Greene County Bancorp, Inc. (NASDAQ: GCBC) is a leading community bank that has established a strong foothold in the Hudson Valley and Capital District regions of New York. With a rich history spanning over a century, the company has weathered numerous economic cycles, successfully adapting to evolving market conditions while maintaining its unwavering commitment to serving the financial needs of its local communities.
Business Overview and History
Greene County Bancorp was founded in 1889 as the Bank of Greene County, initially operating out of a single location in Catskill, New York. The bank was established to provide banking services to the local community and promote economic development in the region. Over the next several decades, the bank steadily grew its deposit base and loan portfolio, becoming a trusted financial institution in the Hudson Valley.
In 1998, Greene County Bancorp, Inc. was formed as the holding company for the Bank of Greene County, allowing the bank to diversify its service offerings and explore new avenues of growth. This restructuring enabled the company to expand its product and service offerings while maintaining its community-focused mission. In the early 2000s, the company opened additional branch locations in the surrounding counties, responding to customer demand and providing greater access to banking services across the region.
A significant milestone for the company came in 2008 when it established Greene County Commercial Bank, a wholly-owned subsidiary focused on serving the financial needs of local municipalities and government entities. This specialized division has since become an important driver of the company's growth, leveraging its deep relationships with public sector clients.
Throughout its history, Greene County Bancorp has navigated various economic challenges, including the Great Recession of 2008-2009. The company's conservative underwriting practices and diversified revenue streams allowed it to weather the storm and emerge as a stronger, more resilient institution. Today, the company operates a network of 18 full-service offices, lending centers, an operations center, a customer call center, and a wealth management center throughout the Hudson Valley and Capital District regions, serving both commercial and retail customers with a broad array of banking products and services.
Financials
Financial Performance and Ratios Greene County Bancorp has consistently delivered solid financial results, even in the face of challenging economic conditions. As of the fiscal year ended June 30, 2024, the company reported net income of $24.8 million, or $1.45 per basic and diluted share, compared to $30.8 million, or $1.81 per basic and diluted share, in the prior fiscal year. This decrease in net income was primarily attributed to a rise in interest expense, driven by the higher interest rate environment.
The company's financial ratios paint a picture of a well-capitalized and efficiently run institution. As of December 31, 2024, Greene County Bancorp reported a Tier 1 risk-based capital ratio of 16.00% and a total risk-based capital ratio of 17.30%, well above the regulatory requirements for being considered "well-capitalized." Additionally, the company's net interest margin stood at 2.04% for the six months ended December 31, 2024, reflecting its ability to effectively manage its interest rate risk and maintain a strong net interest income.
For the most recent fiscal year, Greene County Bancorp reported annual revenue of $64.89 million, annual net income of $24.77 million, annual operating cash flow of $24.91 million, and annual free cash flow of $23.40 million.
In the quarter ended December 31, 2024, GCBC reported revenue of $17.94 million and net income of $7.49 million. This represents a 29.8% increase in revenue and a 31.3% increase in net income compared to the same quarter a year ago. The increase in revenue and net income was primarily due to increases in interest income on loans and securities as a result of rising interest rates.
Lending and Deposit Portfolio
Greene County Bancorp's loan portfolio is primarily composed of commercial real estate loans, which accounted for 63.40% of the total loan portfolio as of December 31, 2024. The company's residential real estate loans and commercial loans made up 27.00% and 7.30% of the portfolio, respectively. The bank's lending strategy focuses on building relationships with local businesses and individuals, providing tailored financing solutions to meet their evolving needs.
The commercial real estate loan portfolio is further diversified across various property types, including non-owner occupied multi-family loans (26.6%), retail plaza (10.6%), mixed-use real estate (9.9%), construction (7.5%), and office buildings (6.9%), among others. Home equity, consumer, and commercial loans account for the remaining 9.3% of the total loan portfolio.
Greene County Bancorp maintains a conservative underwriting approach, avoiding sub-prime lending or exotic loan products. The company regularly obtains updated appraisals on loans when there are indications of potential changes in the borrower's ability to repay. The allowance for credit losses (ACL) on loans was 1.30% of total loans as of December 31, 2024, up slightly from 1.28% at June 30, 2024, reflecting an increase in loan volume and updated economic forecasts. Non-accrual loans represented 0.26% of total loans at the end of the quarter.
On the deposit side, the company has cultivated a diverse customer base, with a mix of retail, business, and municipal deposits. As of December 31, 2024, Greene County Bancorp reported total deposits of $2.47 billion, an increase of 3.30% from the prior year-end. The deposit base is well-diversified, with 74.4% in NOW accounts, 10.1% in savings deposits, 7.2% in certificates of deposit, and 4.5% in noninterest-bearing deposits. The company also has a significant concentration of municipal deposits, which accounted for 45.4% of total deposits as of December 31, 2024.
Uninsured deposits, excluding affiliate and collateralized deposits, represented 12.2% of total deposits at the end of the quarter. The bank's strong deposit franchise, combined with its prudent lending practices, has enabled it to maintain a healthy liquidity position and support its ongoing growth initiatives.
Securities Portfolio
Greene County Bancorp's securities portfolio totaled $1.15 billion as of December 31, 2024, comprising 67.3% held-to-maturity and 32.7% available-for-sale securities. The held-to-maturity portfolio is primarily invested in state and political subdivision securities (40.0%), mortgage-backed securities (23.0%), and U.S. Treasury securities (2.1%). The available-for-sale portfolio is diversified across state and political subdivision securities (19.4%), mortgage-backed securities (9.2%), and U.S. Treasury securities (1.5%), among others.
The company did not record any allowance for credit losses on the available-for-sale securities, as the portfolio is composed of high-quality, investment-grade securities. However, the held-to-maturity portfolio had an allowance for credit losses of $439,000 as of December 31, 2024, down from $483,000 at June 30, 2024.
Liquidity
Greene County Bancorp's strong deposit base and prudent lending practices have contributed to its robust liquidity position. The company's diverse funding sources, including retail and business deposits, as well as its relationships with local municipalities, provide a stable foundation for its operations. This strong liquidity position allows the bank to meet its financial obligations, support lending activities, and pursue growth opportunities as they arise.
As of December 31, 2024, GCBC had a debt-to-equity ratio of 0.86. The company had $166.44 million in cash and cash equivalents. GCBC also had $305.60 million in available unused lines of credit, including $194.10 million in short-term borrowings from the Federal Home Loan Bank and $19.40 million available at the Federal Reserve Bank discount window.
The company's current ratio was 9.95 and quick ratio was also 9.95 as of December 31, 2024, indicating very strong liquidity. Greene County Bancorp maintains $329.4 million in immediately available liquidity, providing 109.9% coverage of uninsured deposits.
Navigating Challenges and Opportunities
Greene County Bancorp has demonstrated its ability to navigate through various economic and industry challenges. During the COVID-19 pandemic, the company quickly adapted its operations to ensure the continued delivery of essential banking services to its customers, while also providing loan modification and deferment programs to support those impacted by the crisis.
The company has also been proactive in addressing the impact of rising interest rates on its profitability. By closely monitoring its asset-liability management and strategically adjusting its deposit and lending rates, Greene County Bancorp has been able to mitigate the compression of its net interest margin and maintain its strong financial performance.
Looking ahead, the company is well-positioned to capitalize on the growth opportunities within its regional markets. The bank's ongoing investment in technology and digital banking solutions is enhancing its ability to serve its customers more efficiently and effectively, while also attracting new clientele. Additionally, the company's focus on commercial lending and its specialized municipal banking offerings continue to be key drivers of its success.
Shareholder Returns and Dividends
Greene County Bancorp has a longstanding history of rewarding its shareholders through consistent dividend payments. The company recently announced a quarterly cash dividend of $0.09 per share, reflecting an annual dividend rate of $0.36 per share. This represents a 12.5% increase from the previous annual dividend of $0.32 per share, further demonstrating the company's commitment to creating value for its shareholders.
Geographic Markets
Greene County Bancorp operates primarily in the Hudson Valley and Capital District Regions of New York State. The company does not have significant operations or sales outside of this local market area. This focused geographic strategy allows GCBC to maintain deep relationships with local customers and tailor its services to meet the specific needs of the communities it serves.
Conclusion
Greene County Bancorp's story is one of resilience, adaptability, and unwavering dedication to its local communities. As a well-capitalized and efficiently run community bank, the company has navigated various economic challenges, consistently delivering solid financial results and creating value for its shareholders. With a robust lending portfolio, a strong deposit base, and a focus on digital transformation, Greene County Bancorp is poised to continue its growth trajectory and capitalize on the evolving needs of its customers in the Hudson Valley and Capital District regions of New York.
The company's conservative approach to risk management, diversified loan and securities portfolios, and strong liquidity position provide a solid foundation for future growth. As Greene County Bancorp continues to leverage its deep local relationships and adapt to changing market conditions, it remains well-positioned to maintain its status as a leading community bank in its region.