Greene County Bancorp, Inc. Announces Improved First Quarter Earnings for Fiscal 2003

Business Wire, Oct 31, 2002

Business Editors

CATSKILL, N.Y.--(BUSINESS WIRE)--Oct. 31, 2002

Greene County Bancorp, Inc. (the "Company") (NASDAQ: GCBC), the holding company for The Bank of Greene County (the "Bank"), today reported net income for the first fiscal quarter ended September 30, 2002 of $641,000, or $0.32 per basic and diluted share as compared to $344,000, or $0.17 per basic and diluted share for the first fiscal quarter ended September 30, 2001, an increase of $297,000, or 86.3%, or $0.15 per basic and diluted share.

Deposit and investment growth, as well as improved noninterest income including gains on the sale of REO property and recovery of a portion of a previously charged-off loan all contributed to the increase in net income.

Net interest income increased to $2,128,000 for the quarter ended September 30, 2002 from $1,739,000 for the quarter ended September 30, 2001, an increase of $389,000, or 22.4%. Net interest income was enhanced by growth in the loan and investment portfolios which was partially offset by reduced yield on such assets due to a lower interest rate environment. The deposit base also increased with the most significant increase in the average savings deposit category. This growth also was offset by reduced rates offered on such deposits due to a lower interest rate environment. These changes contributed to enhanced net interest spread and margin. Net interest spread improved to 3.81% for the fiscal quarter ended September 30, 2002 as compared to 3.56% for the fiscal quarter ended September 30, 2001. Net interest margin also improved to 3.96% for the quarterly period ended September 30, 2002, compared to 3.85% for the quarterly period ended September 30, 2001. The growth in assets was funded primarily through interest bearing deposit growth. Management understands that in a rising rate environment net interest margin and spread would more likely shrink than in a declining rate environment.

The provision for loan losses was reduced to zero for the quarter ended September 30, 2002 as compared to $30,000 for the quarter ended September 30, 2001. The decrease was a result of the receipt of a large recovery which met funding requirements for the allowance for the quarter ended September 30, 2002.

Noninterest income increased to $663,000 for the quarter ended September 30, 2002 from $352,000 for the quarter ended September 30, 2001, an increase of $311,000 or 88.4%. The most significant item affecting noninterest income was the increase in insufficient funds fees associated with the Carefree Overdraft Privilege product, which were $203,000 higher than the same quarter of the previous fiscal year. Other factors contributing to noninterest income were gains of $67,000 associated with sales of real estate owned during the quarter ended September 30, 2002.

Noninterest expense increased to $1,881,000 for the first fiscal quarter ended September 30, 2002 from $1,589,000 for the first fiscal quarter ended September 30, 2001, an increase of $292,000, or 18.4%. Expenses such as a commission paid to a consultant for helping set up the overdraft program and charge-offs of unrecoverable overdrawn amounts associated with the overdraft protection product contributed to the increase in other noninterest expense. Service and data processing fee increases were a result of increases in the volume of deposit and loan accounts being processed.

The effective tax rate increased to 29.5% for the quarter ended September 30, 2002, as compared to 27.3% for the quarter ended September 30, 2001 in anticipation of the effective rate required for the fiscal year ending June 30, 2003. A major reason for the change in effective rate is due to the expected change in the percentage of total income that municipal securities and other tax free investments are expected to contribute to total income during the fiscal year.

Total assets of the Company were $230.0 million at September 30, 2002 as compared to $220.2 million at June 30, 2002, an increase of $9.8 million, or 4.5%. Growth occurred most significantly in investments, which increased $6.5 million to $72.6 million at September 30, 2002 as compared to $66.1 million at June 30, 2002. This growth was funded by increases in interest bearing deposits, which increased $8.8 million to $170.4 million at September 30, 2002 as compared to $161.6 million at June 30, 2002.

The primary changes in equity included changes in retained earnings and accumulated comprehensive income. Retained earnings was affected by net income of $641,000 and offset by dividends paid of $286,000. Unrealized gains associated with investment securities caused accumulated other comprehensive income to increase by approximately $435,000. The change in other accumulated comprehensive income was a result of the change in the equity portion of marking to market the available-for-sale investment portfolio.

Headquartered in Catskill, New York, the Company provides full-service community based banking in its six branch offices located in Catskill, Cairo, Coxsackie, Greenville, Tannersville, and Westerlo. 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.thebankofgreenecounty.com.