based Payment,” of the Staff Accounting Bulletin series. Question 6 of Section D.2 of Topic 14 expresses the views of the staff regarding the use of the “simplified” method in developing an estimate of expected term of “plain vanilla” share options and allows usage of the “simplified” method for share option grants prior to December 31, 2007. SAB 110 allows public companies which do not have historically sufficient experience to provide a reasonable estimate to continue use of the “simplified” method for estimating the expected term of “plain vanilla” share option grants after December 31, 2007.  SAB 110 was effective January 1, 2008. SAB 110 did not have a material impact on the Company’s consolidated financial statements.

Staff Accounting Bulletin No. 109 (SAB 109), "Written Loan Commitments Recorded at Fair Value Through Earnings" expresses the views of the staff regarding written loan commitments that are accounted for at fair value through earnings under generally accepted accounting principles. To make the staff's views consistent with current authoritative accounting guidance, the SAB revises and rescinds portions of SAB No. 105, "Application of Accounting Principles to Loan Commitments."  Specifically, the SAB revises the SEC staff's views on incorporating expected net future cash flows related to loan servicing activities in the fair value measurement of a written loan commitment. The SAB retains the staff's views on incorporating expected net future cash flows related to internally-developed intangible assets in the fair value measurement of a written loan commitment. The staff expects registrants to apply the views in Question 1 of SAB 109 on a prospective basis to derivative loan commitments issued or modified in fiscal quarters beginning after December 15, 2007. SAB 109 has not had a material impact on the Company’s consolidated financial statements.


 (8)      Stock-Based Compensation

At March 31, 2008, Greene County Bancorp, Inc. had two stock-based compensation plans, which are described more fully in Note 9 of the consolidated financial statements and notes thereto for the year ended June 30, 2007.  The Company adopted SFAS 123(R), “Share-Based Payments” effective July 1, 2006.  SFAS No. 123 (R) requires compensation costs related to share-based payment transactions to be recognized in the financial statements over the period that the employees provide service in exchange for the award.  Public companies were required to adopt the standard using a modified prospective method and they were given the option to elect to restate prior periods using the modified retrospective method.  Under the modified prospective method, companies are required to record compensation cost for new and modified awards over the related vesting period of such awards prospectively and record compensation cost prospectively for the unvested portion, at the date of adoption of previously issued and outstanding awards over the remaining vesting period of such awards.  Greene County Bancorp, Inc. chose the modified prospective method.  However, since all outstanding options vested prior to July 1, 2006, there was no stock-based compensation expense to be recorded during the quarters and nine months ended March 31, 2008 and 2007, and, therefore, no effect on net income or earnings per share; consequently, no table illustrating the impact of share-based compensation on earnings for the quarters and nine months ended March 31, 2008 or 2007 is included.

 
 

 

A summary of the Company’s stock option activity and related information for its option plan for the nine months ended March 31, 2008 and 2007 is as follows:

       
2008
   
2007
 
             
Weighted average
         
Weighted average
 
             
Exercise
         
Exercise
 
             
Price
         
Price
 
       
Shares
   
Per Share
   
Shares
   
Per Share
 
Outstanding at beginning of period
      72,664     $
4.55
      100,084     $
4.38
 
Shares granted
      ---      
---
 
    ---      
---
 
Exercised
      (5,580 )   $
3.94
      (4,820 )   $
3.94
 
Surrendered
      (23,780 )   $
3.94
      --      
--
 
Forfeited
      ---      
---
      ---      
---
 
Outstanding at period end
      43,304     $
4.97
      95,264     $
4.41
 
Exercisable at period end
      43,304     $
4.97
      95,264     $
4.41
 

The following table presents stock options outstanding and exercisable at March 31, 2008:

Options Outstanding and Exercisable
 
 
Exercise Prices
   
Number Outstanding
   
Weighted Average Remaining Contractual Life (in years)
   
Weighted Average Exercise Price
 
$
3.94
     
34,804
     
2.00
    $
3.94
 
$
9.20
 
   
8,500
     
4.00
    $
9.20
 
         
43,304
     
2.39
    $
4.97
 

The total intrinsic value of the options exercised during the nine and three months ended March 31, 2008, was approximately $48,000 and zero, respectively.  The total intrinsic value of the options surrendered during the nine and three months ended March 31, 2008 was approximately $197,000.  The total intrinsic value of the options outstanding and exercisable at March 31, 2008, was approximately $345,000.  There were no stock options granted during the nine and three months ended March 31, 2008 and 2007.  The Company had no non-vested options outstanding at or during the nine months ended March 31, 2008 and 2007.

(9)     Stock Repurchase Program

On August 22, 2007, the Board of Directors authorized a stock repurchase program pursuant to which the Company intends to repurchase up to 5% of its outstanding shares (excluding shares held by Greene County Bancorp, MHC, the Company’s mutual holding company), or up to 92,346 shares.  As of March 31, 2008, the Company had repurchased 46,258 shares pursuant to this program at an average cost of $12.60 per share.

(10)     Income Taxes

In July 2006, the Financial Accounting Standards Board (“FASB”) released Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement 109” (“FIN 48”). Effective for fiscal years beginning after December 15, 2006, FIN 48 provides guidance on the financial statement recognition and measurement for income tax positions that the Company has taken or expects to take in its income tax returns. It also provides related guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company adopted the provisions of FIN 48 on July 1, 2007. The adoption required the Company to recognize a $218,000 increase in our liability for unrecognized tax benefit.

As of July 1, 2007, the Company had a liability for unrecognized tax benefits of $186,000. The Company recognizes penalties and accrued interest related to unrecognized tax benefits in tax expense. As of July 1, 2007, the Company had a liability of approximately $32,000 for penalties and interest.

Actual income taxes paid may vary from estimates depending upon changes in income tax laws, actual results of operations, and the final audit of tax returns by taxing authorities. Tax assessments may arise several years after tax returns have been filed. The Company reviews its tax balances quarterly and as new information becomes available, the balances are adjusted, as appropriate. The Company is currently under examination by the Internal Revenue Service for fiscal years ended June 30, 2004 through June 30, 2006.  The Company is no longer subject to federal and state income tax examinations by tax authorities for years before June 30, 2004.

(11)      Subsequent Event

On April 15, 2008, the Board of Directors declared a quarterly cash dividend of $0.16 per share of Greene County Bancorp, Inc. common stock.  The dividend reflected an annual cash dividend rate of $0.64 cents per share, which represented an increase from the annual cash dividend rate of $0.60 per share.  The dividend will be payable to stockholders of record as of May 15, 2008, and will be paid on June 1, 2008.  It should be noted that Greene County Bancorp, Inc.’s mutual holding company intends to continue to waive receipt of dividends on the 2,304,632 shares of Company common stock it owns.

 
 

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview of the Company’s Activities and Risks

Greene County Bancorp, Inc.’s results of operations depend primarily on its net interest income, which is the difference between the income earned on Greene County Bancorp, Inc.’s loan and securities portfolios and its cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by Greene County Bancorp, Inc.’s provision for loan losses, gains and losses from sales of securities, noninterest income and noninterest expense.  Noninterest income consists primarily of fees and service charges.  Greene County Bancorp, Inc.’s noninterest expense consists principally of compensation and employee benefits, occupancy, equipment and data processing, and other operating expenses. Results of operations are also significantly affected by general economic and competitive conditions, changes in interest rates, as well as government policies and actions of regulatory authorities. Additionally, future changes in applicable law, regulations or government policies may materially affect Greene County Bancorp, Inc.

To operate successfully, the Company must manage various types of risk, including but not limited to, market or interest rate risk, credit risk, transaction risk, liquidity risk, security risk, strategic risk, reputation risk and compliance risk.  While all of these risks are important, the risks of greatest significance to the Company relate to market or interest rate risk and credit risk.

Market risk is the risk of loss from adverse changes in market prices and/or interest rates.  Since net interest income (the difference between interest earned on loans and investments and interest paid on deposits and borrowings) is the Company’s primary source of revenue, interest rate risk is the most significant non-credit related market risk to which the Company is exposed.  Net interest income is affected by changes in interest rates as well as fluctuations in the level and duration of the Company’s assets and liabilities.

Interest rate risk is the exposure of the Company’s net interest income to adverse movements in interest rates.  In addition to directly impacting net interest income, changes in interest rates can also affect the amount of new loan originations, the ability of borrowers and debt issuers to repay loans and debt securities, the volume of loan repayments and refinancings, and the flow and mix of deposits.

Credit risk is the risk to the Company’s earnings and shareholders’ equity that results from customers, to whom loans have been made and to the issuers of debt securities in which the Company has invested, failing to repay their obligations.  The magnitude of risk depends on the capacity and willingness of borrowers and debt issuers to repay and the sufficiency of the value of collateral obtained to secure the loans made or investments purchased.

Special Note Regarding Forward Looking Statements

This quarterly report contains forward-looking statements.  Greene County Bancorp, Inc. desires to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and is including this statement for the express purpose of availing itself of the protections of the safe harbor with respect to all such forward-looking statements.  These forward-looking statements, which are included in this Management’s Discussion and Analysis and elsewhere in this quarterly report, describe future plans or strategies and include Greene County Bancorp, Inc.’s expectations of future financial results.   The words “believe,” “expect,” “anticipate,” “project,” and similar expressions identify forward-looking statements.  Greene County Bancorp, Inc.’s ability to predict results or the effect of future plans or strategies or qualitative or quantitative changes based on market risk exposure is inherently uncertain.  Factors that could affect actual results include but are not limited to:
(a)  
changes in general market interest rates,
(b)  
general economic conditions,
(c)  
legislative and regulatory changes,
(d)  
monetary and fiscal policies of the U.S. Treasury and the Federal Reserve,
(e)  
changes in the quality or composition of The Bank of Greene County’s loan portfolio or the consolidated investment portfolios of The Bank of Greene County, Greene County Commercial Bank and Greene County Bancorp, Inc.,
(f)  
deposit flows,
(g)  
competition, and
(h)  
demand for financial services in Greene County Bancorp, Inc.’s market area.

These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements, since results in future periods may differ materially from those currently expected because of various risks and uncertainties.

 
 

 

Comparison of Financial Condition as of March 31, 2008 and June 30, 2007


ASSETS

Total assets of the Company increased to $379.6 million at March 31, 2008 from $325.8 million at June 30, 2007.  Loans have continued to grow to $228.8 million at March 31, 2008 from $207.3 million at June 30, 2007.  Securities, including both available-for-sale and held-to-maturity investments, also increased during the nine months ended March 31, 2008, and represented $107.1 million or 28.2% of total assets at March 31, 2008 as compared to $87.2 million or 26.8% of total assets at June 30, 2007

SECURITIES

Securities increased to $107.1 million at March 31, 2008 as compared to $87.2 million at June 30, 2007, an increase of $19.9 million, or 22.8%.  The increase in the portfolio was the result $39.2 million of securities purchases during the nine months ended March 31, 2008.  This increase was partially offset by maturities and principal repayments of $20.8 million.  Repayments and maturities consisted of $9.7 million in US government agency securities, $6.3 million in mortgage-backed securities, $4.8 million in state and political subdivision securities and $270,000 in FHLB stock. Purchases of $39.2 million consisted of $23.3 million in mortgage-backed securities, $5.3 million in state and political subdivision or tax-free securities, $900,000 in FHLB stock, $7.0 million in corporate debt securities, $2.0 million in U.S. government agency securities, and $1.0 million in a long term certificate of deposit.   Additionally, during the nine months ended March 31, 2008, available-for-sale securities improved from an unrealized loss of $655,000 to an unrealized gain of $1.5 million.

At December 1, 2007, Greene County Bancorp, Inc. reclassified $16.5 million in local, state and political subdivision securities from available-for-sale securities to held-to-maturity securities.  The Company has the ability and intent to hold these securities until maturity.  The issues transferred consisted of local municipal bonds which are considered illiquid and have no quoted market values.  Management estimated that the aggregate fair value of these securities at the time of transfer was equal to their aggregate amortized cost.  These securities will continue to be recorded at amortized cost.  Greene County Bancorp, Inc. held 27.9% of the securities portfolio, including both available-for-sale and held-to-maturity securities, at March 31, 2008 in state and political subdivision securities to take advantage of tax savings and to promote Greene County Bancorp, Inc.’s participation in the communities in which it operates.


 (Dollars in thousands)
                       
   
Carrying value at
March 31, 2008
   
Percentage
of portfolio
   
Carrying value at
June 30, 2007
   
Percentage
of portfolio
 
                         
U.S. government agencies
  $ 12,634       11.8 %   $ 19,628       22.5 %
State and political subdivisions1
    29,877       27.9       29,034       33.3  
Mortgage-backed securities
    56,325       52.6       38,157       43.8  
Asset-backed securities
    64       0.1       76       0.1  
Corporate debt securities
    6,832       6.3       ---       ---  
Total debt securities
    105,732       98.7       86,895       99.7  
                                 
Certificates of deposit
    1,000       1.0       ---       ---  
Equity securities and other
    370       0.3       289       0.3  
                                 
Total securities available-for-sale
  $ 107,102       100.0 %   $ 87,184       100.0 %




                                                                                 
1 Includes $16,753,000 of held-to-maturity securities at March 31, 2008, which are carried at amortized cost.

 
 

 




LOANS

Net loans receivable increased to $228.8 million at March 31, 2008 from $207.3 million at June 30, 2007, an increase of $21.5 million, or 10.4%.  The loan growth experienced during the nine months primarily consisted of $13.5 million in residential mortgages, $3.7 million in home equity loans, $3.4 million in commercial real estate loans, and $1.2 million in commercial loans.  The continued low interest rate environment and strong customer satisfaction from personal service continued to enhance loan growth.  If long term rates begin to rise, the Company anticipates some slow down in new loan demand as well as refinancing activities.  It appears consumers continue to use the equity in their homes and credit cards to fund financing needs for some activities, where in the past an installment loan may have been the choice.  The low financing options from auto makers continued to cut into the Bank’s automobile loan generation.


(Dollars in thousands)
                       
   
At
Mar. 31, 2008
   
Percentage
of portfolio
   
At
June 30, 2007
   
Percentage
of portfolio
 
Real estate mortgages
                       
   Residential
  $ 163,701       71.0 %   $ 150,215       72.0 %
   Commercial
    29,102       12.6       25,740       12.3  
Home equity loans
    23,430       10.2       19,719       9.5  
Commercial loans
    9,582       4.2       8,391       4.0  
Installment loans
    4,241       1.8       4,057       1.9  
Passbook loans
    465       0.2       583       0.3  
Total loans
  $ 230,521       100.0 %   $ 208,705       100.0 %
Less: Allowance for loan losses
    (1,803 )             (1,486 )        
         Unearned origination fees and costs, net
    117               61          
Net loans receivable
  $ 228,835             $ 207,280          


 
 

 

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is established through a provision for loan losses based on management’s evaluation of the risk inherent in the loan portfolio, the composition of the loan portfolio, specific impaired loans and current economic conditions.  Such evaluation, which includes a review of all loans on which full collectibility may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, historical loan loss experience and other factors that warrant recognition in providing for an allowance for loan loss.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review The Bank of Greene County’s allowance for loan losses.  Such agencies may require The Bank of Greene County to recognize additions to the allowance based on their judgment about information available to them at the time of their examination.  The allowance for loan losses is increased by a provision for loan losses (which results in a charge to expense) and recoveries of loans previously charged off and is reduced by net charge-offs.  The level of the provision for the nine months ended March 31, 2008, was driven by the continued growth of the loan portfolio and recent increases in loan delinquencies.  Any future increase in the allowance for loan losses or loan charge-offs could have a material adverse effect on Greene County Bancorp, Inc.’s results of operations and financial condition.

Analysis of allowance for loan losses activity

(Dollars in thousands)
 
Nine months ended
 
   
March 31, 2008
   
March 31, 2007
 
             
Balance at the beginning of the period
  $ 1,486     $ 1,314  
Charge-offs:
               
     Commercial loan
    46       7  
     Installment loans to individuals
    28       25  
     Overdraft protection
    182       109  
Total loans charged off
    256       141  
                 
Recoveries:
               
     Residential mortgage
    27       ---  
     Commercial loan
    ---       7  
     Installment loans to individuals
    44       27  
     Overdraft protection
    53       36  
Total recoveries
    124       70  
                 
Net charge-offs
    132       71  
                 
Provisions charged to operations
    449       194  
Balance at the end of the period
  $ 1,803     $ 1,437  
                 
Ratio of net charge-offs to average loans outstanding, annualized
    0.08 %     0.05 %
Ratio of net charge-offs to nonperforming assets, annualized
    11.50 %     8.18 %
Allowance for loan loss to nonperforming loans
    117.84 %     124.20 %
Allowance for loan loss to total loans receivable
    0.78 %     0.70 %

Nonaccrual Loans and Nonperforming Assets

Loans are reviewed on a regular basis.  Management determines that a loan is impaired or nonperforming when it is probable at least a portion of the loan will not be collected in accordance with its contractual terms due to an irreversible deterioration in the financial condition of the borrower or the value of the underlying collateral.  When a loan is determined to be impaired, the measurement of the loan impairment is based on the present value of estimated future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral.  Management places loans on nonaccrual status once the loans have become 90 days or more delinquent.  Nonaccrual is defined as a loan in which collectibility is questionable and therefore interest on the loan will no longer be recognized on an accrual basis.  A loan does not have to be 90 days delinquent in order to be classified as nonperforming.  Foreclosed real estate is considered nonperforming.  The Bank of Greene County had no accruing loans delinquent 90 days or more at March 31, 2008 or June 30, 2007.

Analysis of Nonaccrual Loans and Nonperforming Assets

(Dollars in thousands)
 
At March 31, 2008
   
At June 30, 2007
 
Nonaccruing loans:
           
  Real estate mortgage loans:
           
      Residential mortgages loans (one- to four-family)
  $ 933     $ 451  
      Commercial mortgage loans
    ---       111  
   Home equity
    283       110  
   Commercial loans
    244       ---  
   Installment loans to individuals
    70       10  
Total nonaccruing loans
    1,530       682  
                 
Foreclosed real estate
    ---       ---  
Total nonperforming assets
  $ 1,530     $ 682  
                 
Total nonperforming assets
   as a percentage of total assets
    0.40 %     0.21 %
                 
Total nonperforming loans to total loans
    0.67 %     0.33 %
                 

At and during the nine months ended March 31, 2008, The Bank of Greene County had three impaired commercial loans totaling $244,000.  At and during the nine months ended March 31, 2007, no loans were considered impaired.  Accordingly, no specific valuation allowance for impaired loans was recorded.  Interest income related to nonaccrual loans was not material in the quarters and nine month periods ended March 31, 2008 and 2007.


DEPOSITS

Total deposits increased to $322.1 million at March 31, 2008 from $284.2 million at June 30, 2007, an increase of $37.9 million, or 13.3%.  The net growth in deposits was primarily due to a $22.0 million increase in municipal deposits at Greene County Commercial Bank.  The Company believes that the increase in deposits is also due the recent volatility of the stock market resulting in consumers moving their funds out of stocks and into deposit products.  The Company has seen a shift from savings and money market deposits to NOW deposits as customers try to shop for the best rates while still maintaining liquidity.  The Company continues to try to encourage customers to open noninterest bearing deposit accounts through various marketing strategies, including gifts.

(Dollars in  thousands)
                       
   
At
Mar. 31, 2008
   
Percentage
of portfolio
   
At
June 30, 2007
   
Percentage
of portfolio
 
                         
Noninterest bearing deposits
  $ 41,294       12.8 %   $ 44,020       15.5 %
Certificates of deposit
    89,495       27.8       74,563       26.2  
Savings deposits
    68,096       21.1       71,830       25.3  
Money market deposits
    38,899       12.1       37,710       13.3  
NOW deposits
    84,283       26.2       56,053       19.7  
Total deposits
  $ 322,067       100.0 %   $ 284,176       100.0 %



BORROWINGS

At March 31, 2008, The Bank of Greene County had the following term borrowings totaling $19.0 million from the FHLB:

Amount
Rate
Maturity Date
$14,000,000
Ranging from 2.97% to 3.97%
Ranging from 02/01/2010 to 01/17/2014
 
$5,000,000
3.64% - convertible
10/24/2013

The $14.0 million borrowing consists of several fixed rate, fixed term advances with a weighted average rate of 3.34% and a weighted average maturity of 37 months.  The $5.0 million borrowing, which carried a 3.64% interest rate at March 31, 2008, is convertible by FHLB under certain market interest rate scenarios, including three-month LIBOR at or above 7.5%.  FHLB has the option to convert this existing advance into a replacement advance for the same or lesser principal amount based on the then current market rates.  If the Bank chooses not to replace the funding, the Bank must repay this convertible advance, including any accrued interest, on the interest payment date.

The $14.0 million borrowing was acquired in order to improve the Company’s interest rate risk position by structuring longer term maturities that would more closely match maturities within the loan and securities portfolios.  These longer term maturities are expected to provide for less volatility in net interest income should interest rates begin to rise.   These borrowings have been utilized to fund loan and security portfolio growth.


EQUITY

Shareholders’ equity increased to $36.8 million at March 31, 2008 from $35.4 million at June 30, 2007, as net income of $1.9 million was partially offset by dividends declared and paid of $995,000. An improvement of $1.3 million in the fair value of the available-for-sale investment portfolio, net of tax, resulted in accumulated other comprehensive income of $928,000 at March 31, 2008 compared to accumulated other comprehensive loss of $400,000 at June 30, 2007.  The Company recorded an adjustment, effective July 1, 2007, reducing retained earnings by $218,000 as a result of implementing FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109”.  Activities associated with the various stock-based compensation plans of the Company including the 2000 Stock Option Plan and ESOP Plan resulted in a net increase in equity of $5,000.  5,580 options were exercised and 23,780 options were surrendered during the nine months ended March 31, 2008.   On August 22, 2007, the Board of Directors authorized a stock repurchase program pursuant to which the Company intends to repurchase up to 5% of its outstanding shares (excluding shares held by Greene County Bancorp, MHC, the Company’s mutual holding company), or up to 92,346 shares.  During the nine months ended March 31, 2008, the Company repurchased 46,258 shares.  As a result of this stock repurchase and the exercise of stock options during the period, treasury shares were increased to 195,282.



 
 

 

Comparison of Operating Results for the Nine Months and Quarter Ended March 31, 2008 and 2007

Average Balance Sheet

The following table sets forth certain information relating to Greene County Bancorp, Inc. for the nine months and quarters ended March 31, 2008 and 2007.  For the periods indicated, the total dollar amount of interest income from average interest earning assets and the resultant yields, as well as the interest expense on average interest bearing liabilities, are expressed both in dollars and rates.  No tax equivalent adjustments were made.  Average balances were based on daily averages for the quarters and nine months ended March 31, 2008 and 2007.  Average loan balances include non-performing loans.  The loan yields include net amortization of certain deferred fees and costs that are considered adjustments to yields.

Nine Months Ended March 31, 2008 and 2007
(Dollars in thousands)
 
2008
   
2008
   
2008
   
2007
   
2007
   
2007
 
   
Average
   
Interest
   
Average
   
Average
   
Interest
   
Average
 
   
Outstanding
   
Earned/
   
Yield/
   
Outstanding
   
Earned/
   
Yield/
 
   
Balance
   
Paid
   
Rate
   
Balance
   
Paid
   
Rate
 
Interest earning assets:
                                   
  Loans receivable, net1
  $ 220,744     $ 10,922       6.60 %   $ 199,565     $ 9,835       6.57 %
  Securities2
    92,502       3,096       4.46       82,721       2,366       3.81  
  Federal funds
    7,803       237       4.05       5,224       204       5.21  
  Interest bearing bank balances
    3,650       104       3.80       2,816       93       4.40  
  FHLB stock
    830       40       6.42       643       33       6.84  
      Total interest earning assets
    325,529       14,399       5.90 %     290,969       12,531       5.74 %
Cash and due from banks
    5,602                       6,750                  
Allowance for loan losses
    (1,616 )                     (1,345 )                
Other non-interest earning assets
    17,324                       15,393                  
    Total assets
  $ 346,839                     $ 311,767                  
                                                 
                                                 
Interest bearing liabilities:
                                               
  Savings and money market deposits
  $ 106,607       1,447       1.81 %   $ 121,204       1,816       2.00 %
  NOW deposits
    70,828       1,360       2.56       45,125       868       2.56  
  Certificates of deposit
    81,545       2,613       4.27       63,671       1,830       3.83  
  Borrowings
    8,838       237       3.57       5,001       139       3.71  
      Total interest bearing liabilities
    267,818       5,657       2.82 %     235,001       4,653       2.64 %
Non-interest bearing deposits
    40,366                       40,477                  
Other non-interest bearing liabilities
    2,525                       1,673                  
Shareholders’ equity
    36,130                       34,616                  
    Total liabilities and equity
  $ 346,839                     $ 311,767                  
                                                 
Net interest income
          $ 8,742                     $ 7,878          
                                                 
Net interest rate spread
                    3.08 %                     3.10 %
                                                 
Net interest margin
                    3.58 %                     3.61 %
                                                 
Average interest earning assets to
                                               
average interest bearing liabilities
                    121.55 %                     123.82 %
 
                                                                           
1 Calculated net of deferred loan fees and costs, loan discounts, and loans in process.
2 Includes tax-free securities, mortgage-backed securities and asset-backed securities.

 
 

 

Rate / Volume Analysis

The following Rate / Volume tables present the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected Greene County Bancorp, Inc.’s interest income and interest expense during the periods indicated.  Information is provided in each category with respect to:
(i)  
change attributable to changes in volume (changes in volume multiplied by prior rate);
(ii)  
change attributable to changes in rate (changes in rate multiplied by prior volume); and
(iii)  
the net change.
The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

   
Nine Months
Ended March 31,
 
(In thousands)
 
2008 versus 2007
 
   
Increase/(Decrease)
   
Total
 
   
Due to
   
Increase/
 
Interest-earning assets:
 
Volume
   
Rate
   
(Decrease)
 
 Loans receivable, net1
  $ 1,042     $ 45     $ 1,087  
 Securities2
    299       431       730  
 Federal funds
    85       (52 )     33  
 Interest-bearing bank balances
    25       (14 )     11  
 FHLB stock
    9       (2 )     7  
Total interest-earning assets
    1,460       408       1,868  
                         
Interest-bearing liabilities:
                       
   Savings deposits
    (206 )     (163 )     (369 )
   NOW deposits
    492       --       492  
   Certificates of deposit
    556       227       783  
   Borrowings
    103       (5 )     98  
Total interest-bearing liabilities
    945       59       1,004  
Net interest income
  $ 515     $ 349     $ 864  

 
 

 

Quarter Ended March 31, 2008 and 2007

(Dollars in thousands)
 
2008
   
2008
   
2008
   
2007
   
2007
   
2007
 
   
Average
   
Interest
   
Average
   
Average
   
Interest
   
Average
 
   
Outstanding
   
Earned/
   
Yield/
   
Outstanding
   
Earned/
   
Yield/
 
   
Balance
   
Paid
   
Rate
   
Balance
   
Paid
   
Rate
 
Interest earning assets:
                                   
   Loans receivable, net1
  $ 227,315     $ 3,708       6.52 %   $ 204,494     $ 3,353       6.56 %
   Securities2
    98,915       1,211       4.90       78,857       765       3.88  
   Federal funds
    9,131       65       2.85       5,434       70       5.15  
   Interest bearing bank balances
    3,167       20       2.53       3,265       37       4.53  
   FHLB stock
    1,167       14       4.80       643       12       7.47  
       Total interest earning assets
    339,695       5,018       5.91 %     292,693       4,237       5.79 %