GREENE COUNTY BANCORP INC (GCBC) FY 2023 MD&A

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

The following discussion is an analysis of the Company’s results of operations for years shown and was derived from the audited consolidated financial statements of Greene County Bancorp, Inc. This discussion and
analysis should be read in conjunction with the consolidated financial statements and related notes.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual 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 annual 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:

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.

23

Index

Selected Financial Data

24

Index

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, 2023, The Bank of Greene County operated 18 full-service branches, an administration office, a customer call center, a lending center, and an operations center in New York’s Hudson Valley Region.  In June 2004, Greene
County Commercial Bank (“Commercial Bank”) was opened for the limited purpose of providing financial services to local municipalities.  The Commercial Bank 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.

Overview of the Company’s Activities and Risks

The Company’s results of operations depend primarily on its net interest income, which is the difference between the income earned on the Company’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 the Company’s provision for loan losses, noninterest income and noninterest expense.  Noninterest income consists primarily of fees and service charges.
The Company’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 the Company.

Critical Accounting Policies

The Company’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.

On July 1, 2023, the Company adopted Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”).  The models and
methodologies are finalized with review controls and processes being finalized. The day-one impact of adopting CECL is not expected to be material to the Company’s total capital, however it is expected to create volatility in the level of the
allowance for credit loss from quarter to quarter, as changes will be dependent upon macroeconomic forecasts and conditions, loan portfolio volumes, credit quality and key modeling assumptions.

Management of Credit Risk

Management considers credit risk to be an important risk factor affecting the financial condition and operating results of the Company. The potential for loss associated with this risk factor is managed through a
combination of policies approved by the Company’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 the Company’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.  The Company 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.

25

Index

FINANCIAL OVERVIEW

Net income for the year ended June 30, 2023 amounted to $30.8 million, or $1.81 per basic and diluted share, as compared to $28.0 million, or $1.64 per basic and diluted share, for the year ended June 30, 2022, an
increase of $2.8 million, or 10.0%.  The increase in net income was primarily the result of increases of $3.2 million in net interest income and a decrease of $4.3 million in provision for loan losses partially offset by an increase of $4.6
million in noninterest expense. The provision for income taxes and noninterest income remained the same when comparing year end June 30, 2023 and 2022. As can be seen in the Rate / Volume Analysis, the increase in net interest income resulted
from interest-earning assets growing faster than interest-earning liabilities, offset by the increase in interest rates paid on liabilities outpacing the interest rates earned on assets, when comparing the years ended June 30, 2023 and 2022.
Growth in interest-earning assets was within both investment securities and loans. Growth in loans was primarily in commercial real estate mortgages, commercial constructions loans and residential mortgages.

Net interest rate spread and margin both decreased when comparing the year ended June 30, 2023 and 2022. Net interest rate spread decreased 17 basis points to 2.33% for the year ended June 30, 2023 compared to
2.50% for the year ended June 30, 2022. Net interest margin decreased 8 basis points to 2.45% for the year ended June 30, 2023 compared to 2.53% for the year ended June 30, 2022.  The decrease during the year ended June 30, 2023 was due to the
higher interest rate environment, as the rates paid for deposits repriced faster than rates earned on loans and investments.

Total assets grew $126.5 million, or 4.9%, to $2.7 billion at June 30, 2023 as compared to $2.6 billion at June 30, 2022.  Net loans increased $158.3 million, or 12.9%, to $1.4 billion at June 30, 2023 as compared
to $1.2 billion at June 30, 2022. Securities classified as available-for-sale and held-to-maturity decreased $162.4 million, or 13.9%, to $1.0 billion at June 30, 2023 as compared to $1.2 billion at June 30, 2022.  Deposits grew $224.6 million,
or 10.1%, to $2.4 billion at June 30, 2023 as compared to $2.2 billion at June 30, 2022.  Total shareholders’ equity amounted to $183.3 million and $157.7 million at June 30, 2023 and 2022, respectively, or 6.8% and 6.1% of total assets,
respectively.

Comparison of Financial Condition as of June 30, 2023 and 2022

CASH AND CASH EQUIVALENTS

Total cash and cash equivalents increased $127.4 million to $196.4 million at June 30, 2023 from $69.0 million at June 30, 2022. 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. The Company increased its overall liquidity and cash
position in response to the current turmoil in the banking sector. As of June 30, 2023, the Company believes it has maintained a strong liquidity position.

SECURITIES

Securities available-for-sale and held-to-maturity decreased $162.4 million, or 13.9%, to $1.0 billion at June 30, 2023 as compared to $1.2 billion at June 30, 2022. The decrease was the result of utilizing
maturing investments to fund loan growth and to maintain elevated cash holdings, and due to the increase in unrealized loss on securities available-for-sale of $4.5 million. Securities purchases totaled $212.0 million during the year ended June
30, 2023 and consisted primarily of $208.1 million of state and political subdivision securities. Principal pay-downs and maturities during the year ended June 30, 2023 amounted to $365.6 million, primarily consisting of $333.2 million of state
and political subdivision securities, and $29.3 million of mortgage-backed securities.

The Company holds 61.2% of its securities portfolio at June 30, 2023 in state and political subdivision securities to take advantage of tax savings and to promote the Company’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.

Investment Maturity Schedule

The following table set forth information with regard to contractual maturities of debt securities shown in amortized cost ($) and weighted average yield (%) at June 30, 2023. Weighted-average yields are an
arithmetic computation of income not fully tax equivalent (“FTE”) adjusted divided by amortized cost.  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.

26

Index

LOANS

Net loans receivable increased $158.3 million, or 12.9%, to $1.4 billion at June 30, 2023 from $1.2 billion at June 30, 2022.  The loan growth experienced during the year consisted primarily of $97.8 million in
commercial real estate loans, $38.2 million in commercial construction loans, $11.6 million in residential loans, $4.9 million in home equity loans, $3.8 million in residential construction and land loans, $2.7 million in multi-family loans and a
$1.5 million decrease in the allowance for loan losses. This growth was partially offset by a $2.2 million decrease in commercial loans.  The Company continues to experience loan growth as a result of continued growth in its customer base and its
relationships with other financial institutions in originating loan participations.  The Company 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 Company’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.

27

Index

Loan Maturity Schedule and Interest Rate Sensitivity

The following table sets forth certain information as of June 30, 2023 regarding the amount of loans maturing or re-pricing in the Company’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 “1 Year or Less.” Home equity loans are included within consumer loan portfolio below.

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 Company 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 Annual 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.

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 Annual Report.

28

Index

Analysis of Nonaccrual Loans, Nonperforming Assets and Restructured Loans

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

Nonperforming assets amounted to $5.8 million at June 30, 2023 and $6.4 million at June 30, 2022, respectively.  Total impaired loans amounted to $10.3 million at June 30, 2023 compared to $10.8 million at June 30,
2022, a decrease of $500,000, or 4.3%.  Impaired loans remained stable throughout the fiscal year, with four commercial real estate loans becoming delinquent and going on nonaccrual, one large commercial loan pay off and one commercial loan
foreclosed on during the fiscal year. 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.

Commercial real estate impaired loans amounted to $5.3 million as of June 30, 2023, as compared to $3.8 million as of June 30, 2022, an increase of $1.5 million.  The increase in commercial real
estate impaired loans was the result of four relationships continuing to deteriorate and moving into nonaccrual status, and therefore classified as impaired. The average recorded investment of these new impaired loans was $1.0 million as of June
30, 2023.  Commercial impaired loans amounted to $1.9 million as of June 30, 2023, as compared to $3.5 million as of June 30, 2022, a decrease of $1.6 million.  The decrease in commercial impaired loans was the result of one relationship being
paid off and one relationship moving to foreclosed assets, therefore being removed from impaired.

Loans on nonaccrual status totaled $5.5 million at June 30, 2023 of which $2.0 million were in the process of foreclosure.  At June 30, 2023, there were three residential real estate loans totaling $625,000 and two
commercial real estate loans totaling $1.4 million in the process of foreclosure. Included in nonaccrual loans were $3.1 million of loans which were less than 90 days past due at June 30, 2023, 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 $6.3 million at June 30, 2022 of which $528,000 were in the process of
foreclosure.  At June 30, 2022, there were three residential real estate loans totaling $426,000 and one commercial real estate loan totaling $102,000 in the process of foreclosure. Included in nonaccrual loans were $4.4 million of loans which
were less than 90 days past due at June 30, 2022, but have a recent history of delinquency greater than 90 days past due. These loans will be returned to accrual status once they have demonstrated a history of timely payments.

29

Index

For additional details on impaired loans, see the table in Part II, Item 8 Financial Statements and Supplemental Data, Note 4, Loans of this Annual 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 Company’s allowance for loan losses.  Such agencies may require the Company to recognize additions to the allowance based on their judgment about information
available to them at the time of their examination.  The Company 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 Company evaluates nonaccrual loans that are over $250,000 and all trouble debt restructured loans individually for impairment, if it is probable that the Company 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 Company 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 Company 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.

Loans classified as substandard or special mention totaled $41.9 million at June 30, 2023 compared to $52.1 million at June 30, 2022, a decrease of $10.2 million. During the year ended June 30, 2023, the Company
upgraded commercial real estate and residential real estate loans from substandard and special mention to pass due to improvements seen in borrower cash flows and financial performance.  This was offset by downgrades in commercial loans from pass
to special mention 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 classified loan
relationships closely.  Reserves on these loans totaled $5.2 million at June 30, 2023 compared to $9.6 million at June 30, 2022, a decrease of $4.4 million.  No loans were classified as doubtful or loss at June 30, 2023 or 2022. Allowance for
loan losses to total loans receivable was 1.51% at June 30, 2023, and 1.82% at June 30, 2022. The decrease in the allowance for loan losses to total loans receivable was due to a decrease in the balance and reserve percentage on loans adversely
classified, as loans were upgraded due to improvements in credit quality and loans were paid off during the fiscal year. This was partially offset by the growth in gross loans and increases in the economic qualitative factors during the year, due
to elevated inflation levels and the negative impacts higher interest rates could have on borrowers’ abilities to repay loans.

Net charge-offs totaled $478,000 and $185,000 for the years ended June 30, 2023 and 2022, respectively. There were no significant net charge-offs in any loan segment during the fiscal year ended June 30, 2023.

Nonperforming loans amounted to $5.5 million and $6.3 million at June 30, 2023 and 2022, respectively. At June 30, 2023 and June 30, 2022, respectively, nonperforming assets
were 0.21% and 0.25% of total assets, and nonperforming loans were 0.39% and 0.50% of net loans, with deterioration split primarily in residential real estate loans and commercial 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.

30

Index

Analysis of allowance for loan losses activity

31

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. On July 1, 2023, the Company adopted CECL. The models and methodologies are finalized with review controls and processes being finalized. The day-one impact of adopting CECL is not expected to be material to the Company’s
total capital, however it is expected to create volatility in the level of the allowance for credit loss from quarter to quarter, as changes will be dependent upon macroeconomic forecasts and conditions, loan portfolio volumes, credit quality and
key modeling assumptions.

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 Annual Report.

PREMISES AND EQUIPMENT

Premises and equipment amounted to $15.0 million and $14.4 million at June 30, 2023 and 2022, respectively.  Purchases totaled $1.5 million during the year ended June 30, 2023, consisting primarily of building
improvements and equipment for a new branch located in East Greenbush, New York and a new office building located in Catskill, New York, and IT equipment.  Purchases totaled $1.1 million during the year ended June 30, 2022, consisting primarily
of building improvements, IT equipment and new ATMs. Depreciation for the year ended June 30, 2023 totaled $871,000, compared to $826,000 for the year ended June 30, 2022.  There were no disposals of premises and equipment during the fiscal years
ended June 30, 2023 and 2022.

PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other assets totaled $17.5 million at June 30, 2023, compared to $15.2 million at June 30, 2022, an increase of $2.3 million.  The increase was due to an increase of $1.3 million in deferred
taxes due to the increase in unrealized losses on available for sale securities and an increase of $1.2 million in accrued income tax receivable due to the Company overpaying estimated quarterly tax payments during fiscal 2023. This was offset by
a decrease of $132,000 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 $302,000 in FRE assets at June 30, 2023.  At June 30, 2022, there were $68,000 in FRE assets.

32

Index

DEPOSITS

Deposits totaled $2.4 billion at June 30, 2023 and $2.2 billion at June 30, 2022, an increase of $224.6 million, or 10.1%.  NOW deposits increased $253.2 million, or 17.1%, certificates of deposits increased $87.3
million, or 213.9%, noninterest-bearing deposits decreased $28.6 million, or 15.3%, savings deposits decreased $44.7 million, or 13.0%, money market deposits decreased $42.6 million, or 27.0%, when comparing June 30, 2023 and June 30, 2022.
Included within certificates of deposits at June 30, 2023 and June 30, 2022 were $60.0 million and $7.2 million in brokered certificates of deposits, respectively, an increase of $52.8 million. The increase in brokered deposits increased the
Company’s overall liquidity and cash position in response to the current turmoil in the banking sector.  Deposits increased during the year ended June 30, 2023, as a result of increases in municipal deposits at Greene County Commercial Bank,
primarily from tax collection and new account relationships, and increases in business accounts at the Bank of Greene County from new account relationships.

The following table summarizes total uninsured deposits based on the same methodologies and assumptions used for the Bank’s regulatory reporting:

The following table presents the maturity distribution of certificates of deposits of $250,000 or more:

The amount of certificates of deposit by time remaining to maturity as of June 30, 2023 is set forth in Part II, Item 8 Financial Statements and Supplemental Data, Note 6, Deposits

of this Annual Report.

BORROWINGS

Borrowings for the Company amounted to $49.5 million at June 30, 2023 compared to $173.0 million at June 30, 2022, a decrease of $123.5 million.  At June 30, 2023, borrowings consisted of $49.5 million of
fixed-to-floating rate subordinated notes. During the quarter ended June 30, 2023 the Bank established a borrowing facility through the Bank Term Funding Program offered through the Federal Reserve which allows the Bank to borrow on eligible
securities at the par value if need. As of June 30, 2023, the Bank did not borrow against this facility.

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, 2023, there were $19.8 million of Subordinated Note
Purchases Agreements outstanding, net of issuance costs.

33

Index

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 June 30, 2023, there were $29.7 million of these 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 Annual Report.

OTHER LIABILITIES

Other liabilities, consisting primarily of accrued liabilities, totaled $28.3 million at June 30, 2023, compared to $28.4 million at June 30, 2022, a decrease of $68,000.  The change was primarily due to a decrease
in accrued expenses for loss reserve liability accounts related to the closure of Greene Risk Management, a decrease in the federal and state taxes payable, an increase in 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 $237,000 when comparing the year ended June 30, 2023 to June 30, 2022 related a new lease entered into for the East Greenbush branch. This was
offset by a decrease in the pension liability of $238,000 when comparing the year ended June 30, 2023 to June 30, 2022. 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 Annual Report.

SHAREHOLDERS’ EQUITY

Shareholders’ equity increased to $183.3 million at June 30, 2023 from $157.7 million at June 30, 2022, resulting primarily from net income of $30.8 million, partially offset by dividends declared and paid of $2.2
million and an increase in accumulated other comprehensive loss of $3.0 million. Other comprehensive loss increased during the year due to the change in market values of securities available for sale, resulting from
the increases in market interest rates.

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, 2023, the Company had repurchased a total of 48,800 shares of the 400,000 shares authorized by the repurchase program. The Company did not repurchase any shares
during the year ended June 30, 2023.

34

Index

Comparison of Operating Results for the Years Ended June 30, 2023 and 2022

Average Balance Sheet

The following table sets forth certain information relating to the Company for the years ended June 30, 2023 and 2022.  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.

Fiscal Years Ended June 30,

35

Index

Taxable-equivalent net interest income and net interest margin

(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 approximately 21% for federal income taxes for the periods ended June 30, 2023 and 2022, and 4.44% for New York State income taxes for the periods ended June 30, 2023 and 2022.

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 the Company’s interest income and
interest expense during the periods indicated.  Information is provided in each category with respect to:

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.

As the above table shows, net interest income for the fiscal year ended June 30, 2023 has been affected most significantly by the increase in volume of loans and securities and the increase in rate on all
interest-earning assets. This was partially offset by an increase in volume and rate of interest-bearing liabilities. Net interest rate spread decreased 17 basis points to 2.33% for the year ended June 30, 2023 compared to 2.50% for the year
ended June 30, 2022. Net interest margin decreased 8 basis points to 2.45% for the year ended June 30, 2023 compared to 2.53% for the year ended June 30, 2022.  The decrease during the quarter and year ended June 30, 2023 was due to the higher
interest rate environment as the rates paid for deposits repriced faster than rates earned on loans and investments resulting in a decrease in net interest rate spread and margin.

36

Index

INTEREST INCOME

Interest income for the year ended June 30, 2023 amounted to $84.6 million as compared to $63.4 million for the year ended June 30, 2022, an increase of $21.2 million, or 33.4%.  The increase in average loan
balances had the greatest impact on interest income when comparing the years ended June 30, 2023 and 2022.   Interest income is derived from loans, securities and other interest-earning assets.  Total average interest-earning assets increased to
$2.5 billion for the year ended June 30, 2023 as compared to $2.3 billion for the year ended June 30, 2022, an increase of $204.2 million, or 8.9%. The yield earned on such assets increased 62 basis points to 3.39% for the year ended June 30,
2023 as compared to 2.77% for the year ended June 30, 2022.

Interest income earned on loans increased to $60.0 million for the year ended June 30, 2023 as compared to $47.1 million for the year ended June 30, 2022.  Average loans outstanding increased $227.3 million, or
19.9%, to $1.4 billion for the year ended June 30, 2023 as compared to $1.1 billion for the year ended June 30, 2022. The yield on such loans increased 26 basis points to 4.38% for the year ended June 30, 2023 as compared to 4.12% for the year
ended June 30, 2022. At June 30, 2023, approximately 58.4% 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) increased to $22.8 million for the year ended June 30, 2023 as compared to $16.1 million for the year ended June 30, 2022.  The average balance of
securities remained at $1.1 billion for the year ended June 30, 2023 and 2022. The average yield on securities non-taxable increased 68 basis points to 2.14% for the year ended June 30, 2023 as compared to 1.46% for the year ended June 30, 2022.
The average yield on securities taxable increased 44 basis points to 2.03% for the year ended June 30, 2023 as compared to 1.59% for the year ended June 30, 2022.  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 $1.6 million for the year ended June 30, 2023 as compared to $157,000 for the year ended June 30, 2022.  The average balance of
federal funds and interest-earning deposits decreased $44.7 million, or 56.2%, to $34.8 million for the year ended June 30, 2023 as compared to $79.5 million for the year ended June 30, 2022.  Dividends on FHLB stock increased to $215,000 for the
year ended June 30, 2023 as compared to $50,000 for the year ended June 30, 2022.

INTEREST EXPENSE

Interest expense for the year ended June 30, 2023 amounted to $23.4 million as compared to $5.4 million for the year ended June 30, 2022, an increase of $18.0 million.  The increase in rate on interest-bearing
liabilities had the greatest impact on interest expense when comparing the years ended June 30, 2023 and 2022. The rate paid on interest-bearing liabilities increased 79 basis points to 1.06% for the year ended June 30, 2023 compared to 0.27% for
the year ended June 30, 2022.  Total average interest-bearing liabilities increased to $2.2 billion for the year ended June 30, 2023 as compared to $2.0 billion for the year ended June 30, 2022, an increase of $213.9 million, or 10.7%.  The
majority of the increase related to NOW accounts, primarily resulting from growth in new deposit relationships within our business and municipal accounts.

Interest expense paid on savings and money market accounts amounted to $929,000 for the year ended June 30, 2023 as compared to $759,000 for the year ended June 30, 2022, an increase of $170,000, or 22.4%. The
average rate paid on savings and money market accounts increased 4 basis points to 0.20% for the year ended June 30, 2023 as compared to 0.16% for the year ended June 30, 2022.  The average balance of savings and money market accounts decreased
by $2.5 million to $465.0 million for the year ended June 30, 2023 as compared to $467.5 million for the year ended June 30, 2022.

Interest expense paid on NOW accounts amounted to $17.5 million for the year ended June 30, 2023 as compared to $2.4 million for the year ended June 30, 2022, an increase of $15.1 million.  The average rate paid on
NOW accounts increased 93 basis points to 1.10% for the year ended June 30, 2023 as compared to 0.17% for the year ended June 30, 2022.  The average balance of NOW accounts increased $150.5 million to $1.6 billion for the year ended June 30, 2023
as compared to $1.4 billion for the year ended June 30, 2022.

Interest expense paid on certificates of deposit amounted to $1.6 million for the year ended June 30, 2023 as compared to $283,000 for the year ended June 30, 2022, an increase of $1.3 million.  The average rate
paid on certificates of deposit increased 151 basis points to 2.32% for the year ended June 30, 2023 as compared to 0.81% for the year ended June 30, 2022.  The average balance on certificates increased $34.3 million to $69.3 million for the year
ended June 30, 2023 as compared to $35.0 million for the year ended June 30, 2022.

Interest expense on borrowings amounted to $3.4 million for the year ended June 30, 2023 as compared to $2.0 million for the year ended June 30, 2022, as the average balance of borrowings increased $31.6 million to
$82.8 million for the year ended June 30, 2023 as compared to $51.2 million for the year ended June 30, 2022. The average rate paid on borrowings increased 22 basis points to 4.05% from 3.83% during the period.

37

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 a benefit of $1.1 million and a charge of $3.3 million for the years ended June 30, 2023 and 2022, respectively. The benefit for the
years ended June 30, 2023 was due to a decrease in the balance and reserve percentage on loans adversely classified, as loans were upgraded due to improvements in credit quality and loans were paid off during the fiscal year. This was partially
offset by the growth in gross loans and increases in the economic qualitative factors during the year, due to elevated inflation levels and the negative impacts higher interest rates could have on borrowers’ abilities to repay 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

Noninterest income remained unchanged at $12.1 million for the year ended June 30, 2023 compared to year ended June 30, 2022.  During the year ended June 30, 2023, there was an increase in debit card fees, service
charges on deposit accounts resulting from continued growth in the number of checking accounts with debit cards and the number of deposit accounts, and income from bank owned life insurance. This was offset by a decrease in investment service
income and a net loss on sale of securities available-for-sale.

NONINTEREST EXPENSE

Noninterest expense increased $4.6 million, or 13.7%, to $38.6 million for the year ended June 30, 2023 compared to $34.0 million for the year ended June 30, 2022. The increase in noninterest expense during the
year ended June 30, 2023 was primarily due to increases in salaries and employee benefits expense due to new positions created during the period to support the Company’s growth, increases in FDIC insurance premiums of $259,000, and increases in
legal and professional fees of $1.6 million due to non-recurring litigation expense and associated legal fees.

38

Index

INCOME TAXES

Provision for income taxes reflects the expected tax associated with the pre-tax income generated for the given period and certain regulatory requirements.  The effective tax rate was 14.1% and 14.9% for the years
ended June 30, 2023 and 2022, 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 and income received on the bank owned life
insurance to arrive at the effective tax rate. The decrease in the current years effective tax rate was the result of an increase in tax-exempt income proportional to total income.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity resources. The Company’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.

The Company’s most liquid assets are cash and cash equivalent accounts.  The levels of these assets are dependent on the Company’s operating, financing, lending and investing activities during any given period.  At
June 30, 2023, cash and cash equivalents totaled $196.4 million, or 7.3% of total assets.

The Company’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 $157.9 million and $143.4 million and purchases of securities totaled $212.0 million and $669.2 million for the years ended June 30, 2023 and 2022, 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, 2023 and 2022, as the Company originated loans for retention in its portfolio.

On March 12, 2023, in response to liquidity concerns in the banking system, the Federal Deposit Insurance Corporation, Federal Reserve and U.S. Department of Treasury, collaboratively approved certain actions with
a stated intention to reduce stress across the financial system, support financial stability and minimize any impact on business, households, taxpayers, and the broader economy. Among other actions, the Federal Reserve Board has created a new
Bank Term Funding Program (BTFP) to make additional funding available to eligible depository institutions to help assure institutions can meet the needs of their depositors. Eligible institutions may obtain liquidity against a wide range of
collateral, at par value. BTFP advances can be requested through at least March 11, 2024. The Bank established a borrowing facility through the BTFP during the quarter ended June 30, 2023. The Company has not requested funding through the BTFP as
of June 30 2023.

In efforts to enhance strong levels of liquidity and to fund strong loan demand, the Bank and Commercial Bank (the “Banks”) accept brokered certificates of deposits, generally in denominations of less than
$250,000, from national brokerage networks, including through IntraFi’s one-way CDARS and ICS products. The Banks can place and obtain brokered deposits from a national brokerage network and IntraFi up to 10%
of total deposits form each broker based on policy. Both Banks have available funds from the IntraFi one-way CDARS and ICS deposits in the combined amount of $243.7 million per
policy, which both had zero outstanding at June 30, 2023. Additionally, both Banks participate in the CDARS and the ICS IntraFi products, which provides for reciprocal two-way transactions among other institutions facilitated by IntraFi
for the purpose of maximizing FDIC insurance for depositors. The Bank also has available funds from a national brokerage network in the amount of $243.7 million per policy, which there was $60.0 million outstanding
at June 30, 2023.

The Company 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 the Company
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, 2023, The Bank of
Greene County’s maximum borrowing from the FHLB reached $136.0 million.  As of the year ended June 30, 2023, 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, 2023, liquidity measures
were as follows:

39

Index

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, 2023, are not necessarily indicative of future cash requirements.

The Company’s unfunded loan commitments and unused lines of credit are as follows at June 30, 2023 and 2022:

The Company 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, 2023 totaled $116.0 million.
Based upon the Company’s experience and its current pricing strategy, management believes that a significant portion of such deposits will remain with the Company.

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 $110.0 million in municipal letters of credit outstanding at June 30, 2023.

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, 2023 or 2022.  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. There was no credit exposure
associated with risk participations-ins as of June 30, 2023 and June 30, 2022 due to the rise in interest rate. The RPAs participations-ins are spread out over four financial institution counterparties and terms range between 4 to 14 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 consistent earnings throughout
the fiscal year, the Company did not push down any additional capital to The Bank of Greene County during the fiscal year ended June 30, 2023.  At June 30, 2023 and 2022, 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 Annual Report.  Shareholders’ equity represented
6.8% and 6.1% of total consolidated assets at June 30, 2023 and 2022, 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.

40

Index

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 Annual Report.