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GOUVERNEUR, N.Y., May 07, 2019 (GLOBE NEWSWIRE) -- Gouverneur Bancorp, Inc. (OTC Pink: GOVB) (the “Company”) and its subsidiary, Gouverneur Savings and Loan Association (the “Bank”), which operate on a fiscal year ending on September 30, today announced results for the second quarter and six month period ended March 31, 2019.
For the three months ended March 31, 2019, the Company reported a net loss of $19,000, or ($0.01) per diluted share, as a result of a $321,000 second quarter decline in the unrealized gain on the market value of interest rate swap agreements (“swaps”) held with Federal Home Loan Bank of New York (“FHLBNY”). Excluding the decline in the unrealized gain on the swaps, the second quarter net income remained strong at a positive $235,000, or $0.11 per diluted share. This represents an increase of $10,000, or 4.44% more than last year’s second quarter net income of $225,000, excluding the unrealized gain on swaps, or $0.10 per diluted share. The annualized return on average assets (net income divided by average assets), (“ROA”) and the annualized return on average equity (net income divided by average equity), (“ROE”) for the three months ended March 31, 2019, excluding the change in unrealized gain on swaps, were 0.75% and 3.19%, respectively, compared to 0.70% and 3.08%, respectively, for the three months ended March 31, 2018, also excluding the change in unrealized gain on swaps.
As reported in December 2018, the swaps have decreased in fair market value from the fiscal 2018 year-end unrealized gain of $832,000 due to a decline in longer term U.S. Treasury bond rates. The Company entered into the swap agreements to hedge the cost of certain borrowings and to increase the interest rate sensitivity of certain assets. The accounting for changes in the fair value of these swaps is currently recognized in earnings as non-interest income. While the swaps market value will continue to fluctuate with long term bond rates and projected short term rates, the Company continues to mitigate its interest rate risk and benefit from a positive net inflow of interest income earned on the swap agreements.
For the six months ended March 31, 2019, after a $20,000 provision for loan losses, the Company reported net loss of $139,000, or -$0.06 per diluted share. However, excluding the decrease in the unrealized gain on the market value of the swaps, the year to date net income is $523,000, just $3,000 less than the 2018 YTD total of $526,000, excluding swaps unrealized gain adjustment, or $0.24 per diluted share per year. The annualized returns on average assets and average equity for the six months ended March 31, 2019 were 0.82% and 3.50%, respectively, compared to 0.80% and 3.54%, respectively, during the six months ended March 31, 2018, excluding the unrealized gain to swaps adjustment.
The net interest rate spread remains strong at 4.29% for the six months ended March 31, 2019, with a decrease in interest income of $13,000 and a decrease in interest expense of $17,000 from the same period last year.
Commenting on the quarter’s results, Mr. Charles C. Van Vleet, the Company’s President and Chief Executive Officer, said, “As stated in December’s press release, the Bank took a negative adjustment to the market value of its swap agreements due to December’s sudden Treasury market decline. While the accounting mark to market requirement may distort the Company’s reported earnings, it does not impact the actual level of net income earned for the quarter, which is $10,000 greater than that of 2018.
“The Bank anticipates an increase in loan production from previous years as economic conditions in its service area continue to improve. The Bank is performing well as it continues to maintain margins higher than many of its peers,” added Mr. Van Vleet.
Since September 30, 2018, total assets decreased $1.92 million, or 1.45%, from $131.83 million to $129.91 million at March 31, 2019. Net loans decreased $3.39 million, from $95.63 million to $92.24 million while securities available-for-sale decreased $0.29 million, from $15.62 million to $15.33 million over the same period.
Deposits decreased $2.76 million, or 3.26%, from $84.62 million at September 30, 2018 to $81.86 million at March 31, 2019. Advances from the Federal Home Loan Bank of New York increased $1.00 million, or 8.33%, from $12.00 million at September 30, 2018 to $13.00 million at March 31, 2019.
Stockholders’ equity was $29.91 million at March 31, 2019 and $29.97 million at September 30, 2018. The book value of Gouverneur Bancorp, Inc. was $13.74 per common share based on 2,176,908 shares outstanding at March 31, 2019. On March 29, 2019, the Company paid a semi-annual cash dividend of $0.17 per share to all shareholders of record on March 15, 2019.
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 southern St. Lawrence and northern 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 due to a number of factors, which include, but are not limited to, factors discussed in the documents filed by the Company with the Securities and Exchange Commission from time to time.
For more information, contact Charles C. Van Vleet, President and Chief Executive Officer at (315) 287-2600.