GREENE COUNTY BANCORP, INC.

(GCBC)
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05/12GREENE COUNTY BANCORP INC Management's Discussion and Analysis of Financial Condition and Results of Operation (form 10-Q)
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05/12GREENE COUNTY BANCORP, INC. : Ex-dividend day for
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04/21GREENE COUNTY BANCORP : Reports Record High Income for the Nine Months Ended March 31, 2022 and Assets Cross the $2.5 Billion Threshold - Form 8-K
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GREENE COUNTY BANCORP INC Management's Discussion and Analysis of Financial Condition and Results of Operation (form 10-Q)

11/09/2021 | 11:12am EDT

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.

COVID-19 is expected to continue 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.

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Index

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:

(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 and September 30, 2021, this
adjusted calculation is used to provide a better basis of comparison with other
periods presented within the financial statements presented.

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Index

Comparison of Financial Condition at September 30, 2021 and June 30, 2021

ASSETS


Total assets of the Company were $2.3 billion at September 30, 2021 and $2.2
billion at June 30, 2021, an increase of $82.5 million, or 3.8%. Securities
available-for-sale and held-to-maturity increased $100.5 million, or 11.3%, to
$988.3 million at September 30, 2021 as compared to $887.8 million at June 30,
2021.  Net loans receivable increased $10.9 million, or 1.0%, to $1.1 billion at
September 30, 2021 from $1.1 billion at June 30, 2021.

CASH AND CASH EQUIVALENTS


Total cash and cash equivalents decreased $36.5 million to $113.3 million at
September 30, 2021 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 $100.5 million, or
11.3%, to $988.3 million at September 30, 2021 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 $198.2 million during
the three months ended September 30, 2021 and consisted of $142.3 million of
state and political subdivision securities, $33.5 million of mortgage-backed
securities, $2.5 million of corporate securities, and $19.9 million of other
securities. Principal pay-downs and maturities during the three months amounted
to $95.0 million, primarily consisting of $11.1 million of mortgage-backed
securities, $81.3 million of state and political subdivision securities,
$867,000 of collateralized mortgage obligations, and $1.7 million of other
securities.  At September 30, 2021, 61.0% 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 held
within the portfolio do not contain sub-prime loans and are not exposed to the
credit risk associated with such lending.

                                                 September 30, 2021                    June 30, 2021
                                                             Percentage of                     Percentage of
(Dollars in thousands)                         Balance           portfolio       Balance           portfolio
Securities available-for-sale:
U.S. Government sponsored enterprises      $    12,842                 1.3 %   $  12,903                 1.5 %
U.S. Treasury securities                        19,742                 2.0        19,836                 2.2
State and political subdivisions               225,913                22.9       200,656                22.6
Mortgage-backed securities-residential          36,813                 3.7        34,981                 3.9
Mortgage-backed securities-multifamily         113,989                11.5       119,407                13.4
Corporate debt securities                        3,076                 0.3         3,107                 0.4
Total securities available-for-sale            412,375                41.7       390,890                44.0
Securities held-to-maturity:
U.S. treasury securities                        10,941                 1.1        10,938                 1.2
State and political subdivisions               376,886                38.1       341,364                38.5
Mortgage-backed securities-residential          25,473                 2.6        28,450                 3.2
Mortgage-backed securities-multifamily         126,085                12.8       100,330                11.3
Corporate debt securities                       12,389                 1.3         9,892                 1.1
Other securities                                24,124                 2.4         5,940                 0.7
Total securities held-to-maturity              575,898                58.3       496,914                56.0
Total securities                           $   988,273               100.0 %   $ 887,804               100.0 %



LOANS

Net loans receivable increased $10.9 million, or 1.0%, to $1.1 billion at
September 30, 2021 from $1.1 billion at June 30, 2021.  Net loans receivable at
September 30, 2021 included $37.4 million in SBA Paycheck Protection Program
loans. The loan growth experienced during the three months consisted primarily
of $38.2 million in commercial real estate loans, $1.1 million in residential
real estate loans, $2.5 million in residential construction, $1.6 million in
multi-family loans, and a $1.3 million net decrease in deferred fees due to the
forgiveness of SBA PPP loans. This growth was partially offset by a $1.1 million
decrease in commercial construction loans, $32.3 million decrease in commercial
loans and an $825,000 increase in allowance for loan losses.  SBA PPP loans
decreased $30.0 million to $37.4 million at September 30, 2021 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.  We believe that customer satisfaction
continued to grow through our participation in the PPP loan program and our
quick response to customer needs during the pandemic, which has enhanced loan
growth.  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.

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  Index

(Dollars in thousands)                    September 30, 2021                     June 30, 2021
                                                      Percentage of                       Percentage of
                                        Balance           Portfolio         Balance           Portfolio
Residential real estate             $   326,274                29.2 %   $   325,167                29.3 %
Residential construction and land        12,645                 1.1          10,185                 0.9
Multi-family                             43,530                 3.9          41,951                 3.8
Commercial real estate                  511,117                45.7         472,887                42.7
Commercial construction                  61,698                 5.5          62,763                 5.7
Home equity                              18,736                 1.7          18,285                 1.6
Consumer installment                      4,897                 0.4           4,942                 0.5
Commercial loans                        139,887                12.5         172,228                15.5
Total gross loans                     1,118,784               100.0 %     1,108,408               100.0 %
Allowance for loan losses               (20,493 )                           (19,668 )
Deferred fees and costs                  (1,475 )                            (2,793 )
Total net loans                     $ 1,096,816                         $ 1,085,947



The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed
into law on March 27, 2020, and provides 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 six
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
407 remaining PPP loans with a total balance of $37.4 million outstanding at
September 30, 2021, 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.

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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 on payment deferral
or adversely classified.

Analysis of allowance for loan losses activity

At or for the three months ended

                                                                                      September 30,
(Dollars in thousands)                                                              2021                 2020
Balance at the beginning of the period                                      $     19,668         $     16,391
Charge-offs:
Consumer installment                                                                 104                   61
Commercial loans                                                                      97                    -
Total loans charged off                                                              201                   61

Recoveries:
Residential real estate                                                                -                    3
Consumer installment                                                                  37                   20
Commercial loans                                                                       1                    -
Total recoveries                                                                      38                   23

Net charge-offs                                                                      163                   38

Provisions charged to operations                                                     988                1,243
Balance at the end of the period                                            

$ 20,493 $ 17,596


Net charge-offs to average loans outstanding (annualized)                           0.06 %               0.02 %
Net charge-offs to nonperforming assets (annualized)                               33.20 %               3.50 %
Allowance for loan losses to nonperforming loans                                 1078.58 %             404.78 %
Allowance for loan losses to total loans receivable                                 1.83 %               1.68 %

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

         1.90 %               1.85 %



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.

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Index

Analysis of Nonaccrual Loans and Nonperforming Assets

                                                                  September       June 30,
(Dollars in thousands)                                             30, 2021           2021
Nonaccruing loans:
Residential real estate                                        $      1,150     $    1,324
Commercial real estate                                                  428            444
Home equity                                                             140            237
Commercial                                                              182            296
Total nonaccruing loans                                        $      1,900     $    2,301
Foreclosed real estate:
Residential real estate                                                  64             64
Total foreclosed real estate                                             64             64
Total nonperforming assets                                     $      1,964 

$ 2,365


Troubled debt restructuring:
Nonperforming (included above)                                 $        340     $      354
Performing (accruing and excluded above)                              5,039 

5,050


Total nonperforming assets as a percentage of total assets             0.09 %         0.11 %
Total nonperforming loans to net loans                                 0.17 

% 0.21 %

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

The table below details additional information related to nonaccrual loans for the three months ended September 30:


(In thousands)                                                    2021      

2020

Interest income that would have been recorded if loans had been performing in accordance with original terms

              $       50     $     135
Interest income that was recorded on nonaccrual loans                  22   

38




Nonperforming assets amounted to $2.0 million and $2.4 million at September 30,
2021 and June 30, 2021, respectively. Nonaccrual loans consisted primarily of
loans secured by real estate at September 30, 2021 and June 30, 2021. Loans on
nonaccrual status totaled $1.9 million at September 30, 2021 of which $260,000
were in the process of foreclosure. At September 30, 2021, there were two
residential loans in the process of foreclosure totaling $158,000 and one
commercial real estate loan for $102,000 in the process of foreclosure. Included
in nonaccrual loans were $1.4 million of loans which were less than 90 days past
due at September 30, 2021, 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 has 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 will not report
these loans as delinquent and Trouble Debt Restructuring disclosures. The
Company will continue 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.  The following table details loans that have payments
deferred as of September 30, 2021.  For further detail regarding loans that have
payments deferred as of September 30, 2021 and June 30, 2021 please refer to
Part I, Financial Statements (unaudited), Note 5 Loans and Allowance for Loan
Losses of this Report.

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Index

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.

The table below details additional information on impaired loans at September
30, 2021 and June 30, 2020:

(In thousands)                                                                    September 30, 2021       June 30, 2021
Balance of impaired loans, with a valuation allowance                            $             4,814     $         5,325

Allowances relating to impaired loans included in allowance for loan losses

                      410                 391
Balance of impaired loans, without a valuation allowance                                       1,256                 970
Total impaired loans                                                                           6,070               6,295



                                                                  For the three months ended
                                                                         September 30,
(In thousands)                                                          2021                2020

Average balance of impaired loans for the periods ended $ 6,041 $ 3,180 Interest income recorded on impaired loans during the periods ended

61                  15



DEPOSITS

Deposits totaled $2.1 billion at September 30, 2021 and $2.0 billion at June 30,
2021, an increase of $51.4 million, or 2.6%. Noninterest-bearing deposits
increased $20.5 million, or 11.8%, and NOW deposits increased $36.4 million, or
2.7%, when comparing September 30, 2021 and June 30, 2021.  These increases were
offset by decreases in certificates of deposits of $84,000, or 0.2%, money
market deposits decreased $5.0 million, or 3.4%, and savings deposits decreased
$410,000, or 0.1%, when comparing September 30, 2021 and June 30, 2021. Deposits
increased during the three months ended September 30, 2021 as a result of an
increase in municipal deposits at Greene County Commercial Bank, primarily from
tax collection, and new account relationships.

Major classifications of deposits at September 30, 2021 and 2020 are summarized
as follows:

                                              September      Percentage of                          Percentage of
(In thousands)                                 30, 2021          Portfolio       June 30, 2021          Portfolio
Noninterest-bearing deposits               $    194,566                9.5 %   $       174,114                8.7 %
Certificates of deposit                          34,707                1.7              34,791                1.7
Savings deposits                                300,640               14.6             301,050               15.0
Money market deposits                           140,812                6.8             145,832                7.3
NOW deposits                                  1,385,737               67.4           1,349,321               67.3
Total deposits                             $  2,056,462              100.0 %   $     2,005,108              100.0 %



BORROWINGS

At September 30, 2021, The Bank of Greene County had pledged approximately
$419.1 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 $307.3 million at September 30, 2021, of which there
were no borrowings outstanding at September 30, 2021.  There were no short-term
or overnight borrowings outstanding at September 30, 2021.  There were no
irrevocable stand-by letters of credit outstanding at September 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 September 30, 2021, approximately $3.9 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
September 30, 2021.

The Bank of Greene County has established unsecured lines of credit with
Atlantic Central Bankers Bank for $10.0 million and three other financial
institutions for $64.5 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 September 30, 2021, 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 September 30, 2021 and had an outstanding balance of $3.0
million at June 30, 2021 to fund Bank capital.

                                       35

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Index


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 15, 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
September 30, 2021, 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
September 30, 2021, there were $29.5 million of these Subordinated Note
Purchases Agreements outstanding, net of issuance costs.

At September 30, 2021, there were no long-term borrowings and therefore no scheduled maturities of long-term borrowings.

EQUITY

Shareholders' equity increased to $154.8 million at September 30, 2021 from $149.6 million at June 30, 2021, resulting primarily from net income of $7.1 million, partially offset by dividends declared and paid of $508,000 and a decrease in other accumulated comprehensive loss of $1.4 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 months
ending September 30, 2021, the Company did not repurchase any shares.

Selected Equity Data:

                                                                     September 30, 2021            June 30, 2021
Shareholders' equity to total assets, at end of period                             6.78 %                   6.80 %
Book value per share                                           $                  18.19         $          17.57
Closing market price of common stock                           $            

36.21 $ 28.12


                                                                   For the 

three months ended September 30,

                                                                                   2021                     2020
Average shareholders' equity to average assets                                     6.88 %                   7.63 %
Dividend payout ratio1                                                            15.48 %                  21.05 %
Actual dividends paid to net income2                                               7.14 %                   9.60 %



1 The 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 March 31, 2020; June 30, 2020;
September 30, 2020; December 31, 2020; June 30, 2021; and September 30, 2021.
Dividends declared during the three months ended December 31, 2019 and 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.

                                       36

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Index

Comparison of Operating Results for the Three Months Ended September 30, 2021 and 2020


Average Balance Sheet

The following table sets forth certain information relating to Greene County
Bancorp, Inc. for the three months ended September 30, 2021 and 2020. 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.

                                                       Three months ended September 30,
                                              2021                                           2020
                                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     $  1,104,588     $   12,067           4.37 %   $  1,029,808     $   10,192           3.96 %
Securities2                     947,086          3,492           1.47          642,528          3,122           1.94
Interest-bearing bank
balances and federal
funds                           103,211             42           0.16           21,840              7           0.13
FHLB stock                        1,091             12           4.40            1,306             17           5.21
Total interest-earning
assets                        2,155,976         15,613           2.90 %      1,695,482         13,338           3.15 %
Cash and due from banks          12,160                                         11,529
Allowance for loan
losses                          (19,725 )                                      (16,548 )
Other
noninterest-earning
assets                           74,896                                         26,064
Total assets               $  2,223,307                                   $  1,716,527

Interest-Bearing
Liabilities:
Savings and money market
deposits                   $    447,543     $      206           0.18 %   $    378,367     $      299           0.32 %
NOW deposits                  1,355,499            565           0.17          984,823            982           0.40
Certificates of deposit          34,738             77           0.89           35,300            108           1.22
Borrowings                       27,526            366           5.32           19,896            133           2.67
Total interest-bearing
liabilities                   1,865,306          1,214           0.26 %      1,418,386          1,522           0.43 %
Noninterest-bearing
deposits                        181,990                                        145,022
Other
noninterest-bearing
liabilities                      23,027                                         22,128
Shareholders' equity            152,984                                        130,991
Total liabilities and
equity                     $  2,223,307                                   $  1,716,527

Net interest income                         $   14,399                                     $   11,816
Net interest rate spread                                         2.64 %                                         2.72 %
Net earnings assets        $    290,670                                   $    277,096
Net interest margin                                              2.67 %                                         2.79 %
Average interest-earning
assets to average
interest-bearing
liabilities                      115.58 %                                       119.54 %


--------------------------------------------------------------------------------

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

                                       37

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Index


                                                                      For the three months ended
Taxable-equivalent net interest income and net interest margin               September 30,
(Dollars in thousands)                                                        2021             2020
Net interest income (GAAP)                                          $       14,399      $    11,816
Tax-equivalent adjustment(1)                                                   766              812
Net interest income (fully taxable-equivalent)                      $       

15,165 $ 12,628


Average interest-earning assets                                     $    2,155,976      $ 1,695,482
Net interest margin (fully taxable-equivalent)                                2.81 %           2.98 %



1 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. The rate used
for this adjustment was 21% for federal income taxes taxes for the periods ended
September 30, 2021 and 2020, 4.44% and 3.98% for New York State income taxes for
the periods ended September 30, 2021 and 2020, respectively.

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 September 30,
                                                                   2021 versus 2020
                                                          Increase/(Decrease)             Total
                                                                Due To                  Increase/
(Dollars in thousands)                                 Volume             Rate         (Decrease)
Interest-earning Assets:
Loans receivable, net1                               $       773       $     1,102     $     1,875
Securities2                                                1,244              (874 )           370
Interest-bearing bank balances and federal funds              33                 2              35
FHLB stock                                                    (3 )              (2 )            (5 )
Total interest-earning assets                              2,047               228           2,275

Interest-Bearing Liabilities:
Savings and money market deposits                             51              (144 )           (93 )
NOW deposits                                                 283              (700 )          (417 )
Certificates of deposit                                       (2 )             (29 )           (31 )
Borrowings                                                    65               168             233
Total interest-bearing liabilities                           397              (705 )          (308 )
Net change in net interest income                    $     1,650       $    

933 $ 2,583

--------------------------------------------------------------------------------

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
1.28% from 1.14% for the three months ended September 30, 2021 and 2020,
respectively.  Annualized return on average equity increased to 18.60% for the
three months ended September 30, 2021 as compared to 14.89% for the three months
ended September 30, 2020.  The increase in return on average assets and average
equity was primarily the result of net income growth outpacing balance sheet
growth, offset by decreases in interest yields on interest earning assets.  Net
income amounted to $7.1 million and $4.9 million for the three months ended
September 30, 2021 and 2020, respectively.  Average assets increased $506.8
million, or 29.5%, to $2.2 billion for the three months ended September 30, 2021
as compared to $1.7 billion for the three months ended September 30, 2020.
Average equity increased $22.0 million, or 16.8%, to $153.0 million for the
three months ended September 30, 2021 as compared to $131.0 million for the
three months ended September 30, 2020.

                                       38

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Index

INTEREST INCOME


Interest income amounted to $15.6 million for the three months ended September
30, 2021 as compared to $13.3 million for the three months ended September 30,
2020, an increase of $2.3 million, or 17.1%. 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 $74.8
million and the yield on loans increased 41 basis points when comparing the
three months ended September 30, 2021 and 2020, respectively.  Included in
interest-earning assets at September 30, 2021 and 2020 were $37.4 million and
$100.5 million of SBA Paycheck Protection Program (PPP) loans, respectively, at
a rate of 1.00%.  The Bank received $1.5 million and $16,000 in SBA PPP fee
income for the three months ended September 30, 2021 and 2020, respectively,
which was realized through a deferred origination fee and recognized within
interest income.  Average securities balances increased $304.6 million and the
yield on securities decreased 47 basis points when comparing the three months
ended September 30, 2021 and 2020, respectively

INTEREST EXPENSE


Interest expense amounted to $1.2 million for the three months ended September
30, 2021 as compared to $1.5 million for the three months ended September 30,
2020, a decrease of $308,000, or 20.2%.  As illustrated in the rate/volume
table, interest expense decreased $308,000 when comparing the three months ended
September 30, 2021 and 2020 due to the decrease in the rate paid on
interest-bearing liabilities.  Decreases in the rate paid on interest-bearing
liabilities was offset by an increase in interest expense of $397,000 when
comparing these same periods due to the increased average balances.

The average cost of interest-bearing liabilities decreased 17 basis points to
0.26% for the 2021 quarter from 0.43% for the 2020 quarter.  The cost of NOW
deposits decreased 23 basis points, the cost of savings and money market
deposits decreased 14 basis points, and the cost of certificates of deposit
decreased 33 basis points when comparing the three months ended September 30,
2021, and 2020, respectively.  The decrease in cost of interest-bearing
liabilities was offset by growth in the average balance of interest-bearing
liabilities of $446.9 million, most notably due to an increase in NOW deposits
of $370.7 million, an increase in average savings and money market deposits of
$69.2 million, and an increase in borrowings of $7.6 million when comparing the
three months ended September 30, 2021 and 2020, respectively. The cost of
borrowings increased 265 basis points when comparing the three months ended
September 30, 2021 and 2020.  The increase in cost of borrowings was due to the
Company entering into Subordinated Note Purchase Agreements in September 2021.
Yields on interest-earning assets and costs of interest-bearing deposits
continue to remain low as a result of the low interest rate environment brought
on by Federal Reserve Board interest rate decreases during fiscal 2020 and its
stance to continue the low interest rate environment to support an economic
recovery as the pandemic continues.

NET INTEREST INCOME


Net interest income increased $2.6 million to $14.4 million for the three months
ended September 30, 2021 from $11.8 million for the three months ended September
30, 2020. The increase in net interest income was primarily the result of the
growth in the average balance of interest-earning assets, which increased $460.5
million when comparing the three months ended September 30, 2021 and 2020,
offset by a decrease in the average interest rate on interest-earning assets,
which decreased 25 basis points when comparing the three months ended September
30, 2021 and 2020.

Net interest rate spread and margin both decreased when comparing the three
months ended September 30, 2021 and 2020. Net interest rate spread decreased
eight basis points to 2.64% for the three months ended September 30, 2021
compared to 2.72% for the three months ended September 30, 2020. Net interest
margin decreased 12 basis points to 2.67% for the three months ended September
30, 2021 compared to 2.79% for the three months ended September 30, 2020.
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.

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 2.81% and 2.98% for the three months ended September 30, 2021 and
2020, 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.

                                       39

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Index


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% which has had an impact to the
Company for the three months ended September 30, 2021.  It is anticipated that
the low interest rate environment will continue to have a negative impact on the
Company's interest spread and margin during the fiscal year ended June 30, 2022.
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 amounted to $988,000 and $1.2 million for the three
months ended September 30, 2021 and 2020, respectively. The provision for loan
losses for the three months ended September 30, 2021 and 2020 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 September
30, 2021, the Company had $7.1 million, consisting of six loans, on payment
deferral as a result of the pandemic, which is a decrease from $8.0 million,
consisting of eight loans, at June 30, 2021.  Management continues to monitor
these loans, and it remains uncertain whether all of these loans will continue
to perform as agreed once they reach the end of the deferral period. Loans
classified as substandard or special mention totaled $47.6 million at September
30, 2021, compared to $49.7 million at June 30, 2021, a decrease of $2.1
million, and compared to $38.9 million at September 30, 2020, an increase of
$8.7 million.  Loans classified as substandard or special mention decreased
slightly as compared to June 30, 2021 but remained elevated as compared to
September 30, 2020, due to insufficient cash flows and revenues related to the
COVID-19 pandemic.  Reserves on loans classified as substandard or special
mention totaled $8.0 million at September 30, 2021 compared to $7.8 million at
June 30, 2021, an increase of $200,000. No loans were classified as doubtful or
loss at September 30, 2021 or June 30, 2021. Allowance for loan losses to total
loans receivable was 1.83% at September 30, 2021 compared to 1.77% at June 30,
2021.  Total loans receivable included $37.4 million and $67.4 million of SBA
Paycheck Protection Program (PPP) loans at September 30, 2021 and June 30, 2021,
respectively.  Excluding these SBA guaranteed loans, the allowance for loan
losses to total loans receivable would have been 1.90% and 1.89% at September
30, 2021 and June 30, 2021, respectively.

Net charge-offs amounted to $163,000 and $38,000 for the three months ended
September 30, 2021 and 2020, respectively, an increase of $125,000. The primary
net charge off activity was in the consumer loans and one commercial loan charge
off that occurred during the quarter ended September 30, 2021.

Nonperforming loans amounted to $1.9 million and $2.3 million at September 30,
2021 and June 30, 2021, respectively. The decrease in nonperforming loans during
the period was primarily due to $304,000 in loan repayments, and $97,000 in
charge-offs. At September 30, 2021 nonperforming assets were 0.09% of total
assets compared to 0.11% at June 30, 2021. Nonperforming loans were 0.17% and
0.21% of net loans at September 30, 2021 and June 30, 2021, respectively.
Nonperforming assets to total assets were 0.24% and nonperforming loans to net
loans were 0.42% at September 30, 2020.  The Company has not been an originator
of "no documentation" mortgage loans, and the loan portfolio does not include
any mortgage loans that the Company classifies as sub-prime.

NONINTEREST INCOME

                                        For the three months                  Change from
(Dollars in thousands)                   ended September 30,                   Prior Year
Noninterest income:                          2021          2020       Amount      Percent
Service charges on deposit accounts   $     1,069       $   806     $    263         32.6 %
Debit card fees                             1,083           893          190         21.3
Investment services                           213           161           52         32.3
E-commerce fees                                33            29            4         13.8
Bank owned life insurance                     301             -          301        100.0
Other operating income                        230           189           41         21.7
Total noninterest income              $     2,929       $ 2,078     $    851         41.0 %



Noninterest income increased $851,000, or 41.0%, and totaled $2.9 million and
$2.1 million for the three months ended September 30, 2021 and 2020,
respectively. 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, increases in service charges on deposit accounts and the income from bank
owned life insurance, which was purchased in quarter ended March 31, 2021.
During the quarter ended September 30, 2021, the Bank purchased $7.0 million in
additional bank owned life insurance.

                                       40

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  Index

NONINTEREST EXPENSE

                                            For the three months                   Change from
(Dollars in thousands)                       ended September 30,                    Prior Year
Noninterest expense:                             2021          2020       Amount       Percent
Salaries and employee benefits            $     4,737       $ 4,407     $    330           7.5 %
Occupancy expense                                 505           515          (10 )        (1.9 )
Equipment and furniture expense                   156           151            5           3.3
Service and data processing fees                  638           613           25           4.1
Computer software, supplies and support           378           306           72          23.5
Advertising and promotion                         101           111          (10 )        (9.0 )
FDIC insurance premiums                           220           174           46          26.4
Legal and professional fees                       396           276          120          43.5
Other                                             830           580          250          43.1
Total noninterest expense                 $     7,961       $ 7,133     $    828          11.6 %



Noninterest expense increased $828,000, or 11.6%, to $8.0 million for the three
months ended September 30, 2021 compared to $7.1 million for the three months
ended September 30, 2020. The increase in noninterest expense during the three
months ended September 30, 2021 was primarily due to an increase in salaries and
employee benefits expense resulting from creating 13 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 other non-interest expense as the bank made a
charitable donation to The Bank of Greene County Charitable Foundation during
the three months ended September 30, 2021.

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 15.1% for the three months ended September 30, 2021 and
11.7% for the three months ended September 30, 2020, 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 the New York State tax rate and the increase in
income before taxes for September 30, 2021 compared to September 30, 2020.

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 September 30, 2021, the Company had
$113.3 million in cash and cash equivalents, representing 5.0% of total assets,
and had $594.9 million available in unused lines of credit.

At September 30, 2021, liquidity measures were as follows:


Cash equivalents/(deposits plus short term borrowings)                      

5.51 % (Cash equivalents plus unpledged securities)/(deposits plus short term borrowings)

12.99 % (Cash equivalents plus unpledged securities plus additional borrowing capacity)/(deposits plus short term borrowings)

 32.11 %



                                       41

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Index

The Bank of Greene County's unfunded loan commitments and unused lines of credit are as follows at September 30, 2021:

(In thousands)                   2021
Unfunded loan commitments   $ 107,981
Unused lines of credit         89,239
Standby letters of credit         175
Total commitments           $ 197,395



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 where 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 September 30, 2021 or  June 30, 2020.  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 $1.7 million and $2.1 million at
September 30, 2021 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.

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

                                                                                 To Be Well
                                                                              Capitalized Under
  (Dollars in                                       For Capital               Prompt Corrective            Capital Conservation
   thousands)             Actual                 Adequacy Purposes            Action Provisions                   Buffer
The Bank of         Amount        Ratio        Amount          Ratio         Amount         Ratio        Actual           Required
Greene County
As of September
30, 2021:

Total risk-based
capital            $ 195,011        16.9 %   $    92,488           8.0 %   $   115,610        10.0 %          8.87 %            2.50 %
Tier 1
risk-based
capital              180,486        15.6          69,366           6.0          92,488         8.0            9.61              2.50
Common equity
tier 1 capital       180,486        15.6          52,025           4.5          75,147         6.5           11.11              2.50
Tier 1 leverage
ratio                180,486         8.1          88,743           4.0         110,929         5.0            4.14              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 September
30, 2021:

Total risk-based
capital            $ 70,097        37.1 %   $ 15,121         8.0 %   $ 18,901        10.0 %     29.09 %      2.50 %
Tier 1
risk-based
capital              70,097        37.1       11,341         6.0       15,121         8.0       31.09        2.50
Common equity
tier 1 capital       70,097        37.1        8,505         4.5       12,286         6.5       32.59        2.50
Tier 1 leverage
ratio                70,097         7.5       37,145         4.0       46,431         5.0        3.55        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.

                                       42

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Index

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