Gouverneur Bancorp Announces Fiscal 2020 Results

Nachrichtenquelle: globenewswire
25.11.2020, 21:39  |  121   |   |   

GOUVERNEUR, N.Y., Nov. 25, 2020 (GLOBE NEWSWIRE) -- Charles C. Van Vleet Jr., President and Chief Executive Officer of Gouverneur Bancorp, Inc. (OTC Pink: GOVB) (the “Company”) holding company for Gouverneur Savings and Loan Association (the “Bank”), announced today results for its fiscal year ended September 30, 2020.

A Note to our Shareholders: In recent months, the COVID-19 outbreak has caused business disruptions throughout the United States. As a result, the Bank experienced a decrease in loan principal, interest payments and service fees which negatively impacted its operating results and financial condition. Although the disruption is expected to be temporary, the overall related financial impact and duration cannot be reasonably estimated at this time. However, management is confident that its current liquidity and capital position is strong enough to rebound from any negative budgetary pressure resulting from the pandemic. Meanwhile, Gouverneur Savings & Loan Association continues its mission of serving the needs of our communities by offering our neighbors and customers relief through our GS&L COVID-19 Assistance Program. It also partnered with Pursuit (formerly NYBDC) and offered SBA loans to those small business customers that were struggling financially due to the virus shut-downs. Staff continues to work diligently with customers to design a solution to meet their specific needs.

To supplement our financial information, which is prepared and presented in accordance with generally accepted accounting principles in the United States of America, or GAAP, we used the following non-GAAP financial measures: Adjusted Non-interest Income, Adjusted Earnings Before Income Tax (AEBIT), Adjusted Income Tax, and Adjusted Net Income. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring business operating results. The financial information excludes from other operating income, the non-cash measurement of the unrealized gains or losses in market value on swap agreements held with FHLBNY.

We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance. We believe these non-GAAP financial measures are useful to investors because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.

There are a number of limitations related to the use of non-GAAP financial measures. In light of these limitations, we provide specific information regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their relevant financial measures in accordance with GAAP. For more information on these non-GAAP financial measures, please see the section titled “Definitions of Non-GAAP Measures” and “Reconciliations of Non-GAAP Measures” included at the end of this release.

Financial and Operational Metrics

  For the Year Ending
    2020       2019  
Statement of Earnings (In Thousands)
       
Interest Income $ 5,012     $ 5,623  
Interest Expense   522       581  
Net Interest Income   4,490       5,042  
       
Provision for Loan Loss   58       70  
Net Interest Income After Provision for Loan Loss   4,432       4,972  
       
Non-interest Income (Loss)   (191 )     (922 )
Non-interest Expenses   4,879       4,794  
       
Income (Loss) Before Income Tax   (638 )     (744 )
Income Tax (Benefit)   (257 )     (280 )
Net Income (Loss) $ (381 )   $ (464 )
 
       
Adjusted Statement of Earnings      
       
Interest Income $ 5,012     $ 5,623  
Interest Expense   522       581  
Net Interest Income   4,490       5,042  
       
Provision for Loan Loss   58       70  
Net Interest Income After Provision for Loan Loss   4,432       4,972  
       
Non-interest Income (Loss)   (191 )     (922 )
Deduct: Unrealized gain (loss) on swap agreement   (1,062 )     (1,820 )
Adjusted Non-interest Income (1)   871       898  
       
Non-interest Expenses   4,879       4,794  
       
Adjusted Earnings Before Income Tax (1) (“AEBIT”)   424       1,076  
       
Income Tax (Benefit)   (257 )     (280 )
Deduct: change in EBIT tax calc. per income adj.   223       382  
Adjusted Income Tax (Benefit)(1)   (34 )     102  
     
Adjusted Net Income (1) $ 458     $ 974  

(1)  “Adjusted Non-interest Income”, “Adjusted Earnings Before Income Tax”, Adjusted Income Tax (Benefit)”, and “Adjusted Net Income” are non-GAAP measures. See “Definitions of Non-GAAP Measures” and “Reconciliation of Non-GAAP Measures” sections herein for an explanation and reconciliation of non-GAAP measures used throughout this release.


Reconciliation to Non-GAAP Net Income
For the fiscal years ending 2020 and 2019
(in thousands)
    2020       2019  
       
Net Income (Loss) $ (381 )   $ (464 )
       
(Addback) Deduct: Unrealized gain (loss) on swap agreement   (1,062 )     (1,820 )
       
Addback (Deduct): Change in EBIT tax calc. per income adj.   (223 )     (382 )
       
Adjusted Net Income $ 458     $ 974  
       

Total Revenue (net interest income plus non-interest loss) for fiscal year 2020 was $4.30 million, an increase of $180,000 over the 2019 fiscal year-end total of $4.12 million. The Bank remains well-capitalized with a core capital ratio of 19.11%, a decrease of 3.22% from 2019.

Total Adjusted Revenue (net interest income less other operating expense) for fiscal year 2020 was $5.36 million, a decrease of $580,000 over the 2019 fiscal year-end total of $5.94 million.

Net income for the fiscal year ended September 30, 2020 increased 17.89% to $(381,000) or $(0.18) per diluted share, compared to $(464,000), or $(0.21) per diluted share, in fiscal 2019. The earnings resulted in a return on average assets of (0.30)%, an increase from (0.36)% in fiscal 2019, while the return on average equity increased to (1.30%) for the year ended September 30, 2020, from (1.55%) for the year ended September 30, 2019.

Adjusted net income for the fiscal year ended September 30, 2020 decreased 52.95% to $458,000 or $0.22 per diluted share, compared to $974,000, or $0.45 per diluted share, in fiscal 2019. The earnings resulted in a return on average assets of 0.35%, a decrease from 0.74% in fiscal 2019, while the return on average equity decreased to 1.57% for the year ended September 30, 2020, from 3.22% for the year ended September 30, 2019.  

Interest income on loans decreased $240,000 in fiscal 2020, from $4.93 million at September 30, 2019 to $4.69 million at September 30, 2020. Total interest income decreased $611,000, or 10.87%, from $5.62 million to $5.01 million.

Interest expense on deposits increased $13,000, from $309,000 at September 30, 2019 to $322,000 at September 30, 2020. Interest expense incurred on borrowings from the Federal Home Loan Bank, $272,000 at the end of fiscal 2019, decreased $72,000, to $200,000 at the end of fiscal 2020, resulting in a total interest expense of $522,000.

Interest spread, the difference between the rate earned on interest-earning assets and the rate paid on interest-bearing liabilities, was 3.84% in fiscal 2020 and 4.21% in fiscal 2019.

Non-interest income (loss) increased $731,000 from ($922,000) in fiscal year 2019 to ($191,000) in fiscal 2020. This includes the unrealized market value loss on swap agreements held with FHLBNY of ($1.06) million and ($1.82) million for 2020 and 2019, respectively.

Adjusted non-interest income decreased $27,000, from $898,000 in fiscal year 2019 to $871,000 in fiscal 2020. The adjustment includes the exclusion of the unrealized market value gain (loss) on swap agreements held with FHLBNY.

Total non-interest expense increased $85,000 from $4.79 million at the end of September 2019 to $4.88 million at the end of September 2020. Salary and employee benefits expense decreased from the 2019 level due to unfilled staff vacancies and an adjustment in SERP benefit expenses from employee benefits to other expenses. Directors’ fees declined $10,000 with the retirement of a full-time director while data processing experienced a modest increase with a fee increase from the Bank’s core processor, COCC. Building, occupancy and equipment costs increased due to increased depreciation and maintenance agreement costs on new ATMs. Foreclosed assets decreased $28,000 while other operating expenses increased $106,000 due to the aforementioned adjustment to SERP cost components. The components of non-interest expense are presented in the table below.                                          

  For the year ended
  September 30,
    2020       2019  
  (In thousands)
               
Salaries and employee benefits $ 2,743     $ 2,886  
Directors’ fees   238       248  
Data processing   261       256  
Building, occupancy and equipment   617       567  
Foreclosed assets, net   91       119  
Other operating expense   929       718  
Non-interest expense $ 4,879     $ 4,794  

Net loans decreased $3.83 million, or 4.22%, from $90.71 million to $86.88 million over the same period. The Bank made a $58,000 provision for loan losses in fiscal 2020, a decrease from the $70,000 provision made in the 2019 fiscal year. Non-performing assets were $1.29 million at September 30, 2020, compared to $2.12 million at September 30, 2019. Net charge-offs, currently $64,000, decreased for the 2020 fiscal year from $209,000 for the year ended September 30, 2019. The allowance for loan losses was $631,000 or 0.72% of total loans outstanding at September 30, 2020 as compared to $637,000 or 0.70% at September 30, 2019.

Deposits increased $11.88 million, or 14.98%, to $91.16 million at September 30, 2020 from $79.28 million at September 30, 2019. The Bank currently holds no brokered deposits. Advances from the FHLB decreased $7.0 million, from $10.0 million to $3.0 million over the same period as the need for the Company to fund its loan portfolio with low-cost FHLB borrowings decreased.

Total assets increased $4.0 million, or 3.19%, from $125.27 million at September 30, 2019 to $129.27 million at September 30, 2020. Asset composition includes non-performing assets of 1.01% of total assets, a decrease from the 2019 figure of 1.69%.  

Shareholders’ equity was $26.63 million at September 30, 2020, representing a decrease of 9.59% from the September 30, 2019 balance of $29.45 million. The Company’s book value was $13.11 per common share based on 2,383,608 shares issued and 2,031,377 shares outstanding at September 30, 2020 versus $13.53 per common share based on 2,383,608 shares issued with 2,176,908 shares outstanding on September 30, 2019. The Company paid cash dividends totaling $0.29 per share to all public holders of our stock, during the fiscal year ending September 30, 2020.   

Non-GAAP Financial Measures

The Company has numerous interest rate swap agreements (“swaps”) with Federal Home Loan Bank of New York (“FHLBNY”) as a means to hedge the cost of certain borrowings and to increase the interest rate sensitivity of certain assets. The accounting for changes in the fair market value of these swaps (unrealized gains or losses) is currently recognized in earnings as other operating income (loss). Activity in Fiscal year 2020 has resulted in an unrealized loss on the fair market value of these swaps due to a decline in longer term U.S. Treasury bond rates. This decline in the fair value of the swaps is considered temporary. While the swaps market value will continue to fluctuate with long term bond rates and projected short-term rates, the Company has both the intent and ability to hold these swaps to maturity regardless of the changes in market condition, liquidity needs or changes in general economic conditions.

Definitions of Non-GAAP Measures

Adjusted Other Operating Income We define Adjusted Other Operating Income as total non-interest earnings excluding certain items that may not be indicative of our recurring business operating results. Adjusted other operating income excludes from other non-interest income the non-cash measurement of the unrealized gains or losses in market value on swap agreements.

Adjusted Earnings Before Income Tax We define AEBIT as net income (loss) before income tax, excluding certain items that may not be indicative of our recurring business operating results. AEBIT excludes from total earnings before income tax the non-cash measurement of the unrealized gains or losses in market value on swap agreements.

We have included AEBIT because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans, and make strategic decisions, including those related to operating expenses. Accordingly, we believe that AEBIT provides useful information to investors and others in understanding and evaluation our operating results in the same manner as our management team and board of directors. In addition, it provides a useful measure for period-to-period comparisons of our business as it removes the effect of certain non-cash items with variable unrealized gains and losses. AEBIT is not meant as a substitute for the related financial information prepared in accordance with GAAP.

Adjusted Income Tax (Benefit) We define Adjusted Income Tax Benefit as the income tax calculated from the adjusted earnings before income tax.

Adjusted Net Income We define Adjusted Net Income as net income less certain items that may not be indicative of our recurring business operating results. Adjusted Net Income excludes the non-cash measurement of the unrealized gains or losses in market value on swap agreements held with FHLBNY and the subsequent recalculation of associated income tax. Adjusted Net Income should be considered a supplement, and not a substitute for, net income prepared in accordance with GAAP.

Forward-Looking Statements

The Company, which is headquartered in Gouverneur, New York, is the holding company for Gouverneur Savings and Loan Association. Founded in 1892, the Bank is a New York State chartered savings and loan association offering a variety of banking products and services to individuals and businesses in its primary market area in St. Lawrence, Lewis and Jefferson Counties in New York State.

Statements in this news release contain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs of management as well as assumptions made using information currently available to management. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties and assumptions. These risks and uncertainties include among others, the impact of changes in market interest rates and general economic conditions, changes in government regulations, changes in accounting principles and the quality or composition of the loan and investment portfolios. Therefore, actual future results may differ significantly from results discussed in the forward-looking statements.

For more information, contact Charles C. Van Vleet Jr., President and Chief Executive Officer at (315) 287-2600.


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Gouverneur Bancorp Announces Fiscal 2020 Results GOUVERNEUR, N.Y., Nov. 25, 2020 (GLOBE NEWSWIRE) - Charles C. Van Vleet Jr., President and Chief Executive Officer of Gouverneur Bancorp, Inc. (OTC Pink: GOVB) (the “Company”) holding company for Gouverneur Savings and Loan Association (the …

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