Gouverneur Bancorp Announces Fiscal 2021 Third Quarter and Nine Months Results

Friday, 30. July 2021 21:44

GOUVERNEUR, N.Y., July 30, 2021 (GLOBE NEWSWIRE) -- Gouverneur Bancorp, Inc. (OTCIQ: GOVB) (the “Company”) holding company for Gouverneur Savings and Loan Association (the “Bank”), today announced the results for the third quarter of fiscal year 2021 ended June 30, 2021.

A Note to our Shareholders: The Bank remains strong following the temporary business disruptions of the COVID-19 outbreak. In partnership with Pursuit (formally NYBDC), the Bank processed $3.62 million dollars in PPP loans to seventy-seven small business customers that were struggling financially due to virus restrictions. There was a decrease in interest and fees during the first half of the fiscal year due to the pandemic, however the branches are now experiencing an increase in loan applications and deposit accounts. Gouverneur Savings & Loan Association is dedicated to serving the needs of our communities and businesses as staff works with customers to design a solution to meet their specific needs.

To supplement our third quarter financial information, which is prepared and presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”), we used the following non-GAAP financial measures: Adjusted Other Operating Income, Adjusted Earnings Before Income Tax (AEBIT), Adjusted Income Tax, and Adjusted Net Income. This financial information is not intended to be considered as a substitute for the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures as a tool in financial and operational decision making and evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide important supplemental information regarding our performance by excluding from other operating income the non-cash measurement of the unrealized gains or losses in market value on swap agreements held with FHLBNY, which fluctuates monthly and may not be indicative of our recurring operating results.

Company management and investors benefit from these non-GAAP financial reports when assessing current performance and while planning, forecasting, and analyzing future periods. These non-GAAP financial measures also assist with management’s comparisons to historical performance. The 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 help investors analyze the health of our business.

In light of a number of limitations related to the use of these non-GAAP financial measures, we provide specific information regarding the GAAP amounts excluded from the non-GAAP financial measures and evaluate these non-GAAP financial measures together with their relevant financial measures in accordance with GAAP.

Certain non-GAAP financial metrics related to adjustments to total liabilities and shareholder’s equity resulting from the exclusion of the non-cash measurement of the unrealized gains or losses in market value on swap agreements held with FHLBNY have been omitted from this release as they are immaterially different from their relevant GAAP financial metrics as disclosed herein.

For more information on these non-GAAP financial measures, please see and “Reconciliation of Non-GAAP Income” and “Definitions of Non-GAAP Measures” included later in this release.

Financial and Operational Metrics

 For the Quarter Ending For the Nine Months Ending
 06/30/21 06/30/20 06/30/21 06/30/20
 (In Thousands) (In Thousands)
Statement of Earnings       
Interest Income$1,101  $1,240  $3,378  $3,834 
Interest Expense 83   128   281   398 
Net Interest Income 1,018   1,112   3,097   3,436 
        
Provision for Loan Loss 3   23   18   59 
Net Interest Income After Provision for Loan Loss 1,015   1,089   3,079   3,377 
        
Other Operating Income (Loss) 319   187   1,771   (580)
Other Operating Expense 1,269   1,252   3,826   3,642 
        
Income (Loss) Before Income Tax 65   24   1,024   (845)
Income Tax (Benefit) (39)  (21)  113   (253)
Net Income (Loss)$104  $45  $911  $(592)
        
Adjusted Statement of Earnings       
Interest Income$1,101  $1,240  $3,378  $3,834 
Interest Expense 83   128   281   398 
Net Interest Income 1,018   1,112   3,097   3,436 
        
Provision for Loan Loss 3   23   18   59 
Net Interest Income After Provision for Loan Loss 1,015   1,089   3,079   3,377 
        
Other Operating Income (Loss) 319   187   1,771   (580)
Deduct: Unrealized gain (loss) on swap agreement (110)  (127)  807   (1,154)
Adjusted Other Operating Income (Loss) (1) 429   314   964   574 
        
Other Operating Expense 1,269   1,252   3,826   3,642 
        
Adjusted Earnings Before Income Tax (1)  175   151   217   309 
        
Income Tax (Benefit) (39)  (21)  113   (253)
Deduct: change in EBIT tax calculation per income adjustment 23   27   (170)  292 
Adjusted Income Tax (Benefit)(1) (16)  6   (57)  39 
       
Adjusted Net Income (1)$191  $145  $274  $270 
                

Footnote appears on the following page

(1) “Adjusted Other Operating Income”, “Adjusted Earnings Before Income Tax”, “Adjusted Income Tax”, 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
 (in thousands)
 For the Quarter Ending: For the Nine Months Ending:
 06/30/21 06/30/20 06/30/21 06/30/20
        
Net Income (Loss)$104  $45  $911 $(592)
        
(Addback) Deduct: Unrealized gain (loss) on swap agreement (110)  (127)  807  (1,154)
        
Addback (Deduct): Change in EBIT tax calc. per income adj. (23)  (27)  170  (292)
        
Adjusted Net Income$191  $145  $274 $270 
               

Net income: for year-to-date fiscal year 2021, after an $18,000 provision for loan loss, the Company reported a net income of $911,000, or $0.45 per diluted share, compared to $(592,000), or $(0.28) per diluted share, in the nine months of fiscal year 2020. The earnings resulted in an annualized return on average assets (net income divided by average assets), (“ROA”) and annualized return on average equity (net income divided by average equity), (“ROE”) increase from the June 2020 figure of -0.62% and -2.79%, respectively, to 0.96%, and 4.30%, respectively.

Adjusted net income for the nine months ending June 30, 2021 increased 1.48% to $274,000 or $0.13 per diluted share, compared to $270,000, or $0.13 per diluted share, for the nine months ending June 30, 2020. The adjusted earnings resulted in an annualized ROA of 0.29%, an increase from 0.28% at June 2020 fiscal year to date while the ROE increased from 1.27% to 1.29% for the same period.

Net interest spread, the difference between the rate earned on interest-earning assets and the rate paid on interest-bearing liabilities, was 3.59% at June 30, 2021 and 3.95% at June 30, 2020.

Total assets increased by $3.56 million or 2.75%, from $129.26 million at September 30, 2020 to $132.82 million at June 30, 2021. Securities available for sale increased $3.40 million, or 16.64%, from $20.46 million to $23.86 million over the same period.   Net loans decreased by $0.51 million from September 2020 to June 2021. The Bank made an $18,000 provision for loan loss the first nine months of fiscal 2021, a decrease from the $59,000 provision made in the same period of the 2020 fiscal year.

Deposits increased $5.98 million, or 6.56%, to $97.14 million at June 30, 2021 from $91.16 million at September 30, 2020. There are currently no advances from the FHLB, a decrease of $3.0 million over these periods.

Shareholders’ equity was $27.45 million at June 30, 2021, representing an increase of 3.08% from the September 30, 2020 balance of $26.63 million. The Company’s book value was $13.51 per common share based on 2,031,377 shares issued and outstanding at June 30, 2021. On March 31, 2021, the Company paid a semi-annual cash dividend of $0.12 per share to all shareholders of record on March 15, 2021.

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. Activity in Fiscal year 2020 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. The accounting for changes in the fair market value of these swaps (unrealized losses) was recognized in earnings as other operating loss. This decline was considered temporary. 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.

During the first three quarters of Fiscal year 2021, the market value of the swaps rebounded, resulting in an unrealized year to date gain in market value of $807,000 as the world emerged from the COVID-19 pandemic and bond prices rose. Management feels that by eliminating these fluctuations in market value from the GAAP statements, it is able to provide a more accurate picture of Company’s financial and operational results.

While the swaps market value will fluctuate with long term bond rates and projected short-term rates, the Company continues to mitigate its interest rate risk through the agreements.

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 evaluating 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 We define Adjusted Income Tax 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, 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 of 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 Faye C. Waterman, President and Chief Executive Officer at (315) 287-2600.


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