Greene County Bancorp, Inc. :GCBC-US: Earnings Analysis: Q3, 2017 By the Numbers : May 31, 2017

Greene County Bancorp, Inc. reports financial results for the quarter ended March 31, 2017.

We analyze the earnings along side the following peers of Greene County Bancorp, Inc. – Pathfinder Bancorp Inc, Flushing Financial Corporation, Astoria Financial Corporation, TrustCo Bank Corp NY, Northwest Bancshares, Inc. and Lake Shore Bancorp, Inc. (PBHC-US, FFIC-US, AF-US, TRST-US, NWBI-US and LSBK-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 9.21 million, Net Earnings of USD 2.90 million.
  • Net interest income margins narrowed from 82.92% to 82.82% compared to the same period last year.
  • Net loan assets changed 23.02% compared to same period last year and 2.59% from previous period, total deposits changed 12.65% compared to same period last year and 9.05% from previous period.
  • Year-on-year change in operating cash flow of 44.67% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as from one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 9.21 9.34 8.64 8.43 7.97
Revenue Growth (%YOY) 15.5 15.52 12.23 13.38 11.68
Earnings (mil) 2.9 2.93 2.51 2.33 2.16
Earnings Growth (%YOY) 34.06 26.12 16.6 28.2 21.13
Net Margin (%) 31.46 31.32 29.03 27.66 27.1
EPS 0.34 0.34 0.3 0.27 0.25
Return on Equity (%) 14.55 15.12 13.31 12.67 12.03
Return on Assets (%) 1.23 1.28 1.13 1.08 1.05

Access our Ratings and Scores for Greene County Bancorp, Inc.

Market Share Versus Profits

Revenues History
Earnings History

GCBC-US‘s change in revenue this period compared to the same period last year of 15.50% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that GCBC-US is holding onto its market share. Also, for comparison purposes, revenues changed by -1.43% and earnings by -0.99% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s net interest income margins showed no year-on-year improvement. In spite of this, the earnings rose, influenced primarily by the increase in net interest income after provisions margins from 77.64% to 79.10%. Loan loss provisions as a percentage of net interest income were 4.50% this period, and 6.37% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (Qtr YOY)
Total Deposits Growth Rate History (Qtr YOY)

The firm’s decline in net interest income margins came despite the relative increase in the levels of net loan assets. In addition, total deposits as a percentage of equity went from 10.28% to 10.44%. On an absolute basis, net loan assets changed 23.02% compared to the same period last year and 2.59% from the previous period. Total deposits changed 12.65% compared to the same period last year and 9.05% from the previous period.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

GCBC-US‘s change in operating cash flow of 44.67% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating margins from 35.17% to 41.73% and (2) one-time items. The company’s pretax margins are now 41.73%, compared to 35.17% for the same period last year.

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for Greene County Bancorp, Inc.

Company Profile

Greene County Bancorp, Inc. operates as a bank holding company for Bank of Greene County. It attracts deposits from customers and invests in loans and securities. Its services include personal banking, checking accounts, savings accounts, loans, commercial lending, business accounts, municipal banking services and investment services. Greene County Bancorp was founded in December 1998 and is headquartered in Catskill, NY.

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