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GOUVERNEUR, N.Y., Aug. 06, 2019 (GLOBE NEWSWIRE) -- Gouverneur Bancorp, Inc. (OTC Pink: GOVB) (the “Company”) and its subsidiary, Gouverneur Savings and Loan Association (the “Bank”), today announced the results for the third quarter and nine months ended June 30, 2019.
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 non-interest income. As first reported in December 2018, fiscal year 2019 has seen a decrease in the unrealized gain on the fair market value due to a decline in longer term U.S. Treasury bond rates. 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 and benefit from a positive net inflow of interest income earned on the swap agreements.
For the three months ended June 30, 2019, excluding the decrease in unrealized gain on the fair market value of the swaps, the Company realized a net income of $351,000, or $0.16 per diluted share, representing an increase of $10,000, or 2.93% from 2018 third quarter’s net income of $341,000, or $0.16 per diluted share. Net interest income decreased $49,000 for the quarter relative to 2018, ending June 30, 2019 at $1.26 million compared to $1.31 million for the quarter ended June 30, 2018. Net interest margin remained strong at 4.39%, compared to 4.49% for the same period last year.
The annualized return on average assets and average equity for the three months ended June 30, 2019 was 1.09% and 4.70% respectively, compared to 1.25% and 5.44% for the three months ended June 30, 2018.
For the nine months ended June 30, 2019, again excluding the decrease in unrealized gain on the swaps, the Company reported a net income of $874,000, or $0.40 per diluted share, representing an increase of $7,000, or 0.81% above last year’s net income of $867,000, or $0.40 per diluted share.
Net interest income decreased $79,000 for the first nine months of 2019 relative to the same period of 2018, ending June 30, 2019 at $3.83 million compared to $3.91 million in 2018. Net interest margin remained strong at 4.45%, compared to 4.43% for the nine month period last year. Net interest income after the provision for loan losses decreased $34,000, or 0.88%, during the first nine months of the 2019 fiscal year as compared to the first nine months of 2018.
The annualized return on average assets and average equity for the nine month period ended June 30, 2019 was 0.91% and 3.90% respectively, compared to 0.86% and 3.78% for the same period last year. Average equity to average total assets increased since September 30, 2018, from 22.79% to the current 23.29% at June 30, 2019.
Factoring in the fiscal year decline in unrealized gains on swap agreements, the Company reported a net loss of $184,000, or $(0.08) per diluted share for the three months ended June 30, 2019, and a net loss of $323,000, or $(0.15) per diluted share for the nine months ended June 30, 2019.
The annualized return on average assets and average equity for the three months ended June 30, 2019 was (0.57%) and (2.47%) respectively, while the annualized return on average assets and average equity for the nine months ended June 30, 2019 was (0.34%) and (1.44%) respectively, inclusive of the decline in unrealized swap market value.
Since September 30, 2018, total assets decreased $1.26 million, or 0.96%, from $131.83 million to $130.57 million at June 30, 2019, resulting from a decrease in loans net of deferred fees of $3.68 million, or 3.85%, from $95.63 million to $91.95 million, which was offset by a 66.06% increase in interest bearing deposits with Federal Home Loan Bank and the Federal Reserve, or $4.33 million, over the same period.
Deposits decreased $3.10 million, or 3.67%, from $84.62 million at September 30, 2018 to $81.52 million at June 30, 2019. Advances from the Federal Home Loan Bank of New York increased from $12.00 million to $13.00 million over the same period as part of a hedge against loan interest rate increases.
Non-performing assets to total assets decreased slightly from 1.53% at September 30, 2018 to 1.52% at June 30, 2019 while the allowance for loan loss increased $23,000 over the same period.
Shareholders’ equity was $29.86 million at June 30, 2019, a decrease of 0.38% from the September 30, 2018 balance of $29.98 million. The book value of Gouverneur Bancorp, Inc. was $13.72 per common share based on 2,176,908 shares outstanding at June 30, 2019. The company paid a semi-annual cash dividend of $0.17 per share to all shareholders on March 29, 2019.
Commenting on the quarter’s results, Mr. Charles C. Van Vleet, the Company’s President and Chief Executive Officer, stated, “The changes in the market value and subsequent fluctuations of the unrealized gains or losses on the swaps does not directly impact the actual net income of the Bank, and the benefit from the inflow of interest income earned has been positive. Discounting the current swaps position, the Bank is on target to meet its fiscal year goals and looks forward to another successful year. ”
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 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 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 Van Vleet, President and Chief Executive Officer at (315) 287-2600.