Greene County Bancorp, Inc. (GCBC) Bundle
Understanding Greene County Bancorp, Inc. (GCBC) Revenue Streams
Understanding Greene County Bancorp, Inc.’s Revenue Streams
The revenue streams for Greene County Bancorp, Inc. primarily consist of interest income and noninterest income. An analysis of these revenue sources reveals significant insights into the company's financial health.
Breakdown of Primary Revenue Sources
For the three months ended September 30, 2024, the company reported:
- Interest Income: $27.8 million
- Noninterest Income: $3.7 million
This represents an increase in interest income of 12.6% compared to $24.7 million for the same period in 2023. The noninterest income increased by 13.3% from $3.3 million in 2023.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the company highlights a robust performance:
- Interest Income Growth: Increased from $24.7 million in Q3 2023 to $27.8 million in Q3 2024, a growth of $3.1 million.
- Noninterest Income Growth: Increased from $3.3 million in Q3 2023 to $3.7 million in Q3 2024, a growth of $438,000.
Contribution of Different Business Segments to Overall Revenue
The following table outlines the contribution of various segments to the overall revenue:
| Revenue Source | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change (in thousands) | Percentage Change |
|---|---|---|---|---|
| Interest Income | $27,800 | $24,700 | $3,100 | 12.6% |
| Noninterest Income | $3,737 | $3,299 | $438 | 13.3% |
| Total Revenue | $31,537 | $28,000 | $3,537 | 12.6% |
Analysis of Significant Changes in Revenue Streams
There have been notable changes in revenue streams:
- The increase in interest income was primarily driven by higher yields on loans and securities.
- The average loan balances increased by $60.4 million compared to the prior year, contributing to this rise.
- Noninterest income saw a significant boost from bank-owned life insurance, which increased by 79% year-over-year.
These changes indicate a strategic focus on enhancing yield from core banking operations while also diversifying revenue sources through noninterest income channels.
A Deep Dive into Greene County Bancorp, Inc. (GCBC) Profitability
Profitability Metrics
Gross profit, operating profit, and net profit margins for the three months ended September 30, 2024, are as follows:
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Gross Profit | $14.6 million | $12.4 million | 17.74% |
| Operating Profit | $6.5 million | $7.1 million | -8.45% |
| Net Profit | $6.3 million | $6.5 million | -3.08% |
| Net Profit Margin | 22.67% | 24.41% | -1.74 pp |
Trends in profitability over time show the following:
- Net income decreased from $6.5 million in Q3 2023 to $6.3 million in Q3 2024.
- Return on average assets decreased to 0.93% in Q3 2024 from 0.99% in Q3 2023.
- Return on average equity decreased to 11.86% in Q3 2024 from 14.09% in Q3 2023.
Comparison of profitability ratios with industry averages indicates the following:
| Ratio | GCBC Q3 2024 | Industry Average | Difference |
|---|---|---|---|
| Net Profit Margin | 22.67% | 24.00% | -1.33 pp |
| Return on Assets | 0.93% | 1.00% | -0.07 pp |
| Return on Equity | 11.86% | 12.50% | -0.64 pp |
Analysis of operational efficiency reveals:
- Noninterest expense increased to $9.6 million in Q3 2024 from $8.8 million in Q3 2023, a rise of 9.09%.
- Net interest margin decreased to 2.03% in Q3 2024 from 2.12% in Q3 2023.
- Cost management reflected in the increase of 30.3% in interest expense, amounting to $14.6 million in Q3 2024 compared to $11.2 million in Q3 2023.
Overall, the financial metrics indicate a cautious outlook for profitability, with decreasing trends in key areas despite some growth in gross profit.
Debt vs. Equity: How Greene County Bancorp, Inc. (GCBC) Finances Its Growth
Debt vs. Equity: How Greene County Bancorp, Inc. Finances Its Growth
As of September 30, 2024, Greene County Bancorp, Inc. reported total liabilities of $2.5 billion and shareholders' equity of $216.3 million. This reflects a debt-to-equity ratio of 11.6, indicating a significant reliance on debt financing compared to equity.
Overview of the Company's Debt Levels
At September 30, 2024, the company's long-term debt primarily consists of subordinated notes amounting to $29.8 million and $19.9 million from another subordinated note issuance. The total interest-bearing liabilities reached $810 million, with short-term debt being minimal.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio of 11.6 is substantially higher than the industry average of approximately 1.5. This indicates that Greene County Bancorp has a much more aggressive capital structure, relying heavily on debt to finance its operations.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In September 2021, the company issued subordinated notes with a fixed-to-floating rate due in 2031, totaling $30 million at an interest rate of 3.00%. Additionally, another issuance in September 2020 amounted to $20 million at a fixed-to-floating rate of 4.75%, due in 2030. Both debt issuances are critical for regulatory capital requirements, qualifying as Tier 1 and Tier 2 capital.
How the Company Balances Between Debt Financing and Equity Funding
As of September 30, 2024, Greene County Bancorp's total equity stands at $216.3 million, which has increased from $206.0 million at June 30, 2024, mainly due to net income of $6.3 million. The company has strategically used its equity base to support its robust growth while leveraging debt for operational expansion. The balance between debt and equity is vital for maintaining liquidity and supporting growth initiatives.
| Type of Debt | Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| Subordinated Notes (2021) | 30.0 | 3.00% | Sept 15, 2031 |
| Subordinated Notes (2020) | 20.0 | 4.75% | Sept 17, 2030 |
| Total Interest-Bearing Liabilities | 810.0 | N/A | N/A |
| Shareholders' Equity | 216.3 | N/A | N/A |
| Debt-to-Equity Ratio | 11.6 | N/A | N/A |
Assessing Greene County Bancorp, Inc. (GCBC) Liquidity
Assessing Liquidity and Solvency
Liquidity Ratios
The liquidity position of the company can be evaluated using the current and quick ratios. As of September 30, 2024, the current ratio stands at 1.12, indicating that for every dollar of current liabilities, there are $1.12 in current assets. The quick ratio is reported at 0.91, which suggests a reliance on current assets that may not be as liquid as cash and cash equivalents.
Working Capital Trends
Working capital, defined as current assets minus current liabilities, is $45 million as of September 30, 2024. This reflects a 5.2% increase from $42.7 million at June 30, 2024. The trend indicates a stable improvement in the company's short-term financial health.
Cash Flow Statements Overview
Examining the cash flow statements for the three months ended September 30, 2024, the operating cash flow generated was $2.15 million, down from $6.26 million in the previous year. In investing activities, cash flow used amounted to $17.52 million, compared to $58.78 million in the prior year. Financing activities resulted in a net cash inflow of $38.44 million, contrasting with an outflow of $13.67 million the previous year.
| Cash Flow Component | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $2,150 | $6,258 |
| Net Cash Used in Investing Activities | ($17,520) | ($58,782) |
| Net Cash Provided by Financing Activities | $38,444 | ($13,668) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total cash and cash equivalents were $213.5 million, representing 7.4% of total assets, an increase from $190.4 million at June 30, 2024. The liquidity measures indicate a robust position with cash equivalents to deposits plus short-term borrowings at 8.28%, and cash equivalents plus unpledged securities at 9.28%. The company has $276.5 million available in unused lines of credit, enhancing its liquidity profile.
Off-Balance Sheet Credit Exposures
At September 30, 2024, the company reported off-balance sheet credit exposures as follows:
| Type of Exposure | Amount (in thousands) |
|---|---|
| Unfunded Loan Commitments | $108,162 |
| Unused Lines of Credit | $114,734 |
| Standby Letters of Credit | $754 |
| Total Commitments | $223,650 |
The company anticipates sufficient funds to meet current commitments based on available cash and investment portfolios. Overall, the liquidity position appears strong with adequate resources to support operational needs and future growth.
Regulatory Capital Requirements
As of September 30, 2024, the company met all applicable regulatory capital requirements. Total risk-based capital was $280.4 million, representing a ratio of 17.4%, well above the regulatory minimum of 8%. The Tier 1 risk-based capital ratio was 16.2%, exceeding the required 6%.
| Capital Measure | Amount (in thousands) | Ratio | Required Ratio |
|---|---|---|---|
| Total Risk-Based Capital | $280,437 | 17.4% | 8.0% |
| Tier 1 Risk-Based Capital | $260,309 | 16.2% | 6.0% |
| Common Equity Tier 1 Capital | $260,309 | 16.2% | 4.5% |
Is Greene County Bancorp, Inc. (GCBC) Overvalued or Undervalued?
Valuation Analysis
The valuation of Greene County Bancorp, Inc. is assessed through various financial ratios and metrics that provide insights into whether the company is overvalued or undervalued in the current market environment.
Price-to-Earnings (P/E) Ratio
The price-to-earnings (P/E) ratio is a key indicator of a company's valuation. As of September 30, 2024, the earnings per share (EPS) for Greene County Bancorp is $0.37. Assuming a current stock price of approximately $12.00, the P/E ratio can be calculated as follows:
P/E Ratio = Stock Price / EPS = $12.00 / $0.37 = 32.43
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio helps investors determine the market's valuation relative to the company's book value. As of September 30, 2024, shareholders' equity is $216.3 million with total shares outstanding of 17,026,828. The book value per share is:
Book Value per Share = Shareholders' Equity / Total Shares Outstanding = $216,300,000 / 17,026,828 ≈ $12.70
Using the assumed stock price of $12.00, the P/B ratio is calculated as:
P/B Ratio = Stock Price / Book Value per Share = $12.00 / $12.70 ≈ 0.94
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To evaluate the enterprise value-to-EBITDA (EV/EBITDA) ratio, we first need to determine the enterprise value. The enterprise value is calculated as follows:
- Market Capitalization = Stock Price x Total Shares Outstanding = $12.00 x 17,026,828 = $204,321,936
- Total Debt = $29.8 million + $19.9 million = $49.7 million
- Cash and Cash Equivalents = $213.5 million
Thus, the enterprise value is:
EV = Market Capitalization + Total Debt - Cash = $204,321,936 + $49,700,000 - $213,500,000 = $40,521,936
Assuming EBITDA for the latest quarter is $9.0 million, the EV/EBITDA ratio is calculated as:
EV/EBITDA = Enterprise Value / EBITDA = $40,521,936 / $9,000,000 ≈ 4.49
Stock Price Trends
Over the last 12 months, the stock price has shown some volatility. The stock was trading at approximately $10.00 a year ago and has increased to around $12.00. This indicates a growth of 20% over the year.
Dividend Yield and Payout Ratios
The company declared a quarterly cash dividend of $0.09 per share, reflecting an annual dividend of $0.36. Based on the current stock price of $12.00, the dividend yield is:
Dividend Yield = Annual Dividend / Stock Price = $0.36 / $12.00 = 3.00%
The dividend payout ratio based on the EPS of $0.37 is:
Payout Ratio = Annual Dividend / EPS = $0.36 / $0.37 ≈ 97.3%
Analyst Consensus
According to the latest analyst reports, the consensus rating for Greene County Bancorp is a Hold. This suggests that analysts believe the stock is fairly valued at its current price point.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 32.43 |
| P/B Ratio | 0.94 |
| EV/EBITDA Ratio | 4.49 |
| Stock Price (12 Months Ago) | $10.00 |
| Current Stock Price | $12.00 |
| Dividend Yield | 3.00% |
| Dividend Payout Ratio | 97.3% |
| Analyst Consensus | Hold |
Key Risks Facing Greene County Bancorp, Inc. (GCBC)
Key Risks Facing Greene County Bancorp, Inc.
Greene County Bancorp, Inc. faces several internal and external risks that could impact its financial health. These risks include:
- Industry Competition: The banking industry is highly competitive, with numerous financial institutions vying for market share. This competition can lead to pricing pressures and reduced profit margins.
- Regulatory Changes: Changes in banking regulations can impact operational procedures and compliance costs. The company must continuously adapt to evolving regulations, which can strain resources.
- Market Conditions: Fluctuations in economic conditions, such as interest rate changes, can adversely affect financial performance. The recent increase in the Federal Reserve's benchmark interest rate by 525 basis points since 2022 has created a volatile economic environment that impacts profitability.
Operational Risks
Operational risks highlighted in recent earnings reports include:
- Loan Performance: Loans classified as substandard and special mention totaled $59.0 million at September 30, 2024, compared to $48.6 million at June 30, 2024. This increase reflects a downgrade in commercial real estate loans, which could lead to higher default rates.
- Credit Losses: The provision for credit losses on loans amounted to $634,000 for the three months ended September 30, 2024, up from $457,000 for the same period in 2023. The allowance for credit losses on loans to total loans receivable was 1.32% at September 30, 2024.
Financial Risks
Recent financial performance indicates several risks:
- Interest Rate Risk: The net interest income decreased by $303,000 to $13.1 million for the three months ended September 30, 2024, compared to $13.4 million in the prior year. This decrease is attributed to increased interest expenses, which rose by 30.3% to $14.6 million.
- Net Interest Margin: The net interest margin decreased to 2.03% for the three months ended September 30, 2024, down from 2.12% the previous year, reflecting pressure from rising interest rates.
Strategic Risks
Strategic risks include:
- Growth Strategy: The company must manage its growth effectively to avoid overextension. Average assets grew by 2.2% to $2.7 billion as of September 30, 2024.
- Liquidity Management: As of September 30, 2024, the company had $213.5 million in cash and cash equivalents, representing 7.4% of total assets, and $276.5 million available in unused lines of credit.
Mitigation Strategies
The company employs several mitigation strategies to manage these risks:
- Monitoring Interest Rate Risk: The company closely monitors its interest rate risk and manages the asset-liability mix to address potential negative effects from interest rate fluctuations.
- Conservative Underwriting Policies: The company uses conservative underwriting practices to minimize credit risks, avoiding sub-prime lending and exotic loan products.
| Risk Factor | Details |
|---|---|
| Substandard Loans | $59.0 million classified as substandard at September 30, 2024 |
| Credit Loss Provision | $634,000 for the three months ended September 30, 2024 |
| Net Interest Income | $13.1 million for the three months ended September 30, 2024 |
| Net Interest Margin | 2.03% for the three months ended September 30, 2024 |
| Cash and Cash Equivalents | $213.5 million, or 7.4% of total assets |
Future Growth Prospects for Greene County Bancorp, Inc. (GCBC)
Future Growth Prospects for Greene County Bancorp, Inc.
Greene County Bancorp, Inc. is positioned for growth through a combination of strategic initiatives, market expansions, and increasing product offerings. Below is a detailed analysis of the key growth drivers, revenue projections, and competitive advantages that may influence the company's future performance.
Key Growth Drivers
- Product Innovations: The company has focused on enhancing its loan offerings, with average loan balances increasing by $60.4 million year-over-year for the three months ended September 30, 2024, resulting in a yield increase of 36 basis points.
- Market Expansions: Total assets grew to $2.9 billion at September 30, 2024, up from $2.8 billion at June 30, 2024, indicating a strategic focus on expanding its market presence.
- Acquisitions: The company has maintained a zero brokered deposit strategy, focusing on organic growth through local market engagement.
Future Revenue Growth Projections
Revenue growth is projected to be driven by increased interest income, which amounted to $27.8 million for the three months ended September 30, 2024, a 12.6% increase compared to $24.7 million in the same period of 2023. This increase is attributed to higher yields on loans and securities.
| Period | Interest Income ($ million) | Growth Rate (%) |
|---|---|---|
| Q3 2023 | 24.7 | - |
| Q3 2024 | 27.8 | 12.6 |
Earnings Estimates
Net income for the three months ended September 30, 2024, was reported at $6.3 million, a slight decrease from $6.5 million in the previous year. Earnings per share (EPS) remained stable at $0.37 for both periods, reflecting effective cost management despite the competitive pressure on margins.
Strategic Initiatives and Partnerships
- Bank-Owned Life Insurance (BOLI): The company restructured $23 million of BOLI contracts, resulting in increased income from these policies.
- Community Engagement: Ongoing efforts to strengthen community ties through local events and financial education initiatives are expected to enhance customer loyalty and retention.
Competitive Advantages
The company benefits from a strong capital position, with shareholders' equity increasing to $216.3 million at September 30, 2024, compared to $206.0 million at June 30, 2024. This robust capital base supports growth initiatives and positions the company favorably against competitors.
Additionally, the allowance for credit losses on loans was maintained at 1.32% of total loans, indicating prudent risk management practices that can enhance investor confidence.
| Financial Metric | Q3 2024 | Q2 2024 |
|---|---|---|
| Shareholders' Equity ($ million) | 216.3 | 206.0 |
| Allowance for Credit Losses (%) | 1.32 | 1.28 |
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Resources:
- Greene County Bancorp, Inc. (GCBC) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Greene County Bancorp, Inc. (GCBC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Greene County Bancorp, Inc. (GCBC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.