Greene County Bancorp, Inc. Announces Earnings

Greene County Bancorp, Inc. (the “Company”) (NASDAQ:GCBC), the holding company for The Bank of Greene County and its subsidiary Greene County Commercial Bank, today reported net income for the nine months and quarter ended March 31, 2010. Net income for the nine months ended March 31, 2010 amounted to $3.6 million or $0.88 per basic and diluted share as compared to $3.0 million or $0.73 per basic and diluted share for the nine months ended March 31, 2009, an increase of $629,000, or 21.0%. Net income amounted to $1.2 million for the quarters ended March 31, 2010 and 2009, or $0.30 per basic and diluted share and $0.28 per basic and diluted share for the quarters ended March 31, 2010 and 2009, respectively.

Donald E. Gibson, President and CEO said, “Greene County Bancorp’s third quarter financial performance is among the best in the Company’s history, and reflects the continued progress toward achieving our long-term strategic goals, and has strengthened an already solid foundation for growth.”

The most significant factor contributing to the higher earnings was higher net interest income, which increased to $13.2 million for the nine months ended March 31, 2010 as compared to $11.6 million for the nine months ended March 31, 2009, an increase of $1.6 million or 13.8%. Net interest income increased to $4.6 million for the quarter ended March 31, 2010 as compared to $3.9 million for the quarter ended March 31, 2009, an increase of $670,000 or 17.0%. Net interest rate spread increased 16 basis points to 3.72% for the nine months ended March 31, 2010 as compared to 3.56% for the nine months ended March 31, 2009. Net interest rate spread increased 43 basis points to 3.90% for the quarter ended March 31, 2010 as compared to 3.47% for the quarter ended March 31, 2009. Net interest margin increased 8 basis points to 3.92% for the nine months ended March 31, 2010 as compared to 3.84% for the nine months ended March 31, 2009. Net interest margin increased 36 basis points to 4.09% for the quarter ended March 31, 2010 as compared to 3.73% for the quarter ended March 31, 2009. The increases in net interest spread and net interest margin were primarily due to the continued decline in the rates paid on deposits, partially offset by purchases of securities at lower yields. The increase in average balances, along with the widening of the net interest spread and net interest margin led to an increase in net interest income when comparing the nine months and quarters ended March 31, 2010 and 2009.

Management continues to closely monitor asset quality and adjust the level of the allowance for loan losses when necessary. The amount recognized for the provision for loan losses is determined by management based on its ongoing analysis of the adequacy of the allowance for loan losses. During the nine months and quarters ended March 31, 2010 and 2009, the Company increased the level of allowance for loan losses due to an increase in the amount of nonperforming assets and loan charge-offs resulting from a decline in the overall economy, and an increase in local unemployment. As a result, the provision for loan losses amounted to $984,000 and $1.8 million for the nine months ended March 31, 2010 and 2009, respectively, a decrease of $780,000 or 44.2%. The provision for loan losses amounted to $307,000 and $1.2 million for the quarters ended March 31, 2010 and 2009, respectively, a decrease of $844,000. Continued increases in non-performing assets and loan charge-offs has resulted in an increase in the level of allowance for loan losses to total loans receivable to 1.33% as of March 31, 2010 as compared to 1.23% as of March 31, 2009. Nonperforming loans amounted to $3.1 million and $1.7 million at March 31, 2010 and 2009, respectively, an increase of $1.4 million or 82.3%. Net charge-offs amounted to $540,000 and $372,000 for the nine months ended March 31, 2010 and 2009, respectively, an increase of $168,000.

Noninterest income decreased $1.4 million and $1.6 million when comparing the nine months and quarters ended March 31, 2010 and 2009, respectively. Noninterest income amounted to $3.5 million and $1.1 million for the nine months and quarter ended March 31, 2010, respectively. Noninterest income for the nine months and quarter ended March 31, 2009 reflected a one-time cash payment of $1.7 million received from TransFirst LLC. This payment was the result of The Bank of Greene County transferring its merchant bank card processing business to TransFirst LLC. Also reflected in noninterest income for the nine months ended March 31, 2009 was an impairment charge of $221,000 ($135,000 net of tax) related to the other-than-temporary impairment of a Lehman Brothers Holdings, Inc. debt security held by the Company. Excluding these nonrecurring items, noninterest income increased $20,000 when comparing the nine months ended March 31, 2010 and 2009, and increased $30,000 when comparing the quarters ended March 31, 2010 and 2009. Debit card fees increased $124,000 and $49,000 when comparing the nine months and quarters ended March 31, 2010 and 2009, respectively, as a result of a higher volume of transactions due to growth in the number of checking accounts with debit cards. E-commerce fee income decreased $103,000 and $26,000 when comparing the nine months and quarters ended March 31, 2010 and 2009, respectively, as a result of the transfer of the Company’s merchant bank card processing business to TransFirst LLC during fiscal 2009.

Noninterest expense increased $218,000 or 2.2% to $10.2 million for the nine months ended March 31, 2010 as compared to $10.0 million for the nine months ended March 31, 2009. Noninterest expense was flat at $3.5 million for the quarters ended March 31, 2010 and 2009. The increase for the nine months ended March 31, 2010 was primarily the result of an increase in FDIC insurance premium expense due to both higher deposit balances and an increase in the rates assessed against the deposits, as well as higher compensation and depreciation due to the opening of the new Ravena branch in January 2009. The Company also has increased staffing as a result of the creation of a new customer service call center and expansion of the marketing department. Partially offsetting the increase for the nine months ended March 31, 2010, was a decrease in pension expense. During the nine months ended March 31, 2009, the Company accrued $351,000 toward the expected future termination of its currently frozen defined benefit plan. The defined benefit pension plan was transferred to a single-employer plan from the previously existing multi-employer plan during the fourth quarter of the fiscal year ended June 30, 2009. As a result, pension expense decreased by $345,000 for the nine months ended March 31, 2010 when compared to the nine months ended March 31, 2009.

Total assets grew $18.4 million or 4.0% to $478.9 million at March 31, 2010 as compared to $460.5 million at June 30, 2009. Net loans increased $20.1 million or 7.5% to $288.0 million at March 31, 2010 as compared to $267.9 million at June 30, 2009. Cash and cash equivalents increased $15.0 million or 159.6% to $24.4 million at March 31, 2010 as compared to $9.4 million at June 30, 2009. Securities classified as both available for sale and held to maturity decreased $17.6 million to $144.0 million at March 31, 2010 as compared to $161.6 million at June 30, 2009, as a result of maturities, sales and principal paydowns of $27.9 million, partially offset by purchases of $10.5 million. Deposits grew $17.2 million to $415.9 million at March 31, 2010 as compared to $398.7 million at June 30, 2009. Total shareholders’ equity amounted to $43.5 million at March 31, 2010, or 9.1% of total assets compared to $40.3 million at June 30, 2009, or 8.5% of total assets.

Headquartered in Catskill, New York, the Company provides full-service community-based banking in its eleven branch offices located in Greene, Columbia and Albany Counties. Customers are offered 24-hour services through ATM network systems, an automated telephone banking system and Internet Banking through its web site at http://www.tbogc.com.

This press release contains statements about future events that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, general economic conditions, changes in interest rates, regulatory considerations, competition, technological developments, retention and recruitment of qualified personnel, and market acceptance of the Company’s pricing, products and services.

At or for the Nine At or for the Three
Months Ended March 31, Months Ended March 31,
2010 2009 2010 2009
Dollars In thousands,

except share and per share data

Interest income $ 17,283 $ 16,824 $ 5,897 $ 5,686
Interest expense 4,082 5,184 1,283 1,742
Net interest income 13,201 11,640 4,614 3,944
Provision for loan losses 984 1,764 307 1,151
Noninterest income 3,526 4,935 1,086 2,706
Noninterest expense 10,218 10,000 3,531 3,487
Income before taxes 5,525 4,811 1,862 2,012
Tax provision 1,899 1,814 636 856
Net Income $ 3,626 $ 2,997 $ 1,226 $ 1,156
Basic EPS $ 0.88 $ 0.73 $ 0.30 $ 0.28

Weighted average

shares outstanding

4,110,014

4,100,072

4,116,779

4,104,119

Diluted EPS $ 0.88 $ 0.73 $ 0.30 $ 0.28
Weighted average

diluted shares outstanding

4,135,000

4,119,973

4,137,447

4,121,186

Dividends declared per share1 $ 0.51 $ 0.51 $ 0.17 $ 0.17
Selected Financial Ratios
Return on average assets2 1.03 % 0.94 % 1.03 % 1.04 %
Return on average equity2 11.53 % 10.69 % 11.40 % 11.98 %
Net interest rate spread2 3.72 % 3.56 % 3.90 % 3.47 %
Net interest margin2 3.92 % 3.84 % 4.09 % 3.73 %
Non-performing assets

to total assets

0.67

%

0.40

%

Non-performing loans

to total loans

1.09

%

0.65

%

Allowance for loan losses to

non-performing loans

123.21

%

189.38

%

Allowance for loan losses to

total loans

1.33

%

1.23

%

Shareholders’ equity to total assets 9.08 % 8.52 %
Dividend payout ratio1 57.95 % 69.86 %
Book value per share $ 10.56 $ 9.52

1Greene County Bancorp, MHC, the owner of 56.0% of the shares issued by the Company, waived its right to receive the dividends. No adjustment has been made to account for this waiver.

2Annualized

As of March 31, 2010 As of June 30, 2009
Dollars In thousands, except share data
Assets
Total cash and cash equivalents $ 24,368 $ 9,443
Long term certificate of deposit 1,000 1,000
Securities- available for sale, at fair value 83,406 98,271
Securities- held to maturity, at amortized cost 60,643 63,336
Federal Home Loan Bank stock, at cost 1,405 1,495
Gross loans receivable 291,397 271,001
Less: Allowance for loan losses (3,865 ) (3,420 )
Unearned origination fees and costs, net 439 321
Net loans receivable 287,971 267,902
Premises and equipment 14,932 15,274
Accrued interest receivable 2,733 2,448
Prepaid expenses and other assets 2,421 1,152
Foreclosed real estate 65 215
Total Assets $ 478,944 $ 460,536
Liabilities and shareholders’ equity
Noninterest bearing deposits $ 40,488 $ 39,772
Interest bearing deposits 375,439 358,957
Total deposits 415,927 398,729
Borrowings from FHLB, long term 17,000 19,000
Accrued expenses and other liabilities 2,516 2,543
Total liabilities 435,443 420,272
Total shareholders’ equity 43,501 40,264
Total liabilities and shareholders’ equity $ 478,944 $ 460,536
Common shares outstanding 4,118,912 4,105,312
Treasury shares 186,758 200,358

Contacts:

Greene County Bancorp, Inc.
Donald Gibson, President and CEO
Michelle Plummer, Executive Vice President, CFO & COO
518-943-2600
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