GREENE COUNTY BANCORP INC Management’s Discussion and Analysis of Financial Condition and Results of Operation (form 10-Q)

Overview of the Company’s Activities and Risks


Greene County Bancorp, Inc.'s results of operations depend primarily on its net
interest income, which is the difference between the income earned on Greene
County Bancorp, Inc.'s loan and securities portfolios and its cost of funds,
consisting of the interest paid on deposits and borrowings. Results of
operations are also affected by Greene County Bancorp, Inc.'s provision for loan
losses, noninterest income and noninterest expense.  Noninterest income consists
primarily of fees and service charges.  Greene County Bancorp, Inc.'s
noninterest expense consists principally of compensation and employee benefits,
occupancy, equipment and data processing, and other operating expenses. Results
of operations are also significantly affected by general economic and
competitive conditions, changes in interest rates, as well as government
policies and actions of regulatory authorities. Additionally, future changes in
applicable law, regulations or government policies may materially affect Greene
County Bancorp, Inc.

To operate successfully, the Company must manage various types of risk,
including but not limited to, market or interest rate risk, credit risk,
transaction risk, liquidity risk, security risk, strategic risk, reputation risk
and compliance risk. While all of these risks are important, the risks of
greatest significance to the Company relate to market or interest rate risk and
credit risk.

Market risk is the risk of loss from adverse changes in market prices and/or
interest rates. Since net interest income (the difference between interest
earned on loans and investments and interest paid on deposits and borrowings) is
the Company's primary source of revenue, interest rate risk is the most
significant non-credit related market risk to which the Company is exposed. Net
interest income is affected by changes in interest rates as well as fluctuations
in the level and duration of the Company's assets and liabilities.

Interest rate risk is the exposure of the Company's net interest income to
adverse movements in interest rates. In addition to directly impacting net
interest income, changes in interest rates can also affect the amount of new
loan originations, the ability of borrowers and debt issuers to repay loans and
debt securities, the volume of loan repayments and refinancing, and the flow and
mix of deposits.

Credit risk is the risk to the Company's earnings and shareholders' equity that
results from customers, to whom loans have been made and to the issuers of debt
securities in which the Company has invested, failing to repay their
obligations. The magnitude of risk depends on the capacity and willingness of
borrowers and debt issuers to repay and the sufficiency of the value of
collateral obtained to secure the loans made or investments purchased.

Operational risk is the risk to current or anticipated earnings or capital
arising from inadequate or failed internal processes or systems, the misconduct
or errors of people, and adverse external events. Operational losses result from
internal fraud; external fraud; employment practices and workplace safety,
clients, products, and business practices; damage to physical assets; business
disruption and system failures; and execution, delivery, and process management.

The COVID-19 pandemic continues to impact the economy and the Company's
financial results as well as demand for services and products during the
remainder for the fiscal year ending June 30, 2022. The Company has implemented
various plans, strategies, and protocols to protect its employees, customers and
other stakeholders in response to the pandemic.  The Company imposed business
travel restrictions, implemented quarantine and remote work from home protocols,
and at times during the pandemic, the Company implemented drive-thru only or by
appointment protocols for branches and other operational areas which may be
reinstated if needed.  Enhanced cleaning, sanitation processes and social
distancing measurers were also implemented.  The Company also enhanced
communications with critical vendors to ensure operational functioning of
mission-critical activities.  The long-term implications of the COVID-19 crisis,
and related government monetary and fiscal stimulus measures on the Company's
future operations, revenues, earnings, allowance for loan losses, capital and
liquidity are difficult to assess and remain uncertain at this time.

Special Note Regarding Forward-Looking Statements


This quarterly report contains forward-looking statements. Greene County
Bancorp, Inc. desires to take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 and is including this statement
for the express purpose of availing itself of the protections of the safe harbor
with respect to all such forward-looking statements. These forward-looking
statements, which are included in this Management's Discussion and Analysis and
elsewhere in this quarterly report, describe future plans or strategies and
include Greene County Bancorp, Inc.'s expectations of future financial results.
The words "believe," "expect," "anticipate," "project," and similar expressions
identify forward-looking statements. Greene County Bancorp, Inc.'s ability to
predict results or the effect of future plans or strategies or qualitative or
quantitative changes based on market risk exposure is inherently uncertain.
Factors that could affect actual results include but are not limited to:

                                       33

——————————————————————————–

Index

(a) changes in general market interest rates,

(b) general economic conditions,

(c) economic or policy changes related to the COVID-19 pandemic,

(d) legislative and regulatory changes,

(e) monetary and fiscal policies of the U.S. Treasury and the Federal Reserve,

(f) changes in the quality or composition of Greene County Bancorp, Inc.’s loan

and investment portfolios,


 (g) deposit flows,


 (h) competition, and

(i) demand for financial services in Greene County Bancorp, Inc.’s market area.




These factors should be considered in evaluating the forward-looking statements,
and undue reliance should not be placed on such statements, since results in
future periods may differ materially from those currently expected because of
various risks and uncertainties.

Non-GAAP Financial Measures


Regulation G, a rule adopted by the Securities and Exchange Commission (SEC),
applies to certain SEC filings, including earnings releases, made by registered
companies that contain "non-GAAP financial measures." GAAP is generally accepted
accounting principles in the United States of America. Under Regulation G,
companies making public disclosures containing non-GAAP financial measures must
also disclose, along with each non-GAAP financial measure, certain additional
information, including a reconciliation of the non-GAAP financial measure to the
closest comparable GAAP financial measure (if a comparable GAAP measure exists)
and a statement of the Company's reasons for utilizing the non-GAAP financial
measure as part of its financial disclosures. The SEC has exempted from the
definition of "non-GAAP financial measures" certain commonly used financial
measures that are not based on GAAP. When these exempted measures are included
in public disclosures, supplemental information is not required. Financial
institutions like the Company and its subsidiary banks are subject to an array
of bank regulatory capital measures that are financial in nature but are not
based on GAAP and are not easily reconcilable to the closest comparable GAAP
financial measures, even in those cases where a comparable measure exists. The
Company follows industry practice in disclosing its financial condition under
these various regulatory capital measures in its periodic reports filed with the
SEC, including period-end regulatory capital ratios for itself and its
subsidiary banks, and does so without compliance with Regulation G, on the
widely-shared assumption that the SEC regards such non-GAAP measures to be
exempt from Regulation G. The Company uses in this Report additional non-GAAP
financial measures that are commonly utilized by financial institutions and have
not been specifically exempted by the SEC from Regulation G. The Company
provides, as supplemental information, such non-GAAP measures included in this
Report as described immediately below.

Tax-Equivalent Net Interest Income and Net Interest Margin: Net interest income,
as a component of the tabular presentation by financial institutions of Selected
Financial Information regarding their recently completed operations, as well as
disclosures based on that tabular presentation, is commonly presented on a
tax-equivalent basis. That is, to the extent that some component of the
institution's net interest income, which is presented on a before-tax basis, is
exempt from taxation (e.g., is received by the institution as a result of its
holdings of state or municipal obligations), an amount equal to the tax benefit
derived from that component is added to the actual before-tax net interest
income total. This adjustment is considered helpful in comparing one financial
institution's net interest income to that of another institution or in analyzing
any institution's net interest income trend line over time, to correct any
analytical distortion that might otherwise arise from the fact that financial
institutions vary widely in the proportions of their portfolios that are
invested in tax-exempt securities, and that even a single institution may
significantly alter over time the proportion of its own portfolio that is
invested in tax-exempt obligations. Moreover, net interest income is itself a
component of a second financial measure commonly used by financial institutions,
net interest margin, which is the ratio of net interest income to average
earning assets. For purposes of this measure as well, tax-equivalent net
interest income is generally used by financial institutions, again to provide a
better basis of comparison from institution to institution and to better
demonstrate a single institution's performance over time. While we present net
interest income and net interest margin utilizing GAAP measures (no
tax-equivalent adjustments) as a component of the tabular presentation within
our disclosures, we do provide as supplemental information net interest income
and net interest margin on a tax-equivalent basis.

Allowance for loan losses to total loans receivable:  The allowance for loan
losses to total loans receivable ratio is calculated by dividing the balance in
the allowance for loan losses by the gross loans outstanding at the end of the
period. This ratio is utilized to show the historical relationship between the
allowance for loan losses and the balances of loans at the end each period
presented in conjunction with other financial information related to asset
quality such as nonperforming loans, charge-offs, and classified assets to
indicate the overall adequacy of the allowance for loan losses. The Company has
adjusted the calculation of the allowance for loan losses to total loans
receivable to exclude loans that are 100% guaranteed by the Small Business
Administration as these present no credit risk to the Company. With a
significant balance in SBA loans at June 30, 2021, this adjusted calculation is
used to provide a better basis of comparison with other periods presented within
the financial statements presented.

                                       34

——————————————————————————–

Index

Comparison of Financial Condition at March 31, 2022 and June 30, 2021

ASSETS


Total assets of the Company were $2.5 billion at March 31, 2022 and $2.2 billion
at June 30, 2021, an increase of $321.4 million, or 14.6%. Securities
available-for-sale and held-to-maturity increased $253.4 million, or 28.5%, to
$1.1 billion at March 31, 2022 as compared to $887.8 million at June 30, 2021.
Net loans receivable increased $47.6 million, or 4.4%, to $1.1 billion at March
31, 2022 from $1.1 billion at June 30, 2021.

CASH AND CASH EQUIVALENTS


Total cash and cash equivalents increased $840,000 to $150.6 million at March
31, 2022 from $149.8 million at June 30, 2021. The level of cash and cash
equivalents is a function of the daily account clearing needs and deposit levels
as well as activities associated with securities transactions and loan funding.
All of these items can cause cash levels to fluctuate significantly on a daily
basis.

SECURITIES

Securities available-for-sale and held-to-maturity increased $253.4 million, or
28.5%, to $1.1 billion at March 31, 2022 as compared to $887.8 million at June
30, 2021. This increase was the result of utilizing excess cash on hand due to
an increase in deposits. Securities purchases totaled $510.5 million during the
nine months ended March 31, 2022 and consisted of $360.3 million of state and
political subdivision securities, $106.1 million of mortgage-backed securities,
$22.9 million of corporate securities, $18.2 million of US Treasury securities,
and $3.0 million of collateralized mortgage obligations. Principal pay-downs and
maturities during the nine months amounted to $237.9 million, primarily
consisting of $32.4 million of mortgage-backed securities, $203.8 million of
state and political subdivision securities, and $1.7 million of collateralized
mortgage obligations.  At March 31, 2022, 61.7% of our securities portfolio
consisted of state and political subdivision securities to take advantage of tax
savings and to promote Greene County Bancorp, Inc.'s participation in the
communities in which it operates. Mortgage-backed securities and asset-backed
securities, which represent 29.9% of our securities portfolio at March 31, 2022,
do not contain sub-prime loans and are not exposed to the credit risk associated
with such lending.

                                                   March 31, 2022                      June 30, 2021
                                                             Percentage of                     Percentage of
(Dollars in thousands)                         Balance           portfolio       Balance           portfolio
Securities available-for-sale:
U.S. Government sponsored enterprises      $    11,937                 1.1 %   $  12,903                 1.5 %
U.S. Treasury securities                        18,981                 1.7        19,836                 2.2
State and political subdivisions               232,017                20.3       200,656                22.6
Mortgage-backed securities-residential          32,484                 2.8        34,981                 3.9
Mortgage-backed securities-multifamily          98,589                 8.6       119,407                13.4
Corporate debt securities                       17,434                 1.5         3,107                 0.4
Total securities available-for-sale            411,442                36.0       390,890                44.0
Securities held-to-maturity:
U.S. treasury securities                        28,621                 2.5        10,938                 1.2
State and political subdivisions               472,018                41.4       341,364                38.5
Mortgage-backed securities-residential          24,171                 2.1        28,450                 3.2
Mortgage-backed securities-multifamily         186,971                16.4       100,330                11.3
Corporate debt securities                       17,904                 1.6         9,892                 1.1
Other securities                                    54                 0.0         5,940                 0.7
Total securities held-to-maturity              729,739                64.0       496,914                56.0
Total securities                           $ 1,141,181               100.0 %   $ 887,804               100.0 %



LOANS

Net loans receivable increased $47.6 million, or 4.4%, to $1.1 billion at March
31, 2022 from $1.1 billion at June 30, 2021.  The loan growth experienced during
the nine months consisted primarily of $62.7 million in commercial real estate
loans, $14.5 million in commercial construction loans, $17.0 million in
residential real estate loans, $3.8 million in residential construction loans,
$9.1 million in multi-family loans, and a $2.6 million net decrease in deferred
fees due to the forgiveness of SBA PPP loans. This growth was partially offset
by a $60.0 million decrease in commercial loans, driven by the decrease in SBA
PPP loans, and a $2.1 million increase in allowance for loan losses. SBA PPP
loans decreased $60.7 million to $6.7 million at March 31, 2022 from $67.4
million at June 30, 2021, due to the receipt of forgiveness proceeds.  The
Company continues to experience loan growth as a result of continued growth in
its customer base and its relationships with other financial institutions in
originating loan participations.  The Bank of Greene County continues to use a
conservative underwriting policy in regard to all loan originations, and does
not engage in sub-prime lending or other exotic loan products.  Updated
appraisals are obtained on loans when there is a reason to believe that there
has been a change in the borrower's ability to repay the loan principal and
interest, generally, when a loan is in a delinquent status.  Additionally, if an
existing loan is to be modified or refinanced, generally, an appraisal is
ordered to ensure continued collateral adequacy.

                                       35

——————————————————————————–

  Index

                                                      March 31, 2022                       June 30, 2021
(Dollars in thousands)                                          Percentage of                       Percentage of
                                                  Balance           Portfolio         Balance           Portfolio
Residential real estate                       $   342,304                29.6 %   $   325,167                29.3 %
Residential construction and land                  14,054                 1.2          10,185                 0.9
Multi-family                                       51,100                 4.4          41,951                 3.8
Commercial real estate                            535,603                46.4         472,887                42.7
Commercial construction                            77,303                 6.7          62,763                 5.7
Home equity                                        18,395                 1.6          18,285                 1.7
Consumer installment                                4,365                 0.4           4,942                 0.4
Commercial loans                                  112,275                 9.7         172,228                15.5
Total gross loans                               1,155,399               100.0 %     1,108,408               100.0 %
Allowance for loan losses                         (21,739 )                           (19,668 )
Deferred fees and costs                              (140 )                            (2,793 )
Total net loans                               $ 1,133,520                         $ 1,085,947



The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed
into law on March 27, 2020, and provided over $2.0 trillion in emergency
economic relief to individuals and businesses impacted by the COVID-19
pandemic.  The CARES Act authorized the Small Business Administration ("SBA") to
temporarily guarantee loans under a new 7(a) loan program called the Paycheck
Protection Program ("PPP").  An eligible business could apply for a PPP loan up
to the greater of: (1) 2.5 times its average monthly "payroll costs"; or (2)
$10.0 million.  PPP loans have: (a) an interest rate of 1.0%, (b) a 2-5 year
loan term to maturity, and (c) principal and interest payments deferred for nine
months from the date of disbursement. The Consolidated Appropriations Act
("CAA") was signed into law on December 27, 2020. The CAA, extended the life of
the PPP, creating a second round of PPP loans for eligible businesses. The
Company participated in the CAA's second round of PPP lending.  The SBA
guarantees 100% of the PPP loans made to eligible borrowers.  The entire
principal amount of the borrower's PPP loan, including any accrued interest, is
eligible to be reduced by the loan forgiveness amount under the PPP so long as
employee and compensation levels of the business are maintained and at least 60%
of the loan proceeds are used for payroll expenses, with the remaining 40%, or
less, of the loan proceeds used for other qualifying expenses.  The Company had
99 remaining PPP loans with a total balance of $6.7 million outstanding at March
31, 2022, compared to 835 PPP loans with a total balance of $67.4 million
outstanding at June 30, 2021.

ALLOWANCE FOR LOAN LOSSES


The allowance for loan losses is established through a provision for loan losses
based on management's evaluation of the risk inherent in the loan portfolio, the
composition of the loan portfolio, specific impaired loans and current economic
conditions.  Such evaluation, which includes a review of certain identified
loans on which full collectability may not be reasonably assured, considers
among other matters, the estimated net realizable value or the fair value of the
underlying collateral, economic conditions, payment status of the loan,
historical loan loss experience and other factors that warrant recognition in
providing for the loan loss allowance.  In addition, various regulatory
agencies, as an integral part of their examination process, periodically review
The Bank of Greene County's allowance for loan losses. Such agencies may require
The Bank of Greene County to recognize additions to the allowance based on their
judgment about information available to them at the time of their examination.
The Bank of Greene County disaggregates its loan portfolio as noted in the below
allowance for loan losses tables to evaluate for impairment collectively based
on historical loss experience.  The Bank of Greene County evaluates nonaccrual
loans that are over $100 thousand and all trouble debt restructured loans
individually for impairment, if it is probable that The Bank of Greene County
will not be able to collect scheduled payments of principal and interest when
due, according to the contractual terms of the loan agreements. Loans that are
guaranteed, such as SBA loans, are excluded from the homogeneous pool of loans
and no allowance is allocated to this segment of the portfolio.  The measurement
of impaired loans is generally based on the fair value of the underlying
collateral.  The Bank of Greene County charges loans off against the allowance
for credit losses when it becomes evident that a loan cannot be collected within
a reasonable amount of time or that it will cost the Bank more than it will
receive, and all possible avenues of repayment have been analyzed, including the
potential of future cash flow, the value of the underlying collateral, and
strength of any guarantors or co-borrowers.  Generally, consumer loans and
smaller business loans (not secured by real estate) in excess of 90 days are
charged-off against the allowance for loan losses, unless equitable arrangements
are made. Included within consumer installment loan charge-offs and recoveries
are deposit accounts that have been overdrawn in excess of 60 days. With
continued growth in the number of deposit accounts, charge-off activity within
this category has also grown, as can be seen from the tables below. For loans
secured by real estate, a charge-off is recorded when it is determined that the
collection of all or a portion of a loan may not be collected and the amount of
that loss can be reasonably estimated. The allowance for loan losses is
increased by a provision for loan losses (which results in a charge to expense)
and recoveries of loans previously charged off and is reduced by charge-offs.

                                       36

——————————————————————————–

Index


The Bank of Greene County recognizes that depending upon the duration of the
COVID-19 pandemic and the adequacy of strategies in place by local and federal
governments, borrowers may not have the ability to repay their debts which may
ultimately result in losses to The Bank of Greene County.  Management continues
to closely monitor credit relationships, particularly those that were on payment
deferral or adversely classified.

Analysis of allowance for loan losses activity

At or for the nine months ended

                                                                                          March 31,
(Dollars in thousands)                                                                 2022                  2021
Balance at the beginning of the period                                      $        19,668       $        16,391
Charge-offs:
Residential real estate                                                                   -                    26
Consumer installment                                                                    355                   247
Commercial loans                                                                        107                   500
Total loans charged off                                                                 462                   773

Recoveries:
Residential real estate                                                                  10                    10
Consumer installment                                                                     89                   101
Commercial loans                                                                          3                     -
Total recoveries                                                                        102                   111

Net charge-offs                                                                         360                   662

Provisions charged to operations                                                      2,431                 3,939
Balance at the end of the period                                            

$ 21,739 $ 19,668


Net charge-offs to average loans outstanding (annualized)                              0.04 %                0.09 %
Net charge-offs to nonperforming assets (annualized)                                  12.20 %               31.28 %
Allowance for loan losses to nonperforming loans                                     562.46 %              737.73 %
Allowance for loan losses to total loans receivable                                    1.88 %                1.80 %

Allowance for loan losses to total loans receivable (excluding PPP loans)

            1.89 %                1.97 %



Nonaccrual Loans and Nonperforming Assets


Loans are reviewed on a regular basis to assess collectability of all principal
and interest payments due.  Management determines that a loan is impaired or
nonperforming when it is probable at least a portion of the principal or
interest will not be collected in accordance with contractual terms of the
note.  When a loan is determined to be impaired, the measurement of the loan is
based on present value of estimated future cash flows, except that all
collateral-dependent loans are measured for impairment based on the fair value
of the collateral.

Generally, management places loans on nonaccrual status once the loans have
become 90 days or more delinquent or sooner if there is a significant reason for
management to believe the collectability is questionable and, therefore,
interest on the loan will no longer be recognized on an accrual basis.  The
Company identifies impaired loans and measures the impairment in accordance with
FASB ASC subtopic "Receivables - Loan Impairment."  Management may consider a
loan impaired once it is classified as nonaccrual and when it is probable that
the borrower will be unable to repay the loan according to the original
contractual terms of the loan agreement or the loan is restructured in a
troubled debt restructuring. A loan does not have to be 90 days delinquent in
order to be classified as nonperforming.  Foreclosed real estate is considered
to be a nonperforming asset.  For further discussion and detail regarding
impaired loans please refer to Part I, Financial Statements (unaudited), Note 5
Loans and Allowance for Loan Losses of this Report.

                                       37

——————————————————————————–

Index

Analysis of Nonaccrual Loans and Nonperforming Assets

(Dollars in thousands)                                         March 31, 2022       June 30, 2021
Nonaccruing loans:
Residential real estate                                      $          2,955     $         1,324
Residential construction and land                                           2                   -
Commercial real estate                                                    251                 444
Home equity                                                               190                 237
Consumer installment                                                        3                   -
Commercial                                                                464                 296
Total nonaccruing loans                                      $          3,865     $         2,301
Foreclosed real estate:
Residential real estate                                                    68                  64
Total foreclosed real estate                                               68                  64
Total nonperforming assets                                   $          

3,933 $ 2,365


Troubled debt restructuring:
Nonperforming (included above)                               $            315     $           354
Performing (accruing and excluded above)                                4,783               5,050

Total nonperforming assets as a percentage of total assets               0.16 %              0.11 %
Total nonperforming loans to net loans                                   0.34 %              0.21 %



At March 31, 2022 and June 30, 2021, there were no loans greater than 90 days
and accruing.


Nonperforming assets amounted to $3.9 million and $2.4 million at March 31, 2022
and June 30, 2021, respectively. Nonaccrual loans consisted primarily of loans
secured by real estate at March 31, 2022 and June 30, 2021. Loans on nonaccrual
status totaled $3.9 million at March 31, 2022 of which $727,000 were in the
process of foreclosure. At March 31, 2022, there were five residential loans
totaling $625,000 and one commercial real estate loan for $102,000 in the
process of foreclosure. Included in nonaccrual loans were $2.5 million of loans
which were less than 90 days past due at March 31, 2022, but have a recent
history of delinquency greater than 90 days past due. These loans will be
returned to accrual status once they have demonstrated a history of timely
payments.  Loans on nonaccrual status totaled $2.3 million at June 30, 2021 of
which $260,000 were in the process of foreclosure. At June 30, 2021, there were
two residential loans in the process of foreclosure totaling $158,000 and one
commercial real estate loan totaling $102,000 in the process of foreclosure.
Included in nonaccrual loans were $1.2 million of loans which were less than 90
days past due at June 30, 2021, but have a recent history of delinquency greater
than 90 days past due.

In order to assist borrowers through the COVID-19 pandemic, The Bank of Greene
County had instituted a loan deferment program whereby deferral of payments were
provided.  Payment deferrals consisted of either principal deferrals or full
payment deferrals.  As allowed under the CARES Act, and as amended by Section
541 of the Consolidated Appropriations Act of 2021, the Company did not report
these loans as delinquent and Trouble Debt Restructuring disclosures. The
Company continued to recognize interest income during the deferral period as
long as they are deemed collectible.  These loans will be closely monitored to
determine collectability and accrual and delinquency status will be updated as
deemed appropriate.  As of March 31, 2022, in accordance with the CARES Act and
Consolidated Appropriations Act of 2021, the loan deferral program ended,
therefore there were no loans that have payments deferred as of March 31,
2022. For further detail regarding loans that have payments deferred as of June
30, 2021 please refer to Part I, Financial Statements (unaudited), Note 5 Loans
and Allowance for Loan Losses of this Report.

Impaired Loans


The Company identifies impaired loans and measures the impairment in accordance
with FASB ASC subtopic "Receivables - Loan Impairment." A loan is considered
impaired when it is probable that the borrower will be unable to repay the loan
according to the original contractual terms of the loan agreement or the loan is
restructured in a troubled debt restructuring.

                                       38

——————————————————————————–

Index

The table below details additional information on impaired loans at March 31,
2022
and June 30, 2021:


(In thousands)                                                                 March 31, 2022       June 30, 2021
Balance of impaired loans, with a valuation allowance                         $         9,734     $         5,325
Allowances relating to impaired loans included in allowance for loan losses             2,123                 391
Balance of impaired loans, without a valuation allowance                                1,151                 970
Total impaired loans                                                                   10,885               6,295



                                              For the three months            For the nine months
                                                 ended March 31,                ended March 31,
(In thousands)                                2022             2021           2022            2021
Average balance of impaired loans for
the periods ended                          $     9,052       $   3,391     $    7,694       $   3,043
Interest income recorded on impaired
loans during the periods ended                     126              90            290             171



Residential real estate impaired loans with a valuation allowance amounted to
$3.0 million as of March 31, 2022, as compared to $1.1 million as of June 30,
2021, an increase of $1.9 million.  The increase in residential real estate
impaired loans was the result of eight relationships continuing to deteriorate
and moving into non-accrual status, and therefore classified as impaired. The
average recorded investment of these new impaired loans was $154,000 as of March
31, 2022.  Commercial real estate impaired loans with a valuation allowance
amounted to $3.8 million as of March 31, 2022, as compared to $1.2 million as of
June 30, 2021, an increase of $2.6 million.  The increase in commercial real
estate impaired loans was the result of three relationships continuing to
deteriorate and moving into non-accrual status, and therefore classified as
impaired. The average recorded investment of these new impaired loans was
$606,000 as of March 31, 2022.

DEPOSITS


Deposits totaled $2.3 billion at March 31, 2022 and $2.0 billion at June 30,
2021, an increase of $286.8 million, or 14.3%. Noninterest-bearing deposits
increased $13.9 million, or 8.0%, NOW deposits increased $228.8 million, or
17.0%, savings deposits increased $31.9 million, or 10.6%, and money market
deposits increased $12.8 million, or 8.7%, when comparing March 31, 2022 and
June 30, 2021.  These increases were offset by a decrease in certificates of
deposits of $693,000, or 2.0%, when comparing March 31, 2022 and June 30, 2021.
Deposits continued to increase during the nine months ended March 31, 2022 as a
result of an increase in new account relationships, including new corporate cash
management deposit relationships, and an increase in municipal deposits at
Greene County Commercial Bank, primarily from New York State funding and tax
collection.

Major classifications of deposits at March 31, 2022 and June 30, 2021 are
summarized as follows:

                                                                   Percentage                            Percentage
(In thousands)                               March 31, 2022      of Portfolio       June 30, 2021      of Portfolio
Noninterest-bearing deposits               $        188,043               8.2 %   $       174,114               8.7 %
Certificates of deposit                              34,098               1.5              34,791               1.7
Savings deposits                                    332,965              14.5             301,050              15.0
Money market deposits                               158,606               6.9             145,832               7.3
NOW deposits                                      1,578,158              68.9           1,349,321              67.3
Total deposits                             $      2,291,870             100.0 %   $     2,005,108             100.0 %



BORROWINGS

At March 31, 2022, The Bank of Greene County had pledged approximately $430.5
million of its residential and commercial mortgage portfolio as collateral for
borrowing and irrevocable stand-by letters of credit at the Federal Home Loan
Bank of New York ("FHLB"). The maximum amount of funding available from the FHLB
was $315.3 million at March 31, 2022, of which there were no borrowings and no
irrevocable stand-by letters of credit outstanding at March 31, 2022. There were
no short-term or overnight borrowings at March 31, 2022 and June 30, 2021.

The Bank of Greene County also pledges securities and certificates of deposit as
collateral at the Federal Reserve Bank discount window for overnight borrowings.
At March 31, 2022, approximately $18.2 million of collateral was available to be
pledged against potential borrowings at the Federal Reserve Bank discount
window. There were no balances outstanding with the Federal Reserve Bank at
March 31, 2022.

                                       39

——————————————————————————–

Index


The Bank of Greene County has established unsecured lines of credit with
Atlantic Central Bankers Bank for $15.0 million and two other financial
institutions for $50.0 million. Greene County Bancorp, Inc. has also established
an unsecured line of credit with Atlantic Central Bankers Bank for $7.5 million.
The lines of credit provide for overnight borrowing and the interest rate is
determined at the time of the borrowing. At March 31, 2022, The Bank of Greene
County had no balances outstanding on any of these lines of credit.  Greene
County Bancorp, Inc., had no borrowings outstanding with Atlantic Central
Bankers Bank at March 31, 2022 and had an outstanding balance of $3.0 million at
June 30, 2021 to fund Bank capital.

On September 17, 2020, the Company entered into Subordinated Note Purchase
Agreements with 14 qualified institutional investors, issued at 4.75%
Fixed-to-Floating Rate due September 17, 2030, in the aggregate principal amount
of $20.0 million, carried net of issuance costs of $424,000 amortized over a
period of 60 months.  These notes are callable on September 15, 2025.  At March
31, 2022, there were $19.7 million of these Subordinated Note Purchases
Agreements outstanding, net of issuance costs.

On September 15, 2021, the Company entered into Subordinated Note Purchase
Agreements with 18 qualified institutional investors, issued at 3.00%
Fixed-to-Floating Rate due September 15, 2031, in the aggregate principal amount
of $30.0 million, carried net of issuance costs of $499,000 amortized over a
period of 60 months.  These notes are callable on September 15, 2026. At March
31, 2022, there were $29.6 million of these Subordinated Note Purchases
Agreements outstanding, net of issuance costs.

At March 31, 2022, there were no long-term borrowings and therefore no scheduled
maturities of long-term borrowings.

EQUITY


Shareholders' equity increased to $156.9 million at March 31, 2022 from $149.6
million at June 30, 2021, resulting primarily from net income of $21.2 million,
partially offset by dividends declared and paid of $1.5 million and an increase
in other accumulated comprehensive loss of $12.3 million.

On September 17, 2019, the Board of Directors of the Company adopted a stock
repurchase program. Under the repurchase program, the Company may repurchase up
to 200,000 shares of its common stock. Repurchases will be made at management's
discretion at prices management considers to be attractive and in the best
interests of both the Company and its stockholders, subject to the availability
of stock, general market conditions, the trading price of the stock, alternative
uses for capital, and the Company's financial performance.  For the three and
nine months ending March 31, 2022, the Company did not repurchase any shares.

Selected Equity Data:
                                                                 March 31, 2022       June 30, 2021
Shareholders' equity to total assets, at end of period                     6.22 %              6.80 %
Book value per share                                           $          18.43     $         17.57
Closing market price of common stock                           $          44.70     $         28.12




                                                                   For the nine months ended March 31,
                                                                            2022                      2021
Average shareholders' equity to average assets                              6.71 %                    7.25 %
Dividend payout ratio1                                                     15.66 %                   18.75 %
Actual dividends paid to net income2                                        7.21 %                   12.02 %



1The dividend payout ratio has been calculated based on the dividends declared
per share divided by basic earnings per share.  No adjustments have been made
for dividends waived by Greene County Bancorp, MHC ("MHC"), the owner of 54.1%
of the Company's shares outstanding.
2 Dividends declared divided by net income.  The MHC waived its right to receive
dividends declared during the three months ended June 30, 2021; September 30,
2021; December 31, 2021 and March 31, 2022. Dividends declared during the three
months ended March 31, 2021 were paid to the MHC. The MHC's ability to waive the
receipt of dividends is dependent upon annual approval of its members as well as
receiving the non-objection of the Federal Reserve Board.

Comparison of Operating Results for the Three and Nine Months Ended March 31,
2022
and 2021


Average Balance Sheet

The following table sets forth certain information relating to Greene County
Bancorp, Inc. for the three and nine months ended March 31, 2022 and 2021. For
the periods indicated, the total dollar amount of interest income from average
interest-earning assets and the resultant yields, as well as the interest
expense on average interest-bearing liabilities, are expressed both in dollars
and rates.  No tax equivalent adjustments were made.  Average balances were
based on daily averages. Average loan balances include nonperforming loans. The
loan yields include net amortization of certain deferred fees and costs that are
considered adjustments to yields.

                                       40

——————————————————————————–

  Index

                                                        Three months ended March 31,
                                             2022                                           2021
                               Average       Interest        Average          Average       Interest        Average
                           Outstanding       Earned /        Yield /      Outstanding       Earned /        Yield /
(Dollars in thousands)         Balance           Paid           Rate          Balance           Paid           Rate
Interest-earning
Assets:
Loans receivable, net1    $  1,155,078     $   11,236           3.89 %   $  1,066,451     $   11,567           4.34 %
Securities2                  1,092,695          4,024           1.47          772,319          3,176           1.64
Interest-bearing bank
balances and federal
funds                           87,115             33           0.15          126,688             30           0.09
FHLB stock                       1,131             12           4.24              993             15           6.04
Total interest-earning
assets                       2,336,019         15,305           2.62 %      1,966,451         14,788           3.01 %
Cash and due from banks         16,303                                         15,421
Allowance for loan
losses                         (21,731 )                                      (18,854 )
Other
noninterest-earning
assets                          84,785                                         55,902
Total assets              $  2,415,376                                   $  2,018,920

Interest-Bearing
Liabilities:
Savings and money
market deposits           $    476,543     $      169           0.14 %   $    416,808     $      225           0.22 %
NOW deposits                 1,484,872            512           0.14        1,225,451            639           0.21
Certificates of deposit         34,803             67           0.77           35,039             87           0.99
Borrowings                      50,122            470           3.75           22,012            267           4.85
Total interest-bearing
liabilities                  2,046,340          1,218           0.24 %      1,699,310          1,218           0.29 %
Noninterest-bearing
deposits                       184,229                                        158,318
Other
noninterest-bearing
liabilities                     25,949                                         22,261
Shareholders' equity           158,858                                        139,031
Total liabilities and
equity                    $  2,415,376                                   $  2,018,920

Net interest income                        $   14,087                                     $   13,570
Net interest rate
spread                                                          2.38 %                                         2.72 %
Net earnings assets       $    289,679                                   $    267,141
Net interest margin                                             2.41 %                                         2.76 %
Average
interest-earning assets
to average
interest-bearing
liabilities                     114.16 %                                       115.72 %


——————————————————————————–

1Calculated net of deferred loan fees and costs, loan discounts, and loans in
process.
2Includes tax-free securities, mortgage-backed securities, and asset-backed
securities.

                                                                      For the three months ended
Taxable-equivalent net interest income and net interest margin                 March 31,
(Dollars in thousands)                                                        2022             2021
Net interest income (GAAP)                                          $       14,087      $    13,570
Tax-equivalent adjustment(1)                                                   865              751
Net interest income (fully taxable-equivalent)                      $       

14,952 $ 14,321


Average interest-earning assets                                     $    2,336,019      $ 1,966,451
Net interest margin (fully taxable-equivalent)                                2.56 %           2.91 %



1Net interest income on a taxable-equivalent basis includes the additional
amount of interest income that would have been earned if the Company's
investment in tax-exempt securities and loans had been subject to federal and
New York State income taxes yielding the same after-tax income. The rate used
for this adjustment was 21% for federal income taxes for the periods ended March
31, 2022 and 2021 and 4.44% and 3.98% for New York State income taxes for the
periods ended March 31, 2022 and 2021, respectively.

                                       41

——————————————————————————–

  Index

                                                         Nine months ended March 31,
                                             2022                                           2021
                               Average       Interest        Average          Average       Interest        Average
                           Outstanding       Earned /        Yield /      Outstanding       Earned /        Yield /
(Dollars in thousands)         Balance           Paid           Rate          Balance           Paid           Rate
Interest-earning
Assets:
Loans receivable, net1    $  1,128,553     $   35,293           4.17 %   $  1,046,993     $   33,525           4.27 %
Securities2                  1,027,204         11,285           1.46          711,507          9,443           1.77
Interest-bearing bank
balances and federal
funds                           96,044            114           0.16           72,802             58           0.11
FHLB stock                       1,112             37           4.44            1,163             49           5.62
Total interest-earning
assets                       2,252,913         46,729           2.77 %      1,832,465         43,075           3.13 %
Cash and due from banks         13,633                                         12,905
Allowance for loan
losses                         (20,796 )                                      (17,651 )
Other
noninterest-earning
assets                          79,900                                         36,447
Total assets              $  2,325,650                                   $  1,864,166

Interest-bearing
Liabilities:
Savings and money
market deposits           $    456,871     $      575           0.17 %   $    391,061     $      750           0.26 %
NOW deposits                 1,426,483          1,652           0.15        1,107,017          2,349           0.28
Certificates of deposit         34,784            218           0.84           35,157            294           1.11
Borrowings                      42,393          1,345           4.23           22,758            687           4.02
Total interest-bearing
liabilities                  1,960,531          3,790           0.26 %      1,555,993          4,080           0.35 %
Noninterest-bearing
deposits                       185,358                                        151,422
Other
noninterest-bearing
liabilities                     23,633                                         21,684
Shareholders' equity           156,128                                        135,067
Total liabilities and
equity                    $  2,325,650                                   $  1,864,166

Net interest income                        $   42,939                                     $   38,995
Net interest rate
spread                                                          2.51 %                                         2.78 %
Net earnings assets       $    292,382                                   $    276,472
Net interest margin                                             2.54 %                                         2.84 %
Average
interest-earning assets
to average
interest-bearing
liabilities                     114.91 %                                       117.77 %


——————————————————————————–

1Calculated net of deferred loan fees and costs, loan discounts, and loans in
process.
2Includes tax-free securities, mortgage-backed securities, and asset-backed
securities.

Taxable-equivalent net interest income and net interest margin        For the nine months ended
                                                                              March 31,
(Dollars in thousands)                                                        2022            2021
Net interest income (GAAP)                                          $       42,939     $    38,995
Tax-equivalent adjustment(1)                                                 2,440           2,207
Net interest income (fully taxable-equivalent)                      $       

45,379 $ 41,202


Average interest-earning assets                                     $    2,252,913     $ 1,832,465
Net interest margin (fully taxable-equivalent)                              

2.69 % 3.00 %




1Net interest income on a taxable-equivalent basis includes the additional
amount of interest income that would have been earned if the Company's
investment in tax-exempt securities and loans had been subject to federal and
New York State income taxes yielding the same after-tax income. The rate used
for this adjustment was 21% for federal income taxes for the periods ended March
31, 2022 and 2021 and 4.44% and 3.98% for New York State income taxes for the
periods ended March 31, 2022 and 2021, respectively.

                                       42

——————————————————————————–

Index

Rate / Volume Analysis


The following table presents the extent to which changes in interest rates and
changes in the volume of interest-earning assets and interest-bearing
liabilities have affected Greene County Bancorp, Inc.'s interest income and
interest expense during the periods indicated.  Information is provided in each
category with respect to:

(i) Change attributable to changes in volume (changes in volume multiplied by

prior rate);

(ii) Change attributable to changes in rate (changes in rate multiplied by prior

      volume); and


 (iii) The net change.


The changes attributable to the combined impact of volume and rate have been
allocated proportionately to the changes due to volume and the changes due to
rate.

                                                          Three Months Ended March 31,                  Nine Months Ended March 31,
                                                                2022 versus 2021                              2022 versus 2021
                                                      Increase/(Decrease)               Total       Increase/(Decrease)              Total
(Dollars in thousands)                                       Due To                 Increase/              Due To                Increase/
                                                       Volume            Rate      (Decrease)        Volume           Rate      (Decrease)

Interest Earning Assets:
Loans receivable, net1                             $      920       $  (1,251 )   $      (331 )   $   2,567       $   (799 )   $     1,768
Securities2                                             1,204            (356 )           848         3,693         (1,851 )         1,842
Interest-bearing bank balances and federal funds          (11 )            14               3            23             33              56
FHLB stock                                                  2              (5 )            (3 )          (2 )          (10 )           (12 )
Total interest-earning assets                           2,115          (1,598 )           517         6,281         (2,627 )         3,654

Interest-bearing Liabilities:
Savings and money market deposits                          31             (87 )           (56 )         115           (290 )          (175 )
NOW deposits                                              117            (244 )          (127 )         560         (1,257 )          (697 )
Certificates of deposit                                    (1 )           (19 )           (20 )          (3 )          (73 )           (76 )
Borrowings                                                275             (72 )           203           620             38             658
Total interest-bearing liabilities                        422            (422 )             0         1,292         (1,582 )          (290 )
Net change in net interest income                  $    1,693       $  

(1,176 ) $ 517 $ 4,989 $ (1,045 ) $ 3,944

——————————————————————————–

1 Calculated net of deferred loan fees, loan discounts, and loans in process.
2 Includes tax-free securities, mortgage-backed securities, and asset-backed
securities.

GENERAL

Return on average assets and return on average equity are common methods of
measuring operating results. Annualized return on average assets increased to
1.19% for the three months ended March 31, 2022 as compared to 1.04% for the
three months ended March 31, 2021, and was 1.21% and 1.17% for the nine months
ended March 31, 2022 and 2021, respectively.  Annualized return on average
equity increased to 18.10% for the three months and increased to 18.09% for the
nine months ended March 31, 2022, as compared to 15.13% for the three months and
16.12% for the nine months ended March 31, 2021. The increase in return on
average assets for the three and nine months ended March 31, 2022 and the
increase of return on average equity for the three and nine months ended March
31, 2022 was primarily the result of net income outpacing growth in the balance
sheet. The increase in return on average shareholders' equity for the nine
months ended March 31, 2022 was primarily due to the receipt of $2.8 million in
PPP fee income due to forgiveness of funds received on SBA PPP loans. Net income
amounted to $7.2 million and $5.3 million for the three months ended March 31,
2022 and 2021, respectively, an increase of $1.9 million, or 36.7%, and amounted
to $21.2 million and $16.3 million for the nine months ended March 31, 2022 and
2021, respectively, an increase of $4.9 million, or 29.7%.  Average assets
increased $396.5 million, or 19.6%, to $2.4 billion for the three months ended
March 31, 2022 as compared to $2.0 billion for the three months ended March 31,
2021. Average equity increased $19.8 million, or 14.3%, to $158.9 million for
the three months ended March 31, 2022 as compared to $139.0 million for the
three months ended March 31, 2021. Average assets increased $461.5 million, or
24.8%, to $2.3 billion for the nine months ended March 31, 2022 as compared to
$1.9 billion for the nine months ended March 31, 2021. Average equity increased
$21.1 million, or 15.6%, to $156.1 million for the nine months ended March 31,
2022 as compared to $135.1 million for the nine months ended March 31, 2021.

                                       43

——————————————————————————–

Index

INTEREST INCOME


Interest income amounted to $15.3 million for the three months ended March 31,
2022 as compared to $14.8 million for the three months ended March 31, 2021, an
increase of $517,000, or 3.5%.  Interest income amounted to $46.7 million for
the nine months ended March 31, 2022 as compared to $43.1 million for the nine
months ended March 31, 2021, an increase of $3.7 million, or 8.5%. The increase
in average balances on loans and securities as well as the recognition of PPP
fee income due to the forgiveness of SBA PPP loans had the greatest impact on
interest income, offset by the decrease in rates on securities.  Average loan
balances increased $88.6 million and the yield on loans decreased 45 basis
points when comparing the three months ended March 31, 2022 and 2021,
respectively.  Average loan balances increased $81.6 million and the yield on
loans decreased 10 basis points when comparing the nine months ended March 31,
2022 and 2021, respectively.  Included in interest-earning assets at March 31,
2022 and 2021 were $6.7 million and $90.3 million of SBA Paycheck Protection
Program (PPP) loans, respectively, at a rate of 1.00%.  The Bank received
$366,000 and $1.3 million for the three months ended and $2.8 million for both
the nine months ended March 31, 2022 and 2021, respectively in SBA PPP fee
income, which was realized through a deferred origination fee and recognized
within interest income.  Average securities increased $320.4 million and $315.7
million, and the yield on such securities decreased 17 basis points and 31 basis
points when comparing the three and nine months ended March 31, 2022 and 2021,
respectively.

INTEREST EXPENSE

Interest expense remained the same at $1.2 million for the three months ended
March 31, 2022 and March 31, 2021, respectively. Interest expense amounted to
$3.8 million for the nine months ended March 31, 2022 as compared to $4.1
million for the nine months ended March 31, 2021, a decrease of $290,000 or
7.1%.  As illustrated in the rate/volume table, interest expense on
interest-bearing liabilities remained the same when comparing the three months
ended March 31, 2022 and 2021 due to the increase in borrowings and NOW deposits
due to volume, offset by decrease in the rate paid on interest-bearing
liabilities.  The interest expense on interest-bearing liabilities due to volume
increased $422,000 and $1.3 million for the three and nine months ended March
31, 2022 and 2021, respectively as the average balance of interest-bearing
liabilities increased.

The average cost of interest-bearing liabilities decreased 5 and 9 basis points
when comparing the three and nine months ended March 31, 2022 and 2021,
respectively.  The cost of NOW deposits decreased 7 and 13 basis points, the
cost of savings and money market deposits decreased 8 and 9 basis points, and
the cost of certificates of deposit decreased 22 and 27 basis points when
comparing the three and nine months ending March 31, 2022, and 2021,
respectively.  The decrease in cost of interest-bearing liabilities was offset
by growth in the average balance of interest-bearing liabilities of $347.0
million and $404.5 million when comparing the three and nine months ended March
31, 2022 and 2021, respectively. The increase resulted most notably due to an
increase in average NOW deposits of $259.4 million and $319.5 million, an
increase in average savings and money market deposits of $59.7 million and $65.8
million, and an increase in average borrowings of $28.1 million and $19.6
million when comparing the three and nine months ended March 31, 2022 and 2021,
respectively, due to the continued focus on new municipal and large commercial
cash management customers. The cost on borrowings decreased 110 basis points and
increased 21 basis points when comparing the three and nine months ended March
31, 2022 and 2021. The change in cost of borrowings was due to the Company
entering into Subordinated Note Purchase Agreements in September 2021 and
September 2020.  Yields on interest-earning assets and costs of interest-bearing
deposits continued to decline during the quarter ended March 31, 2022, but is
expected to stabilize as the Federal Reserve Board started to raise rates during
the current quarter.

NET INTEREST INCOME

Net interest income increased $517,000 to $14.1 million for the three months
ended March 31, 2022 from $13.6 million for the three months ended March 31,
2021. Net interest income increased $3.9 million to $42.9 million for the nine
months ended March 31, 2022 from $39.0 million for the nine months ended March
31, 2021. The increase in net interest income was primarily the result of the
growth in the average balance of interest-earning assets, which increased $369.6
million and $420.4 million when comparing the three and nine months ended March
31, 2022 and 2021, offset by a decrease in the average interest rate on
interest-earning assets, which decreased 39 and 36 basis points when comparing
the three and nine months ended March 31, 2022 and 2021, respectively.

Net interest rate spread and margin both decreased when comparing the three and
nine months ended March 31, 2022 and 2021. Net interest rate spread decreased 34
basis points to 2.38% for the three months ended March 31, 2022 compared to
2.72% for the three months ended March 31, 2021. Net interest rate spread
decreased 27 basis points to 2.51% for the nine months ended March 31, 2022
compared to 2.78% for the nine months ended March 31, 2021. Net interest margin
decreased 35 basis points and 30 basis points to 2.41% and 2.54%, respectively,
for the three and nine months ended March 31, 2022 compared to 2.76% and 2.84%,
respectively, for the three and nine months ended March 31, 2021. Decreases in
net interest rate spread and net interest margin resulted primarily from
lower-yielding securities and loans offset by lower rates on deposits as well as
growth in loan and securities balances.

                                       44

——————————————————————————–

Index


Net interest income on a taxable-equivalent basis includes the additional amount
of interest income that would have been earned if the Company's investment in
tax-exempt securities and loans had been subject to federal and New York State
income taxes yielding the same after-tax income. Tax equivalent net interest
margin was 2.56% and 2.91% for the three months ended March 31, 2022 and 2021,
respectively, and was 2.69% and 3.00% for the nine months ended March 31, 2022
and 2021, respectively.

Due to the large portion of fixed-rate residential mortgages in the Company's
portfolio, the Company closely monitors its interest rate risk, and the Company
will continue to monitor and adjust the asset and liability mix as much as
possible to take advantage of the benefits and reduce the risks or potential
negative effects of changes in interest rates, including in a rising rate
environment.  Management attempts to mitigate the interest rate risk through
balance sheet composition. Several strategies are used to help manage interest
rate risk such as maintaining a high level of liquid assets such as short-term
federal funds sold and various investment securities and maintaining a high
concentration of less interest-rate sensitive and lower-costing core deposits.

The Federal Reserve Bank has taken a number of measures in an attempt to
mitigate the impact of the Coronavirus on the economy. The Federal Reserve Bank
has maintained interest rates near 0.00%-0.25% in recent quarters, which has had
an impact to the Company for the three and nine months ended March 31, 2022.
The Federal Reserve Bank raised interest rates in March of 2022 by 0.25%, and
indicated they will continue to raise rates in the upcoming meetings, which is
expected to have a positive impact to the Company's interest spread and margin,
as assets will be invested or repriced at higher yields quicker than deposits
rates will be raised. The Company continually monitors its interest rate risk
and the impact to net interest income and capital from the interest rate
decrease is well within established limits.

PROVISION FOR LOAN LOSSES


Provision for loan losses was $163,000 and $1.4 million the three months ended
March 31, 2022 and 2021, and was $2.4 million and $3.9 million for the nine
months ended March 31, 2022 and 2021, respectively. The provision for loan
losses for the three months ended March 31, 2021 and for the nine months ended
March 31, 2022 and 2021 was due to the impact of the COVID-19 pandemic as well
as growth in gross loans and an increase in loans adversely classified. The
Company instituted a loan deferral program in response to the COVID-19 pandemic
whereby deferral of principal and/or interest payments have been provided and
correspond to the length of the National Emergency as defined under the CARES
Act and extended under the Consolidated Appropriations Act which was signed into
law on December 27, 2020.  At March 31, 2022, the Company had zero loans on
payment deferral compared to eight loans aggregating $8.0 million as of June 30,
2021.  Loans classified as substandard or special mention totaled $50.0 million
at March 31, 2022, compared to $49.7 million at June 30, 2021, an increase of
$300,000, and compared to $43.0 million at March 31, 2021, an increase of $7.0
million.  Loans classified as substandard or special mention slightly increased
as compared to June 30, 2021 but remained elevated compared to March 31, 2021,
due to insufficient cash flows and revenues related to the COVID-19 pandemic.
As a result, reserves on loans classified as substandard or special mention
totaled $9.6 million at March 31, 2022 compared to $7.8 million at June 30,
2021, an increase of $1.8 million. No loans were classified as doubtful or loss
at March 31, 2022 or June 30, 2021. Allowance for loan losses to total loans
receivable was 1.88% at March 31, 2022 compared to 1.77% at June 30, 2021.
Total loans receivable included $6.7 million and $67.4 million of SBA Paycheck
Protection Program (PPP) loans at March 31, 2022 and June 30, 2021,
respectively.  Excluding these SBA guaranteed loans, the allowance for loan
losses to total loans receivable would have been 1.89% at March 31, 2022 and
June 30, 2021, respectively.

Net charge-offs amounted to $108,000 and $36,000 for the three months ended
March 31, 2022 and 2021, respectively, an increase of $72,000. Net charge-offs
totaled $360,000 and $662,000 for the nine months ended March 31, 2022 and 2021,
respectively. The primary net charge off activity was a commercial loan charge
off that occurred during the quarter ended December 31, 2020.

Nonperforming loans amounted to $3.9 million and $2.3 million at March 31, 2022
and June 30, 2021, respectively. The increase in nonperforming loans during the
period was primarily due to $2.6 million of loans placed into nonperforming
status due to delinquency, $920,000 in loan repayments, and $134,000 in
charge-offs. At March 31, 2022 nonperforming assets were 0.16% of total assets
compared to 0.11% at June 30, 2021. Nonperforming loans were 0.34% and 0.21% of
net loans at March 31, 2022 and June 30, 2021, respectively.

                                       45

——————————————————————————–

  Index

NONINTEREST INCOME

                                          For the three months                                                 For the nine months
(In thousands)                              ended March 31,                Change from Prior Year                ended March 31,               Change from Prior Year
Noninterest income:                          2022             2021          Amount             Percent            2022             2021          Amount           Percent

Service charges on deposit accounts $ 1,052 $ 815 $

   237               29.08 %   $     3,279       $    2,555     $       724             28.34 %
Debit card fees                             1,024              951              73                7.68           3,214            2,761             453             16.41
Investment services                           216              174              42               24.14             707              551             156             28.31
E-commerce fees                                23               25              (2 )             (8.00 )            83               82               1              1.22
Bank owned life insurance                     323              173             150               86.71             939              173             766            442.77
Other operating income                        267              223              44               19.73             850              711             139             19.55
Total noninterest income              $     2,905       $    2,361     $       544               23.04 %   $     9,072       $    6,833     $     2,239             32.77 %



Noninterest income increased $544,000, or 23.0%, to $2.9 million for the three
months ended March 31, 2022 compared to $2.4 million for the three months ended
March 31, 2021. Noninterest income increased $2.2 million, or 32.8%, to $9.1
million for the nine months ended March 31, 2022 compared to $6.8 million for
the nine months ended March 31, 2021. The increase was primarily due to an
increase in debit card fees resulting from continued growth in the number of
checking accounts with debit cards, the income from bank owned life insurance,
and increases in service charges on deposit accounts.

NONINTEREST EXPENSE

                                               For the three months                                                    For the nine months
(In thousands)                                   ended March 31,                  Change from Prior Year                 ended March 31,                Change from Prior Year
Noninterest expense:                              2022              2021           Amount             Percent              2022            2021           Amount            Percent
Salaries and employee benefits            $      5,332       $     4,788     $        544               11.36 %    $     15,103     $    13,966     $      1,137               8.14 %
Occupancy expense                                  549               605              (56 )             (9.26 )           1,627           1,584               43               2.71
Equipment and furniture expense                    186               168               18               10.71               573             483               90              18.63
Service and data processing fees                   649               674              (25 )             (3.71 )           1,937           1,958              (21 )            (1.07 )
Computer software, supplies and support            356               368              (12 )             (3.26 )           1,128           1,001              127              12.69
Advertising and promotion                          146               108               38               35.19               345             328               17               5.18
FDIC insurance premiums                            225               204               21               10.29               646             552               94              17.03
Legal and professional fees                        258               386             (128 )            (33.16 )           1,075             981               94               9.58
Other                                              613             1,066             (453 )            (42.50 )           2,178           2,187               (9 )            (0.41 )
Total noninterest expense                 $      8,314       $     8,367     $        (53 )             (0.63 )%   $     24,612     $    23,040     $      1,572               6.82 %



Noninterest expense decreased $53,000, or 0.6%, to $8.3 million for the three
months ended March 31, 2022 compared to $8.4 million for the three months ended
March 31, 2021. Noninterest expense increased $1.6 million, or 6.8%, to $24.6
million for the nine months ended March 31, 2022, compared to $23.0 million for
the nine months ended March 31, 2021. The increase in noninterest expense during
the nine months ended March 31, 2022 was primarily due to an increase in
salaries and employee benefits expense resulting from creating new positions
during the previous fiscal year.  The new positions were required to support
growth in the bank's lending department, customer service center and finance
department.  There was also an increase in computer software and professional
fees during the current period.

INCOME TAXES


Provision for income taxes reflects the expected tax associated with the pre-tax
income generated for the given year and certain regulatory requirements.  The
effective tax rate was 15.6% and 15.2% for the three and nine months ended March
31, 2022 and 14.2% and 13.4% for the three and nine months ended March 31, 2021,
respectively. The statutory tax rate is impacted by the benefits derived from
tax-exempt bond and loan income, the Company's real estate investment trust
subsidiary income, income received on the bank owned life insurance, as well as
the tax benefits derived from premiums paid to the Company's pooled captive
insurance subsidiary to arrive at the effective tax rate. The increase in the
current quarter was attributable to the increase in income before taxes for
March 31, 2022 compared to March 31, 2021.

LIQUIDITY AND CAPITAL RESOURCES


Market risk is the risk of loss in a financial instrument arising from adverse
changes in market rates or prices such as interest rates, foreign currency
exchange rates, commodity prices, and equity prices. Greene County Bancorp,
Inc.'s most significant form of market risk is interest rate risk since the
majority of Greene County Bancorp, Inc.'s assets and liabilities are sensitive
to changes in interest rates.  Greene County Bancorp, Inc.'s primary sources of
funds are deposits and proceeds from principal and interest payments on loans,
mortgage-backed securities and debt securities, with lines of credit available
through the Federal Home Loan Bank and Atlantic Central Bankers Bank as needed.
While maturities and scheduled amortization of loans and securities are
predictable sources of funds, deposit outflows, mortgage prepayments, and
lending activities are greatly influenced by general interest rates, economic
conditions and competition. The impact of the COVID-19 pandemic has added to the
uncertainty regarding the Company's liquidity needs, with reductions in interest
and principal payments from loans and changes in deposit activity, estimating
cash flow has become more challenging.  At March 31, 2022, the Company had
$150.6 million in cash and cash equivalents, representing 6.0% of total assets,
and had $406.0 million available in unused lines of credit.

                                       46

——————————————————————————–

Index

At March 31, 2022, liquidity measures were as follows:


Cash equivalents/(deposits plus short term borrowings)                      

6.57 %
(Cash equivalents plus unpledged securities)/(deposits plus short term
borrowings)

11.06 %
(Cash equivalents plus unpledged securities plus additional borrowing
capacity)/(deposits plus short term borrowings)

28.78 %

The Bank of Greene County’s unfunded loan commitments and unused lines of credit
are as follows at March 31, 2022:

(In thousands)
Unfunded loan commitments   $ 132,790
Unused lines of credit         89,489
Standby letters of credit         229
Total commitments           $ 222,508



Greene County Bancorp, Inc. anticipates that it will have sufficient funds
available to meet current loan commitments based on the level of cash and cash
equivalents as well as the available-for-sale investment portfolio and borrowing
capacity.

Risk Participation Agreements


Risk participation agreements ("RPAs") are guarantees issued by the Company to
other parties for a fee, whereby the Company agrees to participate in the credit
risk of a derivative customer of the other party. Under the terms of these
agreements, the "participating bank" receives a fee from the "lead bank" in
exchange for the guarantee of reimbursement if the customer defaults on an
interest rate swap. The interest rate swap is transacted such that any and all
exchanges of interest payments (favorable and unfavorable) are made between the
lead bank and the customer. In the event that an early termination of the swap
occurs and the customer is unable to make a required close out payment, the
participating bank assumes that obligation and is required to make this payment.

RPAs in which the Company acts as the lead bank are referred to as
"participations-out," in reference to the credit risk associated with the
customer derivatives being transferred out of the Company. Participations-out
generally occur concurrently with the sale of new customer derivatives.  The
Company had no participations-out at March 31, 2022 or June 30, 2021.  RPAs
where the Company acts as the participating bank are referred to as
"participations-in," in reference to the credit risk associated with the
counterparty's derivatives being assumed by the Company. The Company's maximum
credit exposure is based on its proportionate share of the settlement amount of
the referenced interest rate swap. Settlement amounts are generally calculated
based on the fair value of the swap plus outstanding accrued interest
receivables from the customer. The Company's estimate of the credit exposure
associated with its risk participations-in was $424,000 and $2.1 million at
March 31, 2022 and June 30, 2021, respectively. The current amount of credit
exposure is spread out over three counterparties, and terms range between four
to fifteen years.

Greene County Bancorp, Inc. anticipates that it will have sufficient funds
available to meet current loan commitments based on the level of cash and cash
equivalents as well as the available-for-sale investment portfolio and borrowing
capacity.

                                       47

——————————————————————————–

Index

The Bank of Greene County and Greene County Commercial Bank met all applicable
regulatory capital requirements at March 31, 2022 and June 30, 2021.

                                                                              To Be Well
                                                  For Capital              Capitalized Under
(Dollars in                                         Adequacy               Prompt Corrective            Capital Conservation
thousands)                Actual                    Purposes               Action Provisions                   Buffer
The Bank of Greene
County                Amount       Ratio        Amount        Ratio          Amount       Ratio          Actual          Required
As of March 31,
2022:

Total risk-based
capital            $ 214,942        16.8 %   $ 102,062          8.0 %   $   127,578        10.0 %          8.85 %            2.50 %
Tier 1
risk-based
capital              198,924        15.6        76,547          6.0         102,062         8.0            9.59              2.50
Common equity
tier 1 capital       198,924        15.6        57,410          4.5          82,926         6.5           11.09              2.50
Tier 1 leverage
ratio                198,924         8.2        96,696          4.0         120,870         5.0            4.23              2.50

As of June 30,
2021:

Total risk-based
capital            $ 184,063        16.9 %   $  87,384          8.0 %   $   109,230        10.0 %          8.85 %            2.50 %
Tier 1
risk-based
capital              170,335        15.6        65,538          6.0          87,384         8.0            9.59              2.50
Common equity
tier 1 capital       170,335        15.6        49,154          4.5          71,000         6.5           11.09              2.50
Tier 1 leverage
ratio(1)             170,335         8.0        85,382          4.0         106,728         5.0            3.98              2.50



Greene County Commercial
Bank
As of March 31,
2022:

Total risk-based
capital            $ 88,090        40.1 %   $ 17,558         8.0 %   $ 21,947        10.0 %     32.14 %      2.50 %
Tier 1
risk-based
capital              88,090        40.1       13,168         6.0       17,558         8.0       34.14        2.50
Common equity
tier 1 capital       88,090        40.1        9,876         4.5       14,266         6.5       35.64        2.50
Tier 1 leverage
ratio                88,090         8.2       42,976         4.0       53,720         5.0        4.20        2.50

As of June 30,
2021:

Total risk-based
capital            $ 68,116        40.2 %   $ 13,566         8.0 %   $ 16,958        10.0 %     32.17 %      2.50 %
Tier 1
risk-based
capital              68,116        40.2       10,175         6.0       13,566         8.0       34.17        2.50
Common equity
tier 1 capital       68,116        40.2        7,631         4.5       11,023         6.5       35.67        2.50
Tier 1 leverage
ratio                68,116         7.9       34,412         4.0       43,015         5.0        3.92        2.50


(1) Average assets have been adjusted for PPPLF borrowings in calculation of
Tier 1 Leverage Ratio.

© Edgar Online, source Glimpses

Source link