# GREENE COUNTY BANCORP INC (GCBC) FY 2021 MD&A

Verbatim Item 7 Management's Discussion and Analysis from GREENE COUNTY BANCORP INC's 10-K for fiscal year 2021.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1070524/000114036121031052/brhc10028843_10k.htm
Accession: 0001140361-21-031052
Filing date: 2021-09-13
Report date: 2021-06-30
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/GCBC/
All MD&A years: /company/GCBC/mda/
Next year: /company/GCBC/mda/fy2022/ (FY 2022)

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

GENERAL

Greene County Bancorp, Inc. (the “Company”) is the holding company for The Bank of Greene County (the “Bank”), a community-based bank offering a variety of financial services to meet the needs of the communities it
serves.  Greene County Bancorp, Inc.’s stock is traded on the NASDAQ Capital Market under the symbol “GCBC.”  Greene County Bancorp, MHC is a mutual holding company that owns 54.1% of the Company’s outstanding common stock.  The Bank of Greene County
is a federally chartered savings bank.  The Bank of Greene County’s principal business is attracting deposits from customers within its market area and investing those funds primarily in loans, with excess funds used to invest in securities.  At June
30, 2021, The Bank of Greene County operated 17 full-service branches, an administration office, a lending center, and an operations center in New York’s Hudson Valley Region.  In June 2004, Greene County Commercial Bank (“GCCB”) was opened for the
limited purpose of providing financial services to local municipalities.  GCCB is a subsidiary of The Bank of Greene County, and is a New York State-chartered commercial bank.  In June 2011, Greene Property Holdings, Ltd. was formed as a New York
corporation that has elected under the Internal Revenue Code to be a real estate investment trust.  Greene Properties Holding, Ltd. is a subsidiary of The Bank of Greene County.  Certain mortgages and notes held by The Bank of Greene County were
transferred to and are beneficially owned by Greene Property Holdings, Ltd.  The Bank of Greene County continues to service these loans.  In December 2014, Greene Risk Management, Inc. was formed as a Nevada corporation that is operating as a pooled
captive insurance company.  The purpose of this company is to provide additional insurance coverage for the Company and its subsidiaries related to the operations of the Company for which insurance may not be economically feasible.

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.

Critical Accounting Policies

Greene County Bancorp, Inc.’s critical accounting policies relate to the allowance for loan losses.  The allowance for loan losses is based on management’s estimation of an amount that is intended to absorb losses in
the existing portfolio.  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 portfolio, specific impaired loans and
current economic conditions.  Such evaluation, which includes a review of all loans for 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, historical loan loss experience, management’s estimate of probable credit losses and other factors that warrant recognition in providing for the allowance of loan losses.  However, this evaluation involves a high
degree of complexity and requires management to make subjective judgments that often require assumptions or estimates about highly uncertain matters.  This critical accounting policy and its application are periodically reviewed with the Audit
Committee and the Board of Directors.

Management of Credit Risk

Management considers credit risk to be an important risk factor affecting the financial condition and operating results of Greene County Bancorp, Inc. The potential for loss associated with this risk factor is managed
through a combination of policies approved by Greene County Bancorp, Inc.’s Board of Directors, the monitoring of compliance with these policies, and the periodic reporting and evaluation of loans with problem characteristics. Policies relate to the
maximum amount that can be granted to a single borrower and such borrower’s related interests, the aggregate amount of loans outstanding by type in relation to total assets and capital, loan concentrations, loan-to-collateral value ratios, approval
limits and other underwriting criteria. Policies also exist with respect to the rating of loans, determination of when loans should be placed on a nonperforming status and the factors to be considered in establishing Greene County Bancorp, Inc.’s
allowance for loan losses.  Management also considers credit risk when evaluating potential and current holdings of securities.  Credit risk is a critical component in evaluating corporate debt securities.  Greene County Bancorp, Inc. has purchased
municipal securities as part of its strategy based on the fact that such securities can offer a higher tax-equivalent yield than other similar investments.

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Management has been working with borrowers to determine best strategies to help mitigate the impact of the temporary business closures, decline in business, and loss of employment, including payment deferrals, debt
consolidations and/or loan restructurings due to COVID-19. The Company has instituted a loan deferment program of principal and/or interest payments.  As of June 30, 2021, there were 8 loans aggregating $8.0 million on payment deferrals due to the
COVID-19 pandemic compared to 706 loans aggregating $193.5 million as of June 30, 2020.  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, and will continue to recognize interest income during the deferral period.  These loans will be closely monitored to determine collectability and accrual
and delinquency status will be updated as deemed appropriate.  The Company continues to expect COVID-19 to have a negative impact on credit risk.  For further discussion regarding loan deferrals see Part II, Item 8 Financial Statements and
Supplemental Data, Note 4, Loans of this Report.

FINANCIAL OVERVIEW

Net income for the year ended June 30, 2021 amounted to $23.9 million, or $2.81 per basic and diluted share, as compared to $18.7 million, or $2.20 per basic and diluted share, for the year ended June 30, 2020, an
increase of $5.2 million, or 27.8%.  The increase in net income was primarily the result of increases of $8.3 million in net interest income and $1.0 million in noninterest income partially offset by an increase of $3.4 million in noninterest
expense, $644,000 in provision for income taxes and $69,000 in provision for loan losses. The increase in net interest income resulted from growth in interest-earning assets offset by the decrease in rates when comparing the years ended June 30, 2021
and 2020.  Growth in interest-earning assets was within both investment securities and loans. Growth in loans was primarily in commercial real estate mortgages and residential mortgages.

Net interest rate spread and margin both decreased when comparing the years ended June 30, 2021 and 2020. Net interest rate spread decreased 22 basis points to 2.76% for the year
ended June 30, 2021 compared to 2.98% for the year ended June 30, 2020. Net interest margin decreased 28 basis points to 2.81% for the year ended June 30, 2021 compared to 3.09% for the year ended June 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.

Total assets grew $523.5 million, or 31.2%, to $2.2 billion at June 30, 2021 as compared to $1.7 billion at June 30, 2020.  Net loans increased $92.4 million, or 9.3%, to $1.1 billion at June 30, 2021 as compared to
$993.5 million at June 30, 2020.  Included in net loans at June 30, 2021, are $67.4 million of SBA Paycheck Protection Program loans. Securities classified as available-for-sale and held-to-maturity increased $277.4 million, or 45.5%, to $887.8
million at June 30, 2021 as compared to $610.4 million at June 30, 2020.  Deposits grew $504.0 million, or 33.6%, to $2.0 billion at June 30, 2021 as compared to $1.5 billion at June 30, 2020.  Total shareholders’ equity amounted to $149.6 million
and $128.8 million at June 30, 2021 and 2020, respectively, or 6.8% and 7.7% of total assets, respectively.

Comparison of Financial Condition as of June 30, 2021 and 2020

SECURITIES

Securities available-for-sale and held-to-maturity increased $277.4 million, or 45.5%, to $887.8 million at June 30, 2021 as compared to $610.4 million at June 30, 2020.  This increase was the result of utilizing
excess cash on hand due to an increase in deposits. Securities purchases totaled $626.6 million during the year ended June 30, 2021 and consisted of $408.4 million of state and political subdivision securities, $158.9 million of mortgage-backed
securities, $8.8 million of corporate securities, $13.1 million of US Government Agency securities, $30.6 million of US Treasury securities, and $6.8 million of other securities. Principal pay-downs and maturities during the year amounted to $343.7
million, primarily consisting of $73.7 million of mortgage-backed securities, $252.8 million of state and political subdivision securities, $8.8 million of collateralized mortgage obligations, $2.5 million of US Government agency securities, $3.0
million of corporate debt securities and $2.9 million of other securities.

Greene County Bancorp, Inc. holds 61.1% of its securities portfolio at June 30, 2021 in 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.

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[[GREPCENT_TABLE]]
[["","","At June 30,"],["","","2021","","","2020","","","2019"],["(Dollars in thousands)","","Carrying Amount","","","Percent of total","","","Carrying Amount","","","Percent of total","","","Carrying Amount","","","Percent of total"],["Securities available-for-sale:"],["U.S. government sponsored enterprises","","$","12,903","","","","1.5","%","","$","504","","","","0.1","%","","$","5,553","","","","1.3","%"],["U.S. treasury securities","","","19,836","","","","2.2","","","","-","","","","-","","","","-","","","","-"],["State and political subdivisions","","","200,656","","","","22.6","","","","177,107","","","","29.0","","","","96,570","","","","22.6"],["Mortgage-backed securities-residential","","","34,981","","","","3.9","","","","15,528","","","","2.5","","","","2,645","","","","0.6"],["Mortgage-backed securities-multi-family","","","119,407","","","","13.4","","","","28,910","","","","4.7","","","","16,410","","","","3.8"],["Corporate debt securities","","","3,107","","","","0.4","","","","4,660","","","","0.8","","","","1,550","","","","0.4"],["Total securities available-for-sale","","","390,890","","","","44.0","","","","226,709","","","","37.1","","","","122,728","","","","28.7"],["Securities held-to-maturity:"],["U.S. government sponsored enterprises","","","-","","","","-","","","","2,000","","","","0.3","","","","9,249","","","","2.2"],["U.S. treasury securities","","","10,938","","","","1.2","","","","-","","","","-","","","","-","","","","-"],["State and political subdivisions","","","341,364","","","","38.5","","","","210,535","","","","34.5","","","","152,358","","","","35.7"],["Mortgage-backed securities-residential","","","28,450","","","","3.2","","","","38,884","","","","6.4","","","","4,570","","","","1.1"],["Mortgage-backed securities-multi-family","","","100,330","","","","11.3","","","","127,582","","","","20.9","","","","134,970","","","","31.6"],["Corporate debt securities","","","9,892","","","","1.1","","","","2,593","","","","0.4","","","","1,478","","","","0.3"],["Other securities","","","5,940","","","","0.7","","","","2,063","","","","0.4","","","","1,583","","","","0.4"],["Total securities held-to-maturity","","","496,914","","","","56.0","","","","383,657","","","","62.9","","","","304,208","","","","71.3"],["Total securities","","$","887,804","","","","100.0","%","","$","610,366","","","","100.0","%","","$","426,936","","","","100.0","%"]]
[[/GREPCENT_TABLE]]

Investment Maturity Schedule

The estimated fair value of debt securities at June 30, 2021 by contractual maturity are shown below.  Mortgage-backed securities balances are presented based on final maturity date and do not reflect the expected cash
flows from monthly principal repayments.  Expected maturities may differ from contractual maturities, because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. No tax-equivalent adjustments were
made in calculating the weighted average yield.

[[GREPCENT_TABLE]]
[["(Dollars in thousands)","","In One Year or Less","","","After One Year through Five Years","","","After Five Years through Ten Years","","","After Ten Years","","","Total"],["Securities available-for-sale:"],["U.S. government sponsored enterprises","","$","-","","","$","-","","","$","12,903","","","$","-","","","$","12,903"],["U.S. treasury securities","","","-","","","","4,091","","","","15,745","","","","-","","","","19,836"],["State and political subdivisions","","","200,547","","","","86","","","","23","","","","-","","","","200,656"],["Mortgage-backed securities-residential","","","7","","","","211","","","","631","","","","34,132","","","","34,981"],["Mortgage-backed securities-multi-family","","","5,297","","","","9,693","","","","43,289","","","","61,128","","","","119,407"],["Corporate debt securities","","","-","","","","1,623","","","","-","","","","1,484","","","","3,107"],["Total securities available-for-sale","","","205,851","","","","15,704","","","","72,591","","","","96,744","","","","390,890"],["Securities held-to-maturity:"],["U.S. treasury securities","","","-","","","","1,991","","","","8,973","","","","-","","","","10,964"],["State and political subdivisions","","","39,577","","","","119,022","","","","79,971","","","","119,675","","","","358,245"],["Mortgage-backed securities-residential","","","-","","","","621","","","","987","","","","27,336","","","","28,944"],["Mortgage-backed securities-multi-family","","","5,073","","","","45,641","","","","44,995","","","","9,244","","","","104,953"],["Corporate debt securities","","","-","","","","-","","","","9,467","","","","471","","","","9,938"],["Other securities","","","4,769","","","","816","","","","367","","","","46","","","","5,998"],["Total securities held-to-maturity","","","49,419","","","","168,091","","","","144,760","","","","156,772","","","","519,042"],["Total securities","","$","255,270","","","$","183,795","","","$","217,351","","","$","253,516","","","$","909,932"],["Weighted Average Yield","","","0.88","%","","","2.11","%","","","1.91","%","","","1.58","%","","","1.57","%"]]
[[/GREPCENT_TABLE]]

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LOANS

Net loans receivable increased $92.4 million, or 9.3%, to $1.1 billion at June 30, 2021 from $993.5 million at June 30, 2020.  Net loans receivable at June 30, 2021 included $67.4 million in SBA Paycheck Protection
Program loans. The loan growth experienced during the year consisted primarily of $91.5 million in commercial real estate loans, $45.8 million in residential real estate loans and $16.8 million in multi-family loans. This growth was partially offset
by a $1.7 million decrease in residential construction and land loans, $12.2 million decrease in commercial construction loans, $3.8 million decrease in home equity loans, $40.9 million decrease in commercial loans, $3.3 million increase in allowance
for loan losses and a $46,000 net increase in deferred fees due to the forgiveness of SBA PPP loans.  SBA PPP loans decreased $32.4 million to $67.4 million from $99.8 million at June 30, 2020, 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.

Loan Portfolio Composition

Set forth below is selected information concerning the composition of The Bank of Greene County’s loan portfolio in dollar amounts and in percentages (before deductions for deferred fees and costs, unearned discounts
and allowances for losses) as of the dates indicated.

[[GREPCENT_TABLE]]
[["","","At June 30,"],["","","2021","","","2020","","","2019","","","2018","","","2017"],["(Dollars in thousands)","","Amount","","","Percent","","","Amount","","","Percent","","","Amount","","","Percent","","","Amount","","","Percent","","","Amount","","","Percent"],["Real estate loans:"],["Residential real estate","","$","325,167","","","","29.34","%","","$","279,332","","","","27.58","%","","$","267,802","","","","33.55","%","","$","255,848","","","","35.75","%","","$","245,331","","","","38.67","%"],["Residential construction and land","","","10,185","","","","0.92","","","","11,847","","","","1.17","","","","7,462","","","","0.93","","","","9,951","","","","1.39","","","","7,160","","","","1.13"],["Multi-family","","","41,951","","","","3.78","","","","25,104","","","","2.48","","","","24,592","","","","3.08","","","","14,961","","","","2.09","","","","9,199","","","","1.45"],["Commercial real estate","","","472,887","","","","42.66","","","","381,415","","","","37.67","","","","329,668","","","","41.31","","","","283,935","","","","39.68","","","","257,964","","","","40.67"],["Commercial construction","","","62,763","","","","5.66","","","","74,920","","","","7.40","","","","36,361","","","","4.56","","","","39,366","","","","5.50","","","","28,430","","","","4.48"],["Total real estate loans","","","912,953","","","","82.36","","","","772,618","","","","76.30","","","","665,885","","","","83.43","","","","604,061","","","","84.41","","","","548,084","","","","86.40"],["Consumer loans"],["Home equity","","","18,285","","","","1.65","","","","22,106","","","","2.18","","","","23,185","","","","2.91","","","","21,919","","","","3.06","","","","21,076","","","","3.32"],["Consumer installment(1)","","","4,942","","","","0.45","","","","4,817","","","","0.48","","","","5,481","","","","0.69","","","","5,017","","","","0.70","","","","4,790","","","","0.76"],["Total consumer loans","","","23,227","","","","2.10","","","","26,923","","","","2.66","","","","28,666","","","","3.60","","","","26,936","","","","3.76","","","","25,866","","","","4.08"],["Commercial loans","","","172,228","","","","15.54","","","","213,119","","","","21.04","","","","103,554","","","","12.97","","","","84,644","","","","11.83","","","","60,381","","","","9.52"],["Total consumer loans and"],["commercial loans","","","195,455","","","","17.64","","","","240,042","","","","23.70","","","","132,220","","","","16.57","","","","111,580","","","","15.59","","","","86,247","","","","13.60"],["Total gross loans","","","1,108,408","","","","100.00","%","","","1,012,660","","","","100.00","%","","","798,105","","","","100.00","%","","","715,641","","","","100.00","%","","","634,331","","","","100.00","%"],["Less:"],["Allowance for loan losses","","","(19,668",")","","","","","","","(16,391",")","","","","","","","(13,200",")","","","","","","","(12,024",")","","","","","","","(11,022",")"],["Deferred (fees) and costs","","","(2,793",")","","","","","","","(2,747",")","","","","","","","833","","","","","","","","814","","","","","","","","878"],["Total loans receivable, net","","$","1,085,947","","","","","","","$","993,522","","","","","","","$","785,738","","","","","","","$","704,431","","","","","","","$","624,187"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(1)","Includes direct automobile loans (on both new and used automobiles) and personal loans."]]
[[/GREPCENT_TABLE]]

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Loan Maturity Schedule

The following table sets forth certain information as of June 30, 2021 regarding the amount of loans maturing or re-pricing in The Bank of Greene County’s portfolio.  Adjustable-rate loans are included in the period in
which interest rates are next scheduled to adjust rather than the period in which they contractually mature, and fixed-rate loans are included in the period in which the final contractual repayment is due.  Lines of credit with no specified maturity
date are included in the category “Within 1 Year.”

[[GREPCENT_TABLE]]
[["(In thousands)","","Within 1 Year","","","1 Year Through 3 Years","","","3 Years Through 5 Years","","","5 Years Through 10 Years","","","Beyond 10 Years","","","Total"],["Residential real estate","","$","12,311","","","$","23,662","","","$","45,877","","","$","74,551","","","$","168,766","","","$","325,167"],["Residential construction and land","","","9,857","","","","24","","","","92","","","","212","","","","-","","","","10,185"],["Multi-family","","","5,459","","","","8,067","","","","6,295","","","","21,740","","","","390","","","","41,951"],["Commercial real estate","","","145,283","","","","55,931","","","","120,277","","","","124,647","","","","26,749","","","","472,887"],["Commercial construction","","","43,549","","","","19,214","","","","-","","","","-","","","","-","","","","62,763"],["Consumer loans","","","15,186","","","","1,775","","","","2,906","","","","3,243","","","","117","","","","23,227"],["Commercial loans","","","53,951","","","","8,101","","","","71,004","","","","31,815","","","","7,357","","","","172,228"],["Total loan portfolio","","$","285,596","","","$","116,774","","","$","246,451","","","$","256,208","","","$","203,379","","","$","1,108,408"]]
[[/GREPCENT_TABLE]]

The total amount of the above loans that mature or are due after June 30, 2022 that have fixed interest rates is $476.1 million while the total amount of loans that mature or are due after such date that have
adjustable interest rates is $346.7 million.  The interest rate risk implications of The Bank of Greene County’s substantial preponderance of fixed-rate loans is discussed in detail above within the section Management of Interest Rate Risk.

Potential Problem Loans

Management closely monitors the quality of the loan portfolio and has established a loan review process designed to help grade the quality and profitability of the Company’s loan portfolio.  The credit quality grade
helps management make a consistent assessment of each loan relationship’s credit risk.  Consistent with regulatory guidelines, The Bank of Greene County provides for the classification of loans and other assets considered being of lesser quality. 
Such ratings coincide with the “Substandard”, “Doubtful” and “Loss” classifications used by federal regulators in their examination of financial institutions.  Assets that do not currently expose the insured financial institutions to sufficient risk
to warrant classification in one of the aforementioned categories but otherwise possess weaknesses are designated “Special Mention.”  For further discussion regarding how management determines when a loan should be classified, see Part II, Item 8
Financial Statements and Supplemental Data, Note 4, Loans of this Report.

The Federal Reserve Board along with the other various regulatory agencies have issued joint guidance to financial institutions who are working with borrowers affected by COVID-19.  Management has been working with
borrowers to determine best strategies to help mitigate the impact of the temporary business closures, decline in business, and loss of employment, including payment deferrals, debt consolidations and/or loan restructurings due to COVID-19. The
Company has instituted a loan deferment program of principal and/or interest payments.  As of June 30, 2021, there were eight loans aggregating $8.0 million on payment deferrals due to the COVID-19 pandemic compared to 706 loans aggregating $193.5
million as of June 30, 2020.  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, and will continue to recognize interest income during the deferral period.  These loans will be closely monitored to determine collectability and accrual and delinquency status will be updated as deemed appropriate. 
The Company continues to expect COVID-19 to have a negative impact on credit risk. For further discussion regarding loan deferrals, see Part II, Item 8 Financial Statements and Supplemental Data, Note 4, Loans of

this Report.

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.

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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 II, Item 8 Financial Statements and Supplemental Data, Note 4 Loans of this Report.

Analysis of Nonaccrual Loans, Nonperforming Assets and Restructured Loans

The table below details additional information related to nonaccrual loans for the periods indicated:

[[GREPCENT_TABLE]]
[["","","At June 30,"],["(Dollars in thousands)","","2021","","","2020","","","2019","","","2018","","","2017"],["Nonaccrual loans:"],["Residential real estate","","$","1,324","","","$","2,513","","","$","2,474","","","$","1,778","","","$","1,240"],["Multi-family","","","-","","","","151","","","","-","","","","-","","","","-"],["Commercial real estate","","","444","","","","781","","","","598","","","","1,147","","","","1,452"],["Commercial construction","","","-","","","","-","","","","-","","","","-","","","","176"],["Home equity","","","237","","","","319","","","","452","","","","298","","","","218"],["Consumer installment","","","-","","","","-","","","","6","","","","18","","","","10"],["Commercial","","","296","","","","313","","","","108","","","","276","","","","476"],["Total nonaccrual loans","","","2,301","","","","4,077","","","","3,638","","","","3,517","","","","3,572"],["Accruing loans delinquent 90 days or more:"],["Residential real estate","","","-","","","","-","","","","-","","","","62","","","","69"],["Total accruing loans delinquent 90 days or more","","","-","","","","-","","","","-","","","","62","","","","69"],["Foreclosed real estate:"],["Residential real estate","","","64","","","","-","","","","53","","","","119","","","","-"],["Commercial real estate","","","-","","","","-","","","","-","","","","-","","","","799"],["Total foreclosed real estate","","","64","","","","-","","","","53","","","","119","","","","799"],["Total nonperforming assets","","$","2,365","","","$","4,077","","","$","3,691","","","$","3,698","","","$","4,440"],["Troubled debt restructuring:"],["Nonperforming (included above)","","$","354","","","$","304","","","$","531","","","$","774","","","$","932"],["Performing (accruing and excluded above)","","","5,050","","","","909","","","","1,368","","","","1,557","","","","916"],["Nonperforming assets to total assets","","","0.11","%","","","0.24","%","","","0.29","%","","","0.32","%","","","0.45","%"],["Nonperforming loans to net loans","","","0.21","%","","","0.41","%","","","0.46","%","","","0.51","%","","","0.58","%"]]
[[/GREPCENT_TABLE]]

The table below details additional information related to nonaccrual loans:

[[GREPCENT_TABLE]]
[["","","For the years ended June 30,"],["(In thousands)","","2021","","","2020","","","2019"],["Interest income that would have been recorded if loans had been performing in accordance with original terms","","$","188","","","$","296","","","$","257"],["Interest income that was recorded on nonaccrual loans","","","134","","","","193","","","","146"]]
[[/GREPCENT_TABLE]]

Nonperforming assets amounted to $2.4 million at June 30, 2021 and $4.1 million at June 30, 2020, respectively.  Total impaired loans amounted to $6.3 million at June 30, 2021 compared to $3.3 million at June 30, 2020,
an increase of $3.0 million, or 92.5%.  The increase in impaired loans was the result of an increase in commercial real estate and commercial loans modified in a trouble debt restructuring, offset by residential loans becoming current and off
nonaccrual, and by partial charge-offs on residential loans.  Impaired loans include loans that have been modified in a troubled debt restructuring and are performing under the modified terms and have therefore been returned to performing status.

31

Index

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 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. These
loans will be returned to accrual status once they have demonstrated a history of timely payments.  Loans on nonaccrual status totaled $4.1 million at June 30, 2020 of which $1.3 million were in the process of foreclosure.  At June 30, 2020, there
were eight residential loans in the process of foreclosure totaling $1.0 million.  Included in nonaccrual loans were $1.4 million of loans which were less than 90 days past due at June 30, 2020, 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.

The table below details additional information on impaired loans as of the dates indicated:

[[GREPCENT_TABLE]]
[["","","For the years ended June 30,"],["(In thousands)","","2021","","","2020","","","2019"],["Balance of impaired loans, with a valuation allowance","","$","5,325","","","$","1,662","","","$","2,000"],["Allowances relating to impaired loans included in allowance for loan losses","","","391","","","","228","","","","262"],["Balance of impaired loans, without a valuation allowance","","","970","","","","1,608","","","","1,894"],["Average balance of impaired loans for the years ended","","","3,860","","","","3,496","","","","3,982"],["Interest income recorded on impaired loans during the years ended","","","215","","","","169","","","","160"]]
[[/GREPCENT_TABLE]]

For additional details on impaired loans, see the table in Part II, Item 8 Financial Statements and Supplemental Data, Note 4, Loans of this Report.

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 an allowance for loan loss.  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 allocation of allowance for loan losses table 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.  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 loan 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.  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.

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.

32

Index

Loans classified as substandard or special mention totaled $49.7 million at June 30, 2021 compared to $32.8 million at June 30, 2020, an increase of $16.9 million. During the year ended June 30, 2021 the Company
further downgraded construction, commercial real estate and commercial loans from pass and special mention to substandard due to deterioration in borrower cash flows, delinquent payments and further financial deterioration or not improving financial
performance.  Management continues to monitor these loan relationships closely.  Reserves on these loans totaled $7.9 million at June 30, 2021 compared to $2.4 million at June 30, 2020, an increase of $5.5 million.  No loans were classified as
doubtful or loss at June 30, 2021 or 2020. Allowance for loan losses to total loans receivable was 1.77% at June 30, 2021, and 1.62% at June 30, 2020.  As of June 30, 2021 and 2020, there were $67.4 million and $99.8 million, respectively, in SBA PPP
loans which are 100% guaranteed by the SBA with no allowance allocated to these loans.  Excluding the SBA guaranteed loans, the allowance for loan losses to total loans receivable would have been 1.89% and 1.80% at June 30, 2021 and 2020,
respectively. The increase in the allowance for loan losses to total loans receivable is due to the increase in classified loan reserves and increase in loan growth during the fiscal year, offset by a decrease in economic factors, given the economic
improvements seen in the economy, delinquent loans and nonaccrual loans since the many local businesses and the State of New York have re-opened as of June 30, 2021 to full capacity.

Net charge-offs totaled $697,000 and $714,000 for the years ended June 30, 2021 and 2020, respectively.  The decrease in charge-off activity for the year was primarily within the consumer loan and residential loan
portfolios.  This was offset by an increase in the commercial loan portfolio, resulting from one large charge-off that occurred in the second quarter of the fiscal year end June 30, 2021.

Nonperforming loans amounted to $2.3 million and $4.1 million at June 30, 2021 and June 30, 2020, respectively. At June 30, 2021 and June 30, 2020, respectively, nonperforming
assets were 0.11% and 0.24% of total assets, and nonperforming loans were 0.21% and 0.41% of net loans, an improvement, primarily in residential real estate loans, year over year.  We have not originated “no documentation” mortgage loans and our loan
portfolio does not include any mortgage loans that we classify as sub-prime.

Analysis of allowance for loan losses activity

[[GREPCENT_TABLE]]
[["","","At or for the Years Ended June 30,"],["(Dollars in thousands)","","2021","","","2020","","","2019","","","2018","","","2017"],["Balance at the beginning of the period","","$","16,391","","","","13,200","","","$","12,024","","","$","11,022","","","$","9,485"],["Charge-offs:"],["Residential real estate","","","26","","","","102","","","","287","","","","141","","","","90"],["Commercial real estate","","","-","","","","-","","","","74","","","","-","","","","39"],["Consumer installment","","","309","","","","459","","","","374","","","","318","","","","270"],["Commercial loans","","","500","","","","335","","","","51","","","","159","","","","66"],["Total loans charged off","","","835","","","","896","","","","786","","","","618","","","","465"],["Recoveries:"],["Residential real estate","","","13","","","","16","","","","13","","","","-","","","","-"],["Consumer installment","","","124","","","","130","","","","137","","","","85","","","","88"],["Commercial loans","","","1","","","","36","","","","153","","","","5","","","","3"],["Total recoveries","","","138","","","","182","","","","303","","","","90","","","","91"],["Net charge-offs","","","697","","","","714","","","","483","","","","528","","","","374"],["Provisions charged to operations","","","3,974","","","","3,905","","","","1,659","","","","1,530","","","","1,911"],["Balance at the end of the period","","$","19,668","","","","16,391","","","$","13,200","","","$","12,024","","","$","11,022"],["Net charge-offs to average loans outstanding","","","0.07","%","","","0.08","%","","","0.06","%","","","0.08","%","","","0.06","%"],["Net charge-offs to nonperforming assets","","","29.47","","","","17.51","","","","13.09","","","","14.28","","","","8.42"],["Allowance for loan losses to nonperforming loans","","","854.76","","","","402.04","","","","362.84","","","","335.96","","","","302.72"],["Allowance for loan losses to total loans receivable","","","1.77","","","","1.62","","","","1.65","","","","1.68","","","","1.74"],["Net charge-offs to average assets","","","0.04","","","","0.05","","","","0.04","","","","0.05","","","","0.04"]]
[[/GREPCENT_TABLE]]

33

Index

Allocation of Allowance for Loan Losses

The following table sets forth the allocation of the allowance for loan losses by loan category at the dates indicated.  The allowance is allocated to each loan category based on historical loss experience and economic
conditions.

[[GREPCENT_TABLE]]
[["","","At June 30,"],["","","2021","","","2020","","","2019","","","2018","","","2017"],["(Dollars in thousands)","","Amount of loan loss allowance","","","Percent of loans in each category to total loans","","","Amount of loan loss allowance","","","Percent of loans in each category to total loans","","","Amount of loan loss allowance","","","Percent of loans in each category to total loans","","","Amount of loan loss allowance","","","Percent of loans in each category to total loans","","","Amount of loan loss allowance","","","Percent of loans in each category to total loans"],["Residential real estate","","$","2,012","","","","29.3","%","","$","2,091","","","","27.6","%","","$","2,026","","","","33.6","%","","$","2,116","","","","35.8","%","","$","2,289","","","","38.7","%"],["Residential construction and land","","","106","","","","0.9","","","","141","","","","1.2","","","","87","","","","0.9","","","","114","","","","1.4","","","","89","","","","1.1"],["Multi-family","","","186","","","","3.8","","","","176","","","","2.5","","","","180","","","","3.1","","","","162","","","","2.1","","","","43","","","","1.4"],["Commercial real estate","","","13,049","","","","42.7","","","","8,634","","","","37.6","","","","7,110","","","","41.3","","","","5,979","","","","39.6","","","","5,589","","","","40.7"],["Commercial construction","","","1,535","","","","5.7","","","","2,053","","","","7.4","","","","872","","","","4.5","","","","950","","","","5.5","","","","687","","","","4.5"],["Home equity","","","165","","","","1.6","","","","295","","","","2.2","","","","314","","","","2.9","","","","317","","","","3.1","","","","234","","","","3.3"],["Consumer installment","","","267","","","","0.5","","","","197","","","","0.5","","","","250","","","","0.7","","","","224","","","","0.7","","","","231","","","","0.8"],["Commercial loans","","","2,348","","","","15.5","","","","2,804","","","","21.0","","","","2,361","","","","13.0","","","","2,128","","","","11.8","","","","1,680","","","","9.5"],["Unallocated","","","-","","","","-","","","","-","","","","-","","","","-","","","","-","","","","34","","","","-","","","","180","","","","-"],["Totals","","$","19,668","","","","100.0","%","","$","16,391","","","","100.0","%","","$","13,200","","","","100.0","%","","$","12,024","","","","100.0","%","","$","11,022","","","","100.0","%"]]
[[/GREPCENT_TABLE]]

For further discussion and detail regarding the Allowance for Loan Loss, please refer to Part II, Item 8 Financial Statements and Supplemental Data, Note 4 Loans of this Report.

PREMISES AND EQUIPMENT

Premises and equipment amounted to $14.1 million and $13.7 million at June 30, 2021 and 2020, respectively.  Purchases totaled $1.3 million during the year ended June 30, 2021, consisting primarily of building
improvements and equipment for a new branch located in Albany, New York, equipment for disaster recovery and new ATMs.  Purchases totaled $1.1 million during the year ended June 30, 2020, consisting primarily of building improvements and equipment
for a new branch located in Kinderhook-Valatie, New York and expansion to an existing lending center. Depreciation for the year ended June 30, 2021 totaled $775,000, compared to $713,000 for the year ended June 30, 2020.  There were no disposals of
premises and equipment during the fiscal years ended June 30, 2021 and 2020.

PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other assets totaled $8.5 million at June 30, 2021, compared to $5.0 million at June 30, 2020, an increase of $3.5 million.  This increase was due to an increase of $2.3 million in deferred taxes,
and an increase of $932,000 in prepaid expense.

Real estate acquired as a result of foreclosure, or in-substance foreclosure, is classified as foreclosed real estate (“FRE”) until such time as it is sold.  When real estate is classified as FRE, it is recorded at its
fair value, less estimated costs of disposal establishing a new cost basis. Upon transfer to FRE, if the value of the property is less than the loan, less any related specific loan loss provisions, the difference is charged against the allowance for
loan losses.  Any subsequent write-down of FRE is charged against earnings.  There were $64,000 in FRE assets at June 30, 2021.  At June 30, 2020, there were no FRE assets.

34

Index

DEPOSITS

Total deposits increased to $2.0 billion at June 30, 2021 from $1.5 billion at June 30, 2020, an increase of $504.0 million, or 33.6%. Noninterest-bearing deposits increased $35.9 million, or 26.0%, NOW deposits
increased $397.4 million, or 41.8%, money market deposits increased $11.9 million, or 8.9%, and savings deposits increased $59.7 million, or 24.7%, when comparing June 30, 2021 and June 30, 2020.  These increases were offset by a decrease in
certificates of deposits of $834,000, or 2.3%, when comparing June 30, 2021 and June 30, 2020. Deposits increased during the year ended June 30, 2021 as a result of an increase in new account relationships and stimulus funds deposited across all
three of our primary business lines, retail, commercial and municipal. Additional growth was attributed to the expansion of a new branch on Wolf Road in Albany County, NY.

[[GREPCENT_TABLE]]
[["","","At June 30,"],["","","2021","","","2020","","","2019"],["(Dollars in thousands)","","Amount","","","Percent","","","Amount","","","Percent","","","Amount","","","Percent"],["Transaction and savings deposits:"],["Noninterest-bearing deposits","","$","174,114","","","","8.7","%","","$","138,187","","","","9.2","%","","$","107,469","","","","9.6","%"],["Certificates of deposit","","","34,791","","","","1.7","","","","35,625","","","","2.4","","","","36,542","","","","3.3"],["Savings deposits","","","301,050","","","","15.0","","","","241,371","","","","16.1","","","","214,680","","","","19.2"],["Money market deposits","","","145,832","","","","7.3","","","","133,970","","","","8.9","","","","114,915","","","","10.2"],["NOW deposits","","","1,349,321","","","","67.3","","","","951,922","","","","63.4","","","","646,963","","","","57.7"],["Total deposits","","$","2,005,108","","","","100.0","%","","$","1,501,075","","","","100.0","%","","$","1,120,569","","","","100.0","%"]]
[[/GREPCENT_TABLE]]

The amount of certificates of deposit by time remaining to maturity as of June 30, 2021 is set forth in Part II, Item 8 Financial Statements and Supplemental Data, Note 6, Deposits of

this Report.

BORROWINGS

At June 30, 2021, borrowings for the Company amounted to $22.6 million, compared to $25.5 million at June 30, 2020, a decrease of $2.8 million.  Borrowings consisted of $19.6 million of Fixed-to-Floating Rate
Subordinated Notes and $3.0 million of short-term borrowings with Atlantic Central Bankers Bank (“ACBB”).  During the year ended June 30, 2021, the Company repaid $10.9 million of Paycheck Protection Plan Lending Facility “(PPPLF”), $7.0 million of
short-term borrowings with Atlantic Central Bankers Bank and $7.6 million of long-term borrowings with the FHLB and borrowed $3.0 million of short-term borrowings with Atlantic Central Bankers Bank.

Effective April 9, 2020, the FRB instituted the PPPLF to provide banks additional funding for liquidity whereby the PPP loans are pledged as collateral.  The PPPLF can provide additional liquidity up to the principal
balance of PPP loans on the Company’s balance sheet. The Company did not have any borrowings outstanding under the PPPLF at June 30, 2021 and $10.9 million outstanding at June 30, 2020.

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 June 30, 2021, there were $19.6 million of Subordinated Note
Purchases Agreements outstanding, net of issuance costs.

The Company’s borrowing agreements are discussed further within Part II, Item 8 Financial Statements and Supplemental Data, Note 7 Borrowings of this Report.

35

Index

The table below details additional information related to short-term and long-term borrowings for the years ended June 30,

[[GREPCENT_TABLE]]
[["(Dollars in thousands)","","2021","","","2020"],["Short-term borrowings"],["Average outstanding balance","","$","2,532","","","$","3,983"],["Interest expense","","","75","","","","49"],["Weighted average interest rate during the year","","","2.96","%","","","1.23","%"],["Weighted average interest rate at end of year","","","3.75","%","","","0.39","%"],["Long-term borrowings"],["Average outstanding balance","","$","19,854","","","$","11,317"],["Interest expense","","","887","","","","191"],["Weighted average interest rate during the year","","","4.47","%","","","1.69","%"],["Weighted average interest rate at end of year","","","4.75","%","","","1.73","%"]]
[[/GREPCENT_TABLE]]

OTHER LIABILITIES

Other liabilities, consisting primarily of accrued liabilities, totaled $23.0 million at June 30, 2021, compared to $21.4 million at June 30, 2020, an increase of $1.6 million.  This increase was due primarily to
increased accrued expenses for various employee benefit plans, including short-term and long-term incentive plans, and supplemental executive retirement plan.  The ASU 2016-02 lease liability also increased by $334,000 when comparing the year ended
June 30, 2020 to June 30, 2021. This was partially offset by a decrease in the pension liability of $771,000 when comparing the year ended June 30, 2020 to June 30, 2021. For further information regarding these changes, see Part II, Item 8 Financial
Statements and Supplemental Data, Note 9 Employee Benefits Plans and Note 10 Stock-Based Compensation of this Report.

SHAREHOLDERS’ EQUITY

Shareholders’ equity increased to $149.6 million at June 30, 2021 from $128.8 million at June 30, 2020, resulting primarily from net income of $23.9 million partially offset by dividends declared and paid of $2.4
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 are 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. As of June 30, 2021, the Company had repurchased a total of 24,400 shares of the 200,000 shares authorized by the repurchase program. The Company did not repurchase any shares during the year ended
June 30, 2021.

[[GREPCENT_TABLE]]
[["Selected Equity Data:","","At June 30,"],["","","2021","","","2020"],["Shareholders\u2019 equity to total assets, at end of period","","","6.80","%","","","7.68","%"],["Book value per share","","$","17.57","","","$","15.13"],["Closing market price of common stock","","$","28.12","","","$","22.30"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","","For the years ended June 30,"],["","","2021","","","2020"],["Average shareholders\u2019 equity to average assets","","","7.12","%","","","8.18","%"],["Dividend payout ratio1","","","17.08","%","","","20.00","%"],["Actual dividends paid to net income2","","","10.15","%","","","11.95","%"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["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 (\u201cMHC\u201d), the owner of 54.1% of the Company\u2019s shares outstanding."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["2","Dividends declared divided by net income. The MHC waived its right to receive dividends declared during the three months ended September 30, 2019; March 31, 2020; June 30, 2020; September 30, 2020; and December 31, 2020. Dividends declared during the three months ended December 31, 2019 and March 31, 2021 were paid to the MHC. The MHC\u2019s 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."]]
[[/GREPCENT_TABLE]]

36

Index

Comparison of Operating Results for the Years Ended June 30, 2021 and 2020

Average Balance Sheet

The following table sets forth certain information relating to Greene County Bancorp, Inc. for the years ended June 30, 2021 and 2020.  For the years 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 are 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.

[[GREPCENT_TABLE]]
[["","","Fiscal Years Ended June 30"],["","","2021","","","2020"],["(Dollars in thousands)","","Average Outstanding Balance","","","Interest Earned/ Paid","","","Average Yield/ Rate","","","Average Outstanding Balance","","","Interest Earned/ Paid","","","Average Yield/ Rate"],["Interest-earning Assets:"],["Loans receivable1","","$","1,060,471","","","$","45,275","","","","4.27","%","","$","875,374","","","$","39,159","","","","4.47","%"],["Securities2","","","751,690","","","","12,911","","","","1.72","","","","528,131","","","","13,441","","","","2.55"],["Interest-earning bank balances and federal funds","","","79,345","","","","81","","","","0.10","","","","45,488","","","","622","","","","1.37"],["FHLB stock","","","1,144","","","","61","","","","5.33","","","","1,405","","","","92","","","","6.55"],["Total interest-earning assets","","","1,892,650","","","","58,328","","","","3.08","%","","","1,450,398","","","","53,314","","","","3.67","%"],["Cash and due from banks","","","12,526","","","","","","","","","","","","11,080"],["Allowance for loan losses","","","(18,191",")","","","","","","","","","","","(14,052",")"],["Other noninterest-earning assets","","","44,604","","","","","","","","","","","","23,444"],["Total assets","","$","1,931,589","","","","","","","","","","","$","1,470,870"],["Interest-Bearing Liabilities:"],["Savings and money market deposits","","$","403,360","","","$","952","","","","0.24","%","","$","337,463","","","$","1,348","","","","0.40","%"],["NOW deposits","","","1,156,672","","","","2,895","","","","0.25","","","","831,469","","","","6,414","","","","0.77"],["Certificates of deposit","","","35,044","","","","374","","","","1.07","","","","36,187","","","","479","","","","1.32"],["Borrowings","","","22,386","","","","962","","","","4.30","","","","15,300","","","","240","","","","1.57"],["Total interest-bearing liabilities","","","1,617,462","","","","5,183","","","","0.32","%","","","1,220,419","","","","8,481","","","","0.69","%"],["Noninterest-bearing deposits","","","155,657","","","","","","","","","","","","112,908"],["Other noninterest-bearing liabilities","","","20,959","","","","","","","","","","","","17,156"],["Shareholders\u2019 equity","","","137,511","","","","","","","","","","","","120,387"],["Total liabilities and equity","","$","1,931,589","","","","","","","","","","","$","1,470,870"],["Net interest income","","","","","","$","53,145","","","","","","","","","","","$","44,833"],["Net interest rate spread","","","","","","","","","","","2.76","%","","","","","","","","","","","2.98","%"],["Net earnings assets","","$","275,188","","","","","","","","","","","$","229,979"],["Net interest margin","","","","","","","","","","","2.81","%","","","","","","","","","","","3.09","%"],["Average interest-earning assets to average interest-bearing liabilities","","","117.01","%","","","","","","","","","","","118.84","%"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["1","Calculated net of deferred loan fees and costs, loan discounts, and loans in process."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["2","Includes tax-free securities, mortgage-backed securities, asset-backed securities and long term certificates of deposit."]]
[[/GREPCENT_TABLE]]

Taxable-equivalent net interest income and net interest margin

[[GREPCENT_TABLE]]
[["","","For the year ended June 30,"],["(Dollars in thousands)","","2021","","","2020"],["Net interest income (GAAP)","","$","53,145","","","$","44,833"],["Tax-equivalent adjustment(1)","","","3,032","","","","2,510"],["Net interest income (fully taxable-equivalent)","","$","56,177","","","$","47,343"],["Average interest-earning assets","","$","1,892,650","","","$","1,450,398"],["Net interest margin (fully taxable-equivalent)","","","2.97","%","","","3.26","%"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(1)","Net interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if the Company\u2019s 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 approximately 21% for federal income taxes for the periods ended June 30, 2021 and 2020, and 4.44% and 3.98% for New York State income taxes for the periods ended June 30, 2021 and 2020, respectively."]]
[[/GREPCENT_TABLE]]

37

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:

[[GREPCENT_TABLE]]
[["","(i)","Change attributable to changes in volume (changes in volume multiplied by prior rate);"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","(ii)","Change attributable to changes in rate (changes in rate multiplied by prior volume); and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","(iii)","The net change."]]
[[/GREPCENT_TABLE]]

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.

[[GREPCENT_TABLE]]
[["","","Years Ended June 30,"],["","","2021 versus 2020","","","2020 versus 2019"],["","","Increase/(Decrease) Due To","","","Total Increase/","","","Increase/(Decrease) Due To","","","Total Increase/"],["(In thousands)","","Volume","","","Rate","","","(Decrease)","","","Volume","","","Rate","","","(Decrease)"],["Interest-earning Assets:"],["Loans receivable, net1","","$","7,938","","","$","(1,822",")","","$","6,116","","","$","5,344","","","$","(1,235",")","","$","4,109"],["Securities2","","","4,656","","","","(5,186",")","","","(530",")","","","3,241","","","","(460",")","","","2,781"],["Interest-earning bank balances and federal funds","","","274","","","","(815",")","","","(541",")","","","413","","","","(243",")","","","170"],["FHLB stock","","","(15",")","","","(16",")","","","(31",")","","","(46",")","","","(8",")","","","(54",")"],["Total interest-earning assets","","","12,853","","","","(7,839",")","","","5,014","","","","8,952","","","","(1,946",")","","","7,006"],["Interest-Bearing Liabilities:"],["Savings and money market deposits","","","224","","","","(620",")","","","(396",")","","","26","","","","75","","","","101"],["NOW deposits","","","1,881","","","","(5,400",")","","","(3,519",")","","","1,936","","","","514","","","","2,450"],["Certificates of deposit","","","(15",")","","","(90",")","","","(105",")","","","(56",")","","","50","","","","(6",")"],["Borrowings","","","152","","","","570","","","","722","","","","(255",")","","","(117",")","","","(372",")"],["Total interest-bearing liabilities","","","2,242","","","","(5,540",")","","","(3,298",")","","","1,651","","","","522","","","","2,173"],["Net change in net interest income","","$","10,611","","","$","(2,299",")","","$","8,312","","","$","7,301","","","$","(2,468",")","","$","4,833"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["1","Calculated net of deferred loan fees, loan discounts, and loans in process."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["2","Includes tax-free securities, mortgage-backed securities, asset-backed securities and long term certificates of deposit."]]
[[/GREPCENT_TABLE]]

As the above table shows, net interest income for the fiscal year ended June 30, 2021 has been affected most significantly by the increase in volume of loans and securities, partially offset by an increase in volume of
interest-bearing liabilities and a decrease in rate on interest-earning assets. Net interest rate spread decreased 22 basis points to 2.76% for the fiscal year ended June 30, 2021 as compared to 2.98% for the fiscal year ended June 30, 2020.  Net
interest margin decreased 28 basis points to 2.81% for the fiscal year ended June 30, 2021 as compared to 3.09% for the fiscal year ended June 30, 2020.

The Federal Reserve Board has taken a number of measures in an attempt to mitigate the impact of the pandemic on the economy.  In mid-March 2020, the Federal Reserve Board decreased the Federal Funds benchmark rate by
100 basis points to 0.00%-0.25%.  The reduction in rate has continued throughout the fiscal year end and continues to have a negative impact on the Company’s interest spread and margin during the year ended June 30, 2021.  The Company continually
monitors its interest rate risk, the impact to net interest income and capital from the interest rate decrease and is well within established limits.

INTEREST INCOME

Interest income for the year ended June 30, 2021 amounted to $58.3 million as compared to $53.3 million for the year ended June 30, 2020, an increase of $5.0 million, or 9.4%.  The increase in average loan and
securities balances had the greatest impact on interest income when comparing the years ended June 30, 2021 and 2020.   Interest income is derived from loans, securities and other interest-earning assets.  Total average interest-earning assets
increased to $1.9 billion for the year ended June 30, 2021 as compared to $1.5 billion for the year ended June 30, 2020, an increase of $442.3 million, or 30.5%.   The yield earned on such assets decreased 59 basis points to 3.08% for the year ended
June 30, 2021 as compared to 3.67% for the year ended June 30, 2020.

38

Index

Interest income earned on loans amounted to $45.3 million for the year ended June 30, 2021 as compared to $39.2 million for the year ended June 30, 2020.  Average loans outstanding increased $185.1 million, or 21.1%,
to $1.1 billion for the year ended June 30, 2021 as compared to $875.4 million for the year ended June 30, 2020.  The yield on such loans decreased 20 basis points to 4.27% for the year ended June 30, 2021 as compared to 4.47% for the year ended June
30, 2020. At June 30, 2021, approximately 52.1% of the loan portfolio was adjustable rate, of which a large portion is tied to the Prime Rate.

Interest income earned on securities (excluding FHLB stock) decreased to $12.9 million for the year ended June 30, 2021 as compared to $13.4 million for the year ended June 30, 2020.  Included in interest income earned
on securities is yield maintenance payments received when various agency mortgage-backed securities prepaid in advance of maturity of $829,000 for the year ended June 30, 2021, a decrease of $443,000 from $1.3 million when compared to June 30, 2020.
The average balance of securities increased $223.6 million to $751.7 million for the year ended June 30, 2021 as compared to $528.1 million for the year ended June 30, 2020 resulting from growth in deposits within our retail, commercial and municipal
lines of business.  The average yield on such securities decreased 83 basis points to 1.72% for the year ended June 30, 2021 as compared to 2.55% for the year ended June 30, 2020.  No adjustments were made to tax-effect the income for the state and
political subdivision securities, which often carry a lower yield because of the offset expected from income tax benefits gained from holding such securities.

Interest income earned on federal funds and interest-earning deposits amounted to $81,000 for the year ended June 30, 2021 as compared to $622,000 for the year ended June 30, 2020.  The average balance of federal funds
and interest-earning deposits increased $33.9 million when comparing the years ended June 30, 2021 and 2020.  Dividends on FHLB stock decreased to $61,000 for the year ended June 30, 2021 as compared to $92,000 for the year ended June 30, 2020.

INTEREST EXPENSE

Interest expense for the year ended June 30, 2021 amounted to $5.2 million as compared to $8.5 million for the year ended June 30, 2020, a decrease of $3.3 million, or 38.9%.  The decrease was the result of lower rates
paid on average deposits however offset by the increase in the average balance of interest-bearing liabilities. Total average interest-bearing liabilities increased to $1.6 billion for the year ended June 30, 2021 as compared to $1.2 billion for the
year ended June 30, 2020, an increase of $397.0 million, or 32.5%.  Much of this increase related to NOW accounts primarily resulting from growth in new deposit relationships within our retail, commercial and municipal lines of business. The overall
rate paid on interest-bearing liabilities decreased 37 basis points to 0.32% for the year ended June 30, 2021 compared to 0.69% for the year ended June 30, 2020.

Interest expense paid on savings and money market accounts amounted to $952,000 for the year ended June 30, 2021 as compared to $1.3 million for the year ended June 30, 2020, a decrease of $396,000, or 29.4%. The rate
paid on savings and money market accounts decreased 16 basis points to 0.24% for the year ended June 30, 2021 as compared to 0.40% for the year ended June 30, 2020.  The average balance of savings and money market accounts increased by $65.9 million
to $403.4 million for the year ended June 30, 2021 as compared to $337.5 million for the year ended June 30, 2020.

Interest expense paid on NOW accounts amounted to $2.9 million and $6.4 million for the years ended June 30, 2021 and 2020, respectively.  The average balance of NOW accounts increased to $1.2 billion for the year
ended June 30, 2021 as compared to $831.5 million for the year ended June 30, 2020, an increase of $325.2 million.  The average rate paid on NOW accounts decreased 52 basis points to 0.25% for the year ended June 30, 2021 as compared to 0.77% for the
year ended June 30, 2020.

Interest expense paid on certificates of deposit amounted to $374,000 for the year ended June 30, 2021 as compared to $479,000 for the year ended June 30, 2020, a decrease of $105,000.  The average rate paid on
certificates of deposit decreased 25 basis points to 1.07% for the year ended June 30, 2021 as compared to 1.32% for the year ended June 30, 2020.  The average balance on certificates of deposit decreased to $35.0 million for the year ended June 30,
2021 as compared to $36.2 million for the year ended June 30, 2020.

Interest expense on borrowings amounted to $962,000 for the year ended June 30, 2021 as compared to $240,000 for the year ended June 30, 2020, as the average balance of borrowings increased $7.1 million to $22.4
million for the year ended June 30, 2021 as compared to $15.3 million for the year ended June 30, 2020. The average rate paid on borrowings increased 273 basis points to 4.30% from 1.57% during the period.  The increase in the average balance on
borrowings was due to the Company entering into subordinated note purchase agreements in September 2020.

39

Index

PROVISION FOR LOAN LOSSES

Management continues to closely monitor asset quality and adjust the level of the allowance for loan losses when necessary.  The amount recognized for the provision for loan losses is determined by management based on
its ongoing analysis of the adequacy of the allowance for loan losses. Provision for loan losses amounted to $4.0 million and $3.9 million for the years ended June 30, 2021 and 2020, respectively, an increase of $69,000. The slight increase was due
to growth in gross loans and an increase in loans adversely classified. Management continues to assess the impact of the COVID-19 pandemic and determined to reduce some of the associated reserves as of the year ended June 30, 2021.  The allocation of
this provision was primarily for commercial real estate and commercial loans.  For additional details relating to the allocation of the provision for loan losses, see Part II, Item 8 Financial Statements and Supplemental Data, Note 4, Loans of this report.

NONINTEREST INCOME

[[GREPCENT_TABLE]]
[["(Dollars in thousands)","","For the years ended June 30,","","","Change from Prior Year"],["","","2021","","","2020","","","Amount","","","Percent"],["Service charges on deposit accounts","","$","3,414","","","$","3,926","","","$","(512",")","","","(13.04",")%"],["Debit card fees","","","3,860","","","","2,980","","","","880","","","","29.53"],["Investment services","","","732","","","","559","","","","173","","","","30.95"],["E-commerce fees","","","113","","","","113","","","","-","","","","-"],["Bank owned life insurance","","","425","","","","-","","","","425","","","","100.00"],["Other operating income","","","1,123","","","","1,072","","","","51","","","","4.76"],["Total noninterest income","","$","9,667","","","$","8,650","","","$","1,017","","","","11.76","%"]]
[[/GREPCENT_TABLE]]

Noninterest income increased $1.0 million, or 11.8%, to $9.7 million for the year ended June 30, 2021 as compared to $8.7 million for the year ended June 30, 2020.  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 and the income from bank owned life insurance purchased in the current fiscal year offset by decreases in service charges on deposit accounts, primarily from a lower volume of
nonsufficient fund fees.

NONINTEREST EXPENSE

[[GREPCENT_TABLE]]
[["(Dollars in thousands)","","For the years ended June 30,","","Change from Prior Year"],["","","2021","","","2020","","","Amount","","","Percent"],["Salaries and employee benefits","","$","19,166","","","$","17,170","","","$","1,996","","","","11.63","%"],["Occupancy expense","","","2,169","","","","1,865","","","","304","","","","16.30"],["Equipment and furniture expense","","","637","","","","749","","","","(112",")","","","(14.95",")"],["Service and data processing fees","","","2,621","","","","2,450","","","","171","","","","6.98"],["Computer software, supplies and support","","","1,369","","","","1,064","","","","305","","","","28.67"],["Advertising and promotion","","","491","","","","473","","","","18","","","","3.81"],["FDIC insurance premiums","","","738","","","","321","","","","417","","","","129.91"],["Legal and professional fees","","","1,212","","","","1,111","","","","101","","","","9.09"],["Other","","","2,820","","","","2,619","","","","201","","","","7.67"],["Total noninterest expense","","$","31,223","","","$","27,822","","","$","3,401","","","","12.22","%"]]
[[/GREPCENT_TABLE]]

Noninterest expense increased $3.4 million, or 12.2%, to $31.2 million for the year ended June 30, 2021 as compared to $27.8 million for the year ended June 30, 2020. The increase during the year ended June 30, 2021
was primarily due to an increase in salaries and employee benefits expense resulting from creating 13 new positions during the year.  The new positions were required to support growth in the Bank’s lending department, customer service center and
finance department, along with staff to support our new branch located in Albany, New York, which opened in September 2020.  FDIC insurance premiums also increased for the year ended June 30, 2021 compared to the year ended June 30, 2020, when
credits were applied to the premiums.  In January 2019, the FDIC provided notification to the Company that a credit in the amount of $177,000 was calculated for The Bank of Greene County, and a credit in the amount of $91,000 was calculated for
Greene County Commercial Bank, based on a change in assessments under FDIC regulations resulting from the Deposit Insurance Fund Reserve Ratio reaching 1.36%.  The Company received credits of $268,000 during the year ended June 30, 2020.  This credit
was applied against FDIC insurance premiums expense. No credits remained at June 30, 2020 and therefore no credits were used for the fiscal year end June 30, 2021.

40

Index

INCOME TAXES

Provision for income taxes directly reflects the expected tax associated with the pre-tax income generated for the given year and certain regulatory requirements.  The effective tax rate was 13.3% and 13.9% for the
years ended June 30, 2021 and 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.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity resources. Greene County Bancorp, Inc.’s primary sources of funds are deposits and proceeds from principal and interest payments on loans and
securities, as well as lines of credit and term borrowing facilities available through the Federal Home Loan Bank as needed.  While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit outflows,
mortgage prepayments, and borrowings are greatly influenced by general interest rates, economic conditions and competition.

Greene County Bancorp, Inc.’s most liquid assets are cash and cash equivalent accounts.  The levels of these assets are dependent on Greene County Bancorp, Inc.’s operating, financing, lending and investing activities
during any given period.  At June 30, 2021, cash and cash equivalents totaled $149.8 million, or 6.8% of total assets.

Greene County Bancorp, Inc.’s primary investing activities are the origination of residential and commercial real estate mortgage loans, other consumer and commercial loans, and the purchase of securities.  Loan
originations exceeded repayments by $95.7 million and $212.4 million and purchases of securities totaled $626.6 million and $391.5 million for the years ended June 30, 2021 and 2020, respectively.  These activities were funded primarily through
deposit growth, and principal payments on loans and securities and borrowings.  Loan sales did not provide an additional source of liquidity during the years ended June 30, 2021 and 2020, as Greene County Bancorp, Inc. originated loans for retention
in its portfolio.

Greene County Bancorp, Inc. experienced a net increase in total deposits of $504.0 million and $380.5 million for the years ended June 30, 2021 and 2020, respectively.  Deposits increased during the year ended June 30,
2021 as a result of an increase in new account relationships and stimulus funds deposited across all three of our primary business lines, retail, commercial and municipal.  The Company continues to benefit from consolidation of other depository
institutions within its market area and has successfully launched several marketing campaigns aimed at different segments of the market.

Greene County Bancorp, Inc. monitors its liquidity position on a daily basis.  Excess short-term liquidity is usually invested in interest-earning deposits with the Federal Reserve Bank of New York.  In the event
Greene County Bancorp, Inc. requires funds beyond its ability to generate them internally, additional sources of funds are available through the use of FHLB advance programs made available to The Bank of Greene County.  During the year ended June 30,
2021, The Bank of Greene County’s maximum borrowing from the FHLB reached $32.1 million and the minimum amounted to no borrowings.  As of the year ended June 30, 2021 there were no borrowings outstanding with the FHLB.  The liquidity position can be
significantly impacted on a daily basis by funding needs associated with Greene County Commercial Bank.  These funding needs are also impacted by the collection of taxes and state aid for the municipalities using the services of Greene County
Commercial Bank.  At June 30, 2021, liquidity measures were as follows:

[[GREPCENT_TABLE]]
[["Cash equivalents/(deposits plus short term borrowings)","","","7.46","%"],["(Cash equivalents plus unpledged securities)/(deposits plus short term borrowings)","","","11.13","%"],["(Cash equivalents plus unpledged securities plus additional borrowing capacity)/(deposits plus short term borrowings)","","","32.21","%"]]
[[/GREPCENT_TABLE]]

The Federal Reserve Board has instituted a program, the Paycheck Protection Plan Lending Facility (“PPPLF”) to provide banks additional funding for liquidity whereby the PPP loans are pledged as collateral.  The PPPLF
allowed banks to offer these loans to local businesses while maintaining strong liquidity to meet cash flow needs.  At June 30, 2020, the Company had borrowed $10.9 million through the PPPLF which was paid down to zero during the fiscal year end June
30, 2021.

Off-balance sheet arrangements. In the normal course of business the Company is party to certain financial instruments, which in accordance with accounting
principles generally accepted in the United States, are not included in its Consolidated Statements of Condition. These transactions include commitments to fund new loans and unused portions of lines of credit and are undertaken to accommodate the
financing needs of the Company’s customers. Loan commitments are agreements by the Company to lend monies at a future date. These loan commitments are subject to the same credit policies and reviews as the Company’s loans. Because most of these loan
commitments expire within one year from the date of issue, the total amount of these loan commitments as of June 30, 2021, are not necessarily indicative of future cash requirements.

41

Index

The Bank of Greene County’s unfunded loan commitments and unused lines of credit are as follows at June 30, 2021 and 2020:

[[GREPCENT_TABLE]]
[["(In thousands)","","2021","","","2020"],["Unfunded loan commitments","","$","121,775","","","$","100,241"],["Unused lines of credit","","","86,456","","","","70,333"],["Standby letters of credit","","","175","","","","-"],["Total commitments","","$","208,406","","","$","170,574"]]
[[/GREPCENT_TABLE]]

Greene County Bancorp, Inc. anticipates that it will have sufficient funds available to meet current loan commitments.  Certificates of deposit scheduled to mature in one year or less from June 30, 2021 totaled $18.0
million.  Based upon Greene County Bancorp, Inc.’s experience and its current pricing strategy, management believes that a significant portion of such deposits will remain with Greene County Bancorp, Inc.

The Company has an Irrevocable Letter of Credit Reimbursement Agreement with the FHLB, whereby upon The Bank of Greene County’s request, on behalf of Greene County Commercial Bank, an irrevocable letter of credit is
issued to secure municipal transactional deposit accounts.  These letters of credit are secured by residential and commercial real estate mortgage loans.  The amount of funds available to the Company through the FHLB line of credit is reduced by any
letters of credit outstanding.  There were no municipal letters of credit outstanding at June 30, 2021.

The Company has risk participation agreements (“RPAs”) which 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 June 30, 2021 or 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 $7.2 million and $3.3 million at June 30, 2021 and 2020, respectively. The current amount of credit exposure is spread out over four financial institution counterparties, and terms range between five to nine years.

Capital Resources.  The Company and the Bank considers current needs and future growth, with the sources of capital being
the retention of earnings, less dividends paid, and proceeds from the issuance of subordinated debt. The Company believes its current capital is adequate to support ongoing operations. As a result of the significant growth in assets, the
Company borrowed $3.0 million on its line of credit through ACBB and contributed $17.5 million of additional capital to The Bank of Greene County.  At June 30, 2021 and 2020, The Bank of Greene County and Greene County Commercial Bank exceeded all of
their regulatory capital requirements, as illustrated in Part II, Item 8 Financial Statements and Supplementary Data Note 17. Regulatory Matters of this Report.  Shareholders’ equity represented 6.8% and 7.7%
of total consolidated assets at June 30, 2021 and 2020, respectively.

IMPACT OF INFLATION AND CHANGING PRICES

The consolidated financial statements of Greene County Bancorp, Inc. and notes thereto, presented elsewhere herein, have been prepared in accordance with U.S. generally accepted accounting principles, which require the
measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time and due to inflation.  The impact of inflation is reflected in the increased
cost of Greene County Bancorp, Inc.’s operations.  Unlike most industrial companies, nearly all the assets and liabilities of Greene County Bancorp, Inc. are monetary.  As a result, interest rates have a greater impact on Greene County Bancorp,
Inc.’s performance than do the effects of general levels of inflation.  Interest rates do not necessarily move in the same direction or to the same extent as the price of goods and services.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements which may impact the Company’s financial statements are discussed within Part II, Item 8 Financial Statements and Supplementary Data, Note 1 Summary of significant accounting policies of this Report.

42

Index

UNAUDITED QUARTERLY FINANCIAL DATA

The following table sets forth a summary of selected financial data at June 30, 2021 and 2020 and quarter ends within those years.

[[GREPCENT_TABLE]]
[["(In thousands, except per share data)","","First Quarter","","","Second Quarter","","","Third Quarter","","","Fourth Quarter"],["The year ended June 30, 2021"],["Loans receivable, net","","$","1,028,782","","","$","1,031,519","","","$","1,068,498","","","$","1,085,947"],["Deposits","","","1,618,993","","","","1,679,718","","","","1,960,029","","","","2,005,108"],["Interest income","","","13,338","","","","14,949","","","","14,788","","","","15,253"],["Interest expense","","","1,522","","","","1,340","","","","1,218","","","","1,103"],["Net interest income","","","11,816","","","","13,609","","","","13,570","","","","14,150"],["Provision for loan losses","","","1,243","","","","1,262","","","","1,434","","","","35"],["Noninterest income","","","2,078","","","","2,394","","","","2,361","","","","2,834"],["Noninterest expense","","","7,133","","","","7,540","","","","8,367","","","","8,183"],["Income before provision for income taxes","","","5,518","","","","7,201","","","","6,130","","","","8,766"],["Net income","","","4,875","","","","6,195","","","","5,258","","","","7,614"],["Basic earnings per share","","","0.57","","","","0.73","","","","0.62","","","","0.89"],["Diluted earnings per share","","","0.57","","","","0.73","","","","0.62","","","","0.89"],["The year ended June 30, 2020"],["Loans receivable, net","","$","805,539","","","$","851,065","","","$","883,735","","","$","993,522"],["Deposits","","","1,263,210","","","","1,244,658","","","","1,429,532","","","","1,501,075"],["Interest income","","","12,608","","","","13,197","","","","13,437","","","","14,072"],["Interest expense","","","2,108","","","","2,286","","","","2,296","","","","1,791"],["Net interest income","","","10,500","","","","10,911","","","","11,141","","","","12,281"],["Provision for loan losses","","","551","","","","690","","","","1,425","","","","1,239"],["Noninterest income","","","2,266","","","","2,316","","","","2,126","","","","1,942"],["Noninterest expense","","","6,422","","","","6,535","","","","7,228","","","","7,637"],["Income before provision for income taxes","","","5,793","","","","6,002","","","","4,614","","","","5,347"],["Net income","","","4,863","","","","5,113","","","","4,051","","","","4,700"],["Basic earnings per share","","","0.57","","","","0.60","","","","0.47","","","","0.55"],["Diluted earnings per share","","","0.57","","","","0.60","","","","0.47","","","","0.55"]]
[[/GREPCENT_TABLE]]