• Despite the COVID pressures on community banks, this bank has held up pretty well all things considered.
• Revenue growth occurred on the back of loan and deposit growth despite immense pressure on rates and increasing loan loss provisions.
• From an investment standpoint, consider shares below $22.
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• Prepared by Tara, Senior Analyst of the team at BAD BEAT Investing

We were asked by a member about Greene County Bancorp (NASDAQ:GCBC). This is a stock we had never looked at. We (Quad 7 Capital) have staff from the Catskill, NY, area, where this company was founded. Greene County Bancorp is the holding company for the Bank of Greene County and its subsidiary Greene County Commercial Bank. Despite the COVID pressures on community banks, this bank has held up pretty well all things considered. The company just reported earnings, and the results were strong. We like shares here under $22 if you can get them based on the valuation, growing revenues, and the long-term prospects for financials. Sure, right now, there is pain in banking. In the near term, it will be volatile. Keep in mind that Greene County Bancorp has exposure to upstate New York markets, and so the market has hammered this name because of lockdown orders and the unemployment rates in New York. The economy is still in pain here in New York as reopening has been so very slow. Further interest rates remain low, making it hard for banks to make money on deposits they take in and loan out. In addition, a lot of borrowers are facing increased pressure. Let us discuss.

Discussion

This regional bank is focused entirely on traditional community banking. Greene County Bancorp takes in deposits from customers at a low interest rate and makes loans to other customers at a higher rate. It is a model that has worked for centuries, though, in recent months, has been painful with the sharp shift in the economy and interest rates so low. Increased loan activity, as well as overall higher returns on assets, helped lead to revenue strength relative to expectations, and revenues did rise. The return on average assets and return on average equity came in at 1.14% and 14.89%, respectively. This is a decrease from last year. There are a lot of assets under management, but the lower returns did not lower revenues (they were up 8.8%) or earnings per share ($0.57 vs. $0.57 last year).