Gouverneur Bancorp Announces Fiscal 2023 Third Quarter and Nine Months Results
- The acquisition of Citizens Bank of Cape Vincent added $37.3 million in acquired loans and $76.1 million in deposits
- Shareholders' equity increased by 5.74%
- Total assets decreased by $9.9 million
- Deposits decreased by $23.3 million
- The market value of interest rate swap agreements resulted in an unrealized loss of $783,000
GOUVERNEUR, N.Y., Aug. 02, 2023 (GLOBE NEWSWIRE) -- Gouverneur Bancorp, Inc. (OTC Pink: GOVB) (the “Company”) holding company for Gouverneur Savings and Loan Association (the “Bank”), today announced the results for the third quarter of fiscal year 2023 ended June 30, 2023.
A Note to our Shareholders: On September 16, 2022, the acquisition of Citizens Bank of Cape Vincent (“CBCV”) was consummated, adding three additional full-service branches, in Cape Vincent, Chaumont, and LaFargeville. The Bank also established GS&L Municipal Bank, a subsidiary limited purpose municipal bank, to service the deposit needs of the area’s municipalities. As a result, fiscal year 2022 saw a rise in professional fees and other merger related expenses due to costs associated with the completion of the merger. The increased costs incurred by the merger include due diligence, financial and legal services. The acquisition also resulted in an additional
In addition, on May 22, 2023, the Board of Directors adopted a plan of Conversion and Reorganization. Pursuant to the Plan of Conversion, Gouverneur Bancorp, Inc., a newly formed Maryland corporation (the “Holding Company”), will sell a number of shares of Holding Company common stock that represents the ownership interest of Cambray Mutual Holding Company (the “MHC”) in the Company, and the Bank will reorganize from the mutual holding company form of organization to the stock holding company form of organization in a “second step” conversion transaction. In addition to the shares being offered for sale in the stock offering, the shares of Company common stock currently owned by shareholders other than the MHC will be exchanged for shares of common stock of the Holding Company based on an exchange ratio that will result in existing public shareholders of the Company owning approximately the same percentage of common stock of the Holding Company as they owned in common stock of the Company immediately before the completion of the conversion and stock offering. The second step conversion will be subject to approval by the depositors and certain borrowers of the Bank, by the Company’s shareholders (including the approval of a majority of the shares held by persons other than the MHC) and by the Board of Governors of the Federal Reserve System and the New York State Department of Financial Services.
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 (Loss) Before Income Tax (AEBIT), Adjusted Income Tax (Benefit), and Adjusted Net Income (Loss). 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 non-interest income, the non-cash measurement of the unrealized gains or losses in market value on swap agreements held with Federal Home Loan Bank of New York (“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 also 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 Quarter Ending | For the Nine Months Ending | |||||||||||||||||||
| 06/30/23 | 06/30/22 | 06/30/23 | 06/30/22 | |||||||||||||||||
| (In Thousands except per share data) | (In Thousands except per share data) | |||||||||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||||||
| Statement of Earnings (GAAP) | ||||||||||||||||||||
| Interest Income | $ | 2,033 | $ | 1,087 | $ | 6,065 | $ | 3,247 | ||||||||||||
| Interest Expense | 187 | 64 | 286 | 222 | ||||||||||||||||
| Net Interest Income | 1,846 | 1,023 | 5,779 | 3,025 | ||||||||||||||||
| Provision for Loan Loss | 30 | 15 | 92 | 46 | ||||||||||||||||
| Net Interest Income After Provision for Loan Loss | 1,816 | 1,008 | 5,687 | 2,979 | ||||||||||||||||
| Non-interest Income | 275 | 575 | (96 | ) | 2,025 | |||||||||||||||
| Non-interest Expenses | 1,847 | 1,182 | 5,455 | 3,671 | ||||||||||||||||
| Income Before Income Tax | 244 | 401 | 136 | 1,333 | ||||||||||||||||
| Income Tax (Benefit) | 12 | 62 | (96 | ) | 207 | |||||||||||||||
| Net Income | $ | 232 | $ | 339 | $ | 232 | $ | 1,126 | ||||||||||||
| Performance Ratios | ||||||||||||||||||||
| Basic and Diluted Earnings per Share | $ | 0.11 | $ | 0.17 | $ | 0.11 | $ | 0.55 | ||||||||||||
| Annualized Return on Average Assets | 0.45 | % | 1.06 | % | 0.15 | % | 1.17 | % | ||||||||||||
| Annualized Return on Average Equity | 3.55 | % | 5.30 | % | 1.21 | % | 5.65 | % | ||||||||||||
| Net Interest Spread | 4.06 | % | 3.48 | % | 4.23 | % | 3.43 | % | ||||||||||||
| For the Quarter Ending | For the Nine Months Ending | |||||||||||||||||||
| 06/30/23 | 06/30/22 | 06/30/23 | 06/30/22 | |||||||||||||||||
| (In Thousands except per share data) | (In Thousands except per share data) | |||||||||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||||||
| Adjusted Statement of Earnings (Non-GAAP) | ||||||||||||||||||||
| Interest Income | $ | 2,033 | $ | 1,087 | $ | 6,065 | $ | 3,247 | ||||||||||||
| Interest Expense | 187 | 64 | 286 | 222 | ||||||||||||||||
| Net Interest Income | 1,846 | 1,023 | 5,779 | 3,025 | ||||||||||||||||
| Provision for Loan Loss | 30 | 15 | 92 | 46 | ||||||||||||||||
| Net Interest Income After Provision for Loan Loss | 1,816 | 1,008 | 5,687 | 2,979 | ||||||||||||||||
| Non-interest Income | 275 | 575 | (96 | ) | 2,025 | |||||||||||||||
| Deduct: Unrealized gain (loss) on swap agreement | 40 | 434 | (783 | ) | 1,527 | |||||||||||||||
| Adjusted Non-interest Income (1) | 235 | 141 | 687 | 498 | ||||||||||||||||
| Non-interest Expenses | 1,847 | 1,182 | 5,455 | 3,671 | ||||||||||||||||
| Adjusted Earnings (Losses) Before Income Tax (1) | 204 | (33 | ) | 919 | (194 | ) | ||||||||||||||
| Income Tax (Benefit) | 12 | 62 | (96 | ) | 207 | |||||||||||||||
| (Addback) Deduct: change in EBIT tax calculation per income adjustment | 8 | (91 | ) | (165 | ) | 321 | ||||||||||||||
| Adjusted Income Tax (Benefit)(1) | 4 | (29 | ) | 69 | (114 | ) | ||||||||||||||
| Adjusted Net Income (Loss) (1) | $ | 200 | $ | (4 | ) | $ | 850 | $ | (80 | ) | ||||||||||
| Performance Ratios | ||||||||||||||||||||
| Basic and Diluted Earnings per Share | $ | 0.10 | $ | (0.002 | ) | $ | 0.42 | $ | (0.04 | ) | ||||||||||
| Annualized Return on Average Assets | 0.39 | % | (0.01 | )% | 0.55 | % | (0.08 | )% | ||||||||||||
| Annualized Return on Average Equity | 3.06 | % | (0.06 | )% | 4.43 | % | (0.40 | )% | ||||||||||||
| Net Interest Spread | 4.06 | % | 3.48 | % | 4.23 | % | 3.43 | % | ||||||||||||
| (1) | “Adjusted Non-interest Income”, “Adjusted Earnings (Losses) Before Income Tax”, “Adjusted Income Tax (Benefit)”, and “Adjusted Net Income (Loss)” 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 of GAAP NET INCOME to Non-GAAP Adjusted Net Income (Loss) | |||||||||||||||
| (in thousands) (unaudited) | |||||||||||||||
| For the Quarter Ending: | For the Nine Months Ending: | ||||||||||||||
| 06/30/23 | 06/30/22 | 06/30/22 | 06/30/22 | ||||||||||||
| Net Income (GAAP) | $ | 232 | $ | 339 | $ | 232 | $ | 1,126 | |||||||
| (Addback) Deduct: Unrealized gain (loss) on swap agreement | 40 | 434 | (783 | ) | 1,527 | ||||||||||
| Addback (Deduct): Change in EBIT tax calc. per income adj. | 8 | 91 | (165 | ) | 321 | ||||||||||
| Adjusted Net Income (Loss) (Non-GAAP) | $ | 200 | $ | (4 | ) | $ | 850 | $ | (80 | ) | |||||
Net interest spread, the difference between the rate earned on interest-earning assets and the rate paid on interest-bearing liabilities, was
Total assets decreased by
Deposits decreased
Shareholders’ equity was
Interest Rate Swap Agreements
The Company has numerous interest rate swap agreements (“swaps”) with 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 2022 resulted in an unrealized gain on the fair market value of these swaps due to an increase in longer term U.S. Treasury bond rates. The accounting for changes in the fair market value of these swaps (unrealized gains or losses) is currently recognized in earnings as non-interest income (loss). 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 2023, the market value of the swaps decreased, resulting in an unrealized year to date loss in market value of
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 Non-Interest Income We define Adjusted Non-Interest Income as total non-interest earnings excluding certain items that may not be indicative of our recurring business operating results. Adjusted non-interest 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 (Benefit) We define Adjusted Income Tax (Benefit) as the income tax calculated from the adjusted earnings before income tax.
Adjusted Net Income (Loss) We define Adjusted Net Income (Loss) as net income less certain items that may not be indicative of our recurring business operating results. Adjusted Net Income (Loss) 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 (Loss) should be considered a supplement, and not a substitute for, net income prepared in accordance with GAAP.
Forward-Looking Statements
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.
About Gouverneur Bancorp, Inc.
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.
For more information, contact Charles C. Van Vleet, President and Chief Executive Officer at (315) 287-2600.
