Greene County Bancorp, Inc. Announces Higher Quarterly Earnings

Business Wire, Oct 24, 2008

CATSKILL, N.Y. -- 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 quarter ended September 30, 2008, which is the Company's first quarter of the fiscal year ending June 30, 2009. Net income for the quarter ended September 30, 2008 amounted to $809,000 or $0.20 per basic and diluted share as compared to $569,000 or $0.14 per basic and diluted share for the quarter ended September 30, 2007, an increase of $240,000, or 42.2%.

Donald Gibson, President and CEO, said "We are proud to report the last quarter was a successful one for Greene County Bancorp, Inc. despite the difficult economic times that have challenged our industry and the nation."

The most significant contributor to the improved earnings was higher net interest income, which increased $958,000 or 34.7% over the same quarter the prior year. Net interest income increased to $3.72 million for the quarter ended September 30, 2008 as compared to $2.76 million for the quarter ended September 30, 2007. Net interest rate spread increased 66 basis points to 3.66% for the quarter ended September 30, 2008 as compared to 3.00% for the quarter ended September 30, 2007. Net interest margin increased 44 basis points to 3.98% for the quarter ended September 30, 2008 as compared to 3.54% for the quarter ended September 30, 2007.

Noninterest income also contributed to enhanced earnings in the quarter ended September 30, 2008 by increasing $171,000 or 15.6% over the same quarter the prior year. Noninterest income increased to $1.27 million for the quarter ended September 30, 2008 as compared to $1.10 million for the quarter ended September 30, 2007. The majority of the increase in noninterest income was from services fees on various accounts, including debit card fees.

Noninterest expense increased $676,000 or 23.3% to $3.58 million for the quarter ended September 30, 2008 as compared to $2.91 million for the quarter ended September 30, 2007. One factor that affected noninterest expense was the other-than-temporary impairment associated with the bankruptcy filing of Lehman Brothers Holdings, Inc. ("Lehman"). The Company recorded an other-than-temporary impairment of $220,000 ($135,000 net of tax) on a Lehman debt security held by the Company. The Company also allocated $351,000 toward the expected future termination of its currently frozen defined benefit plan during the quarter ended September 30, 2008. Additional expenses such as compensation and depreciation due to the new Chatham branch which opened in January 2008 also contributed to the higher noninterest expense.

Total assets grew $59.0 million or 15.5% to $438.6 million at September 30, 2008 as compared to $379.6 million at June 30, 2008. Securities available for sale increased $41.5 million to $139.2 million at September 30, 2008 as compared to $97.7 million at June 30, 2008. Loans increased $14.4 million or 6.0% to $254.6 million at September 30, 2008 as compared to $240.1 million at June 30, 2008. Funding the growth in assets was primarily deposit growth of $52.1 million, or 16.2% to $373.6 million at September 30, 2008 as compared to $321.4 million at June 30, 2008. The Company has recently attracted new local municipalities including school districts to use the services of Greene County Commercial Bank, which is a special-purpose entity for such activities. Greene County Commercial Bank has sought core deposits from such entities rather than more expensive time accounts. The level of deposits held by such public entities can be cyclical and fluctuate significantly from quarter to quarter and are significantly dependent and affected by tax collection periods or special projects such as new buildings or renovations. These types of local municipal entities are also required to have certain forms of collateral pledged for amounts deposited over the FDIC insurance limits. Total shareholders' equity amounted to $36.7 million at September 30, 2008, or 8.4% of total assets.

Headquartered in Catskill, New York, the Company provides full-service community-based banking in its ten 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.