GOUVERNEUR, N.Y., Nov. 15, 2024 (GLOBE NEWSWIRE) -- Gouverneur Bancorp, Inc. (OTCQB: GOVB) (the "Company”), the holding company for Gouverneur Savings and Loan Association (the "Bank”), today announced the results for the fourth quarter and full fiscal year ended September 30, 2024.
The Company reported net income of $136,000, or $0.13 per basic and diluted share, for the quarter ended September 30, 2024, compared to net income of $86,000, or $0.04 per basic and diluted share, for the quarter ended September 30, 2023. The Company reported adjusted net income(1) of $161,000 for the quarter ended September 30, 2024, compared to adjusted net income(1) of $100,000 for the quarter ended September 30, 2023.
The Company also reported net income of $539,000, or $0.51 per basic and diluted share, for the fiscal year ended September 30, 2024, compared to net income of $317,000, or $0.16 per basic and diluted share, for the fiscal year ended September 30, 2023. The Company reported adjusted net income(1) of $729,000 for the fiscal year ended September 30, 2024, compared to adjusted net income(1) of $951,000 for the fiscal year ended September 30, 2023.
Completion of the Second-Step Conversion
On October 31, 2023, the Bank completed its "second-step” conversion from the mutual holding company form of organization to the stock holding company form of organization. In connection with the transaction, the Company sold a total of 723,068 shares of its common stock at a price of $10.00 per share, which includes 57,845 shares sold to the Bank's employee stock ownership plan. In addition, as part of the conversion transaction, each outstanding share of common stock of Gouverneur Bancorp, the former mid-tier stock holding company for the Bank (the "Mid-Tier Holding Company”), owned by the public stockholders of the Mid-Tier Holding Company (stockholders other than Cambray Mutual Holding Company) as of the closing date was converted into shares of Company common stock based on an exchange ratio of 0.5334 shares of Company common stock for each share of Mid-Tier Holding Company common stock. Cash was issued in lieu of a fractional share of Company common stock based on the offering price of $10.00 per share.
Summary of Financial Results
Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets, consisting primarily of loans and securities, and the interest we pay on our interest-bearing liabilities, consisting of savings and club accounts, NOW and money market accounts and time certificates. Our results of operations also are affected by our provisions for credit losses, non-interest income and non-interest expense. Non-interest income currently consists primarily of service charges, unrealized gains (losses) on swap agreements, earnings on bank owned life insurance and loan servicing fees. Non-interest expense currently consists primarily of salaries and employee benefits, directors' fees, occupancy and data processing expense and professional fees. Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.
(1) | As used in this press release, adjusted net income is a non-GAAP financial measure. This non-GAAP financial measure excludes unrealized gain (loss) on swap agreements and changes in earnings and interest and tax calculations from income adjustments. For a reconciliation of this and other non-GAAP financial measures to their comparable GAAP measures, see "Reconciliation of Non-GAAP Measures”. | |
Deposits increased $1.1 million or 0.71%, to $159.9 million at September 30, 2024 from $158.8 million at September 30, 2023. The Bank currently holds no advances from FHLB.
Shareholders' equity was $32.8 million at September 30, 2024, representing an increase of 30.50% from the September 30, 2023 balance of $25.1 million. The increase in shareholders' equity was primarily a result of the completion of the second-step conversion on October 31, 2023, at which time the Company sold, for gross proceeds of $7.2 million, a total of 723,068 shares of common stock at $10.00 per share. The Company's book value was $29.59 per common share based on 1,107,134 shares issued and outstanding at September 30, 2024. The Company's book value was $12.36 per common share based on 2,031,377 shares issued and outstanding at September 30, 2023.
Net interest spread, the difference between the rate earned on interest-earning assets and the rate paid on interest-bearing liabilities, was 3.86% at September 30, 2024 and 4.14% at September 30, 2023 as interest rates on interest bearing deposits increased faster than the interest rates on loans during fiscal 2024.
Interest Rate Swap Agreements
The Company has held 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 the fiscal years ended September 30, 2024 and 2023 resulted in an unrealized loss on the fair market value of these swaps due to a decrease 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 fiscal year ended September 30, 2024, the market value of the swaps decreased, resulting in an unrealized loss in market value of $240,000 for fiscal 2024, in comparison to an unrealized loss in swap market value of $802,000 for fiscal 2023.
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.
Financial and Operational Metrics (GAAP)
For the Quarter Ending | For the Fiscal Year Ending | ||||||||||||||
09/30/24 | 09/30/23 | 09/30/24 | 09/30/23 | ||||||||||||
(In Thousands except per share data) | (In Thousands except per share data) | ||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Statement of Earnings (GAAP) | |||||||||||||||
Interest Income | $ | 2,148 | $ | 2,097 | $ | 8,565 | $ | 8,162 | |||||||
Interest Expense | 370 | 283 | 1,418 | 570 | |||||||||||
Net Interest Income | 1,778 | 1,814 | 7,147 | 7,592 | |||||||||||
Provision for Credit Loss | - | 30 | 70 | 122 | |||||||||||
Net Interest Income After Provision for Credit Loss | 1,778 | 1,784 | 7,077 | 7,470 | |||||||||||
Non-interest Income | 245 | 166 | 772 | 71 | |||||||||||
Non-interest Expenses | 1,910 | 1,853 | 7,373 | 7,308 | |||||||||||
Income Before Income Tax | 113 | 97 | 476 | 233 | |||||||||||
Income Tax (Benefit) | (23 | ) | 11 | (63 | ) | (84 | ) | ||||||||
Net Income | $ | 136 | $ | 86 | $ | 539 | $ | 317 | |||||||
Performance Ratios (GAAP) | |||||||||||||||
Basic and Diluted Earnings per Share | $ | 0.13 | $ | 0.04 | $ | 0.51 | $ | 0.16 | |||||||
Annualized Return on Average Assets | 0.27 | % | 0.17 | % | 0.27 | % | 0.15 | % | |||||||
Annualized Return on Average Equity | 1.68 | % | 1.32 | % | 1.76 | % | 1.23 | % | |||||||
Net Interest Spread | 3.84 | % | 3.88 | % | 3.86 | % | 4.14 | % | |||||||
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 (Benefit), 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 non-GAAP 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”). Management believes that by eliminating fluctuations in market value from the GAAP statements, it is able to provide a more accurate picture of Company's financial and operational results.
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 evaluate these non-GAAP financial measures together with their relevant financial measures in accordance with GAAP.
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 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.
Financial and Operational Metrics (Non-GAAP)
For the Quarter Ending | For the Fiscal Year Ending | ||||||||||||||
09/30/24 | 09/30/23 | 09/30/24 | 09/30/23 | ||||||||||||
(In Thousands except per share data) | (In Thousands except per share data) | ||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Adjusted Statement of Earnings (Non-GAAP) | |||||||||||||||
Interest Income | $ | 2,148 | $ | 2,097 | $ | 8,565 | $ | 8,162 | |||||||
Interest Expense | 370 | 283 | 1,418 | 570 | |||||||||||
Net Interest Income | 1,778 | 1,814 | 7,147 | 7,592 | |||||||||||
Provision for Credit Loss | - | 30 | 70 | 122 | |||||||||||
Net Interest Income After Provision for Credit Loss | 1,778 | 1,784 | 7,077 | 7,470 | |||||||||||
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