To supplement our financial information, which is prepared and presented in accordance with generally accepted accounting principles in
Company management and investors benefit from these non-GAAP financial reports when assessing current performance and while planning, forecasting, and analyzing future periods. These non-GAAP financial measures also assist with management’s comparisons to historical performance. The non-GAAP financial measures are 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 help investors analyze the health of our business.
In light of a number of limitations related to the use of these non-GAAP financial measures, we provide specific information regarding the GAAP amounts excluded from the non-GAAP financial measures and evaluate these non-GAAP financial measures together with their relevant financial measures in accordance with GAAP.
Certain non-GAAP financial metrics related to adjustments to total liabilities and shareholder’s equity resulting from the exclusion of the non-cash measurement of the unrealized gains or losses in market value on swap agreements held with FHLBNY have been omitted from this release as they are immaterially different from their relevant GAAP financial metrics as disclosed herein.
For more information on these non-GAAP financial measures, please see and “Reconciliation of Non-GAAP Income” and “Definitions of Non-GAAP Measures” included later in this release.
Financial and Operational Metrics | |||||||
For the Quarter Ending | |||||||
Statement of Earnings | (In Thousands) | ||||||
Interest Income | $ | 1,317 | $ | 1,421 | |||
Interest Expense | 137 | 137 | |||||
Net Interest Income | 1,180 | 1,284 | |||||
Provision for Loan Loss | - | 10 | |||||
Net Interest Income After Provision for Loan Loss | 1,180 | 1,274 | |||||
Other Operating Income (Expense) | 604 | (410 | ) | ||||
Other Operating Expense | 1,336 | 1,049 | |||||
Income (Loss) Before Income Tax | 448 | (185 | ) | ||||
Income Tax (Benefit) | 69 | (65 | ) | ||||
Net Income (Loss) | $ | 379 | $ | (120 | ) | ||
Adjusted Statement of Earnings | |||||||
Interest Income | $ | 1,317 | $ | 1,421 | |||
Interest Expense | 137 | 137 | |||||
Net Interest Income | 1,180 | 1,284 | |||||
Provision for Loan Loss | - | 10 | |||||
Net Interest Income After Provision for Loan Loss | 1,180 | 1,274 | |||||
Other Operating Income (Expense) | 604 | (410 | ) | ||||
Deduct: Unrealized gain (loss) on swap agreement | 327 | (517 | ) | ||||
Adjusted Other Operating Income (1) | 277 | 107 | |||||
Other Operating Expense | 1,336 | 1,049 | |||||
Adjusted Earnings Before Income Tax (1) (“AEBIT”) | 121 | 332 | |||||
Income Tax (Benefit) | 69 | (65 | ) | ||||
Deduct: change in EBIT tax calc. per income adj. | (68 | ) | 109 | ||||
Adjusted Income Tax(1) | 1 | 44 | |||||
Adjusted Net Income (1) | $ | 120 | $ | 288 |
(1) “Adjusted Other Operating Income”, “Adjusted Earnings Before Income Tax”, “Adjusted Income Tax”, and “Adjusted Net Income” 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 to Non-GAAP Net Income | ||||||||||
(in thousands) | ||||||||||
For the Quarter Ending: | ||||||||||
Net Income (Loss) | $ | 379 | $ | (120 | ) | |||||
(Addback) Deduct: Unrealized gain (loss) on swap agreement | 327 | (517 | ) | |||||||
Addback (Deduct): Change in EBIT tax calc. per income adj. | 68 | (109 | ) | |||||||
Adjusted Net Income | $ | 120 | $ | 288 | ||||||
Net income for the first quarter of fiscal year 2020 was
Adjusted net income for the quarter ended
Interest income on loans decreased
Interest expense on deposits increased
Interest spread, the difference between the rate earned on interest-earning assets and the rate paid on interest-bearing liabilities, was 4.05% at
Other operating income increased from -
Adjusted other operating income, for the quarter ended
Total assets decreased by
Net loans remained constant at
Deposits decreased
Shareholders’ equity was
Non-GAAP Financial Measures
The Company has numerous interest rate swap agreements (“swaps”) with
During the first quarter of Fiscal year 2020, the market value of the swaps rebounded, resulting in an unrealized gain 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 and benefit from a positive net inflow of interest income earned on the swap agreements.
Definitions of Non-GAAP Measures
Adjusted Other Operating Income We define Adjusted Other Operating Income as total non-interest earnings excluding certain items that may not be indicative of our recurring business operating results. Adjusted other operating 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 We define Adjusted Income Tax 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.
Forward-Looking Statements
The Company, headquartered in
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.
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