Greene County Bancorp, Inc. Announces Earnings

Business Wire, April 30, 2009

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 nine months and quarter ended March 31, 2009. Net income for the nine months ended March 31, 2009 amounted to $3.0 million or $0.73 per basic and diluted share as compared to $1.9 million or $0.45 per basic and diluted share for the nine months ended March 31, 2008, an increase of $1.1 million, or 57.9%. Net income for the quarter ended March 31, 2009 amounted to $1.2 million or $0.28 per basic and diluted share as compared to $684,000 or $0.17 per basic and $0.16 per diluted share for the quarter ended March 31, 2008, an increase of $472,000, or 69.0%.

Donald E. Gibson, President and CEO stated, “We are pleased to report strong earnings for the quarter especially when one considers the many financial challenges confronting our national, state and local economies.”

The most significant factor contributing to the improved earnings was higher net interest income, which increased to $11.6 million for the nine months ended March 31, 2009 as compared to $8.7 million for the nine months ended March 31, 2008, an increase of $2.9 million or 33.3%. Net interest income increased to $3.9 million for the quarter ended March 31, 2009 as compared to $3.2 million for the quarter ended March 31, 2008, an increase of $764,000 million or 23.9%. Net interest rate spread increased 48 basis points to 3.56% for the nine months ended March 31, 2009 as compared to 3.08% for the nine ended March 31, 2008. Net interest rate spread increased 16 basis points to 3.47% for the quarter ended March 31, 2009 as compared to 3.31% for the quarter ended March 31, 2008. Net interest margin increased 26 basis points to 3.84% for the nine months ended March 31, 2009 as compared to 3.58% for the nine months ended March 31, 2008. Net interest margin decreased one basis point to 3.73% for the quarter ended March 31, 2009 as compared to 3.74% for the quarter ended March 31, 2008.

Due to the worsening economic climate, management continues to closely monitor asset quality and adjust the level of the allowance for loan losses when necessary. The provision for loan losses amounted to $1.8 million and $449,000 for the nine months ended March 31, 2009 and 2008, respectively, an increase of $1.3 million or 289.5%. The provision for loan losses amounted to $1.2 million and $171,000 for the quarters ended March 31, 2009 and 2008, respectively, an increase of $1.0 million. Contributing to the increased provision was continued growth in the loan portfolio, and an increase in the amount of loan charge-offs. Net charge-offs amounted to $372,000 and $132,000 for the nine months ended March 31, 2009 and 2008, respectively, an increase of $240,000. The increase in the level of charge-offs reflected the decline in the overall economy. As a result, the level of allowance for loan losses to total loans receivable has been increased to 1.23% as of March 31, 2009 as compared to 0.78% as of March 31, 2008.

Noninterest income increased to approximately $4.9 million for the nine months ended March 31, 2009 compared to $3.4 million for the nine months ended March 31, 2008, an increase of $1.5 million. Noninterest income increased to $2.7 million for the quarter ended March 31, 2009 compared to $1.1 million for the quarter ended March 31, 2008, an increase of $1.6 million. Noninterest income for the nine months and quarter ended March 31, 2009 reflected a one time cash payment of approximately $1.7 million ($1.0 million net of tax) 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 $220,000 ($135,000 net of tax) related to the other-than-temporary impairment of a Lehman Brothers Holdings, Inc. debt security held by the Company.

Noninterest expense increased $1.0 million or 11.1% to $10.0 million for the nine months ended March 31, 2009 as compared to $9.0 million for the nine months ended March 31, 2008. Noninterest expense increased $305,000 or 9.5% to $3.5 million for the quarter ended March 31, 2009 as compared to $3.2 million for the quarter ended March 31, 2008. The Company allocated $351,000 toward the expected future termination of its currently frozen defined benefit plan during the nine months ended March 31, 2009. Most recently, the Company has decided not to terminate the current defined benefit plan, but instead will modify the plan, moving it out of the existing multi-employer plan. The Company has recognized approximately $58,000 in professional expenses during the quarter and fiscal year to date ended March 31, 2009 related to this modification. It is expected that this modification will be completed within the fourth quarter of fiscal 2009. Additional expenses such as compensation and depreciation due to the new Chatham branch which opened in January 2008, and the new Ravena branch which opened in January 2009, also contributed to the higher noninterest expense.