U.S. UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


☒ QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934


FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2017

SEPTEMBER 30, 2023
OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT


Commission File Number:  0-25165


graphic

GREENE COUNTY BANCORP, INC.
(Exact nameName of registrantRegistrant as specifiedSpecified in its charter)Charter)


Commission file number  0-25165

United States

 
14-1809721

(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)


302 Main Street, Catskill, New York
 
12414

(Address of principal executive office) (Zip code)


Registrant'sRegistrant’s telephone number, including area code: (518) 943-2600


CheckSecurities registered pursuant to Section 12(b) of the Act:

Title of classTrading symbolName of exchange on which registered
Common Stock, $0.10 par value
GCBC
The Nasdaq Stock Market

Securities Registered Pursuant to Section 12(g) of the Act:
None
(Title of Class)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    YES☒          NO ☐


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES☒          NO ☐


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer   ☐
Accelerated filer   ☐
Emerging Growth Company   ☐
Non-accelerated filer   ☐☒
Smaller reporting company   ☒
Emerging Growth Company ☐
 


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   YES .YES ☐NO ☒


As of February 14, 2018,November 10, 2023, the registrant had 8,513,61417,026,828 shares of common stock outstanding at $ 0.10$0.10 par value per share.

GREENE COUNTY BANCORP, INC.

INDEX

GREENE COUNTY BANCORP, INC.
INDEX
PART I.
FINANCIAL INFORMATION
 
  Page
Item 1.Financial Statements (unaudited) 
 
*   Consolidated Statements of Financial Condition
3
 
*   Consolidated Statements of Income
4
 
*   Consolidated Statements of Comprehensive Income
5
 
*   Consolidated Statements of Changes in Shareholders’ Equity
6
 
*   Consolidated Statements of Cash Flows
7
 
*   Notes to Consolidated Financial Statements
8-298-30
   
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
30-4431-44
   
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
44
   
Item 4.
Controls and Procedures
44
   
PART II.
OTHER INFORMATION
45
   
Item 1.
Legal Proceedings
45
   
Item 1A.
Risk Factors
45
   
Item 2.
Unregistered Sales of Equity Securities and Use of  Proceeds and Issuer Purchase of Equity Securities
45
   
Item 3.
Defaults Upon Senior Securities
45
   
Item 4.
Mine Safety Disclosures
45
   
Item 5.
Other Information
45
   
Item 6.
Exhibits
45
   
 
Signatures
46
Exhibit 31.1 302 Certification of Chief Executive Officer
Exhibit 31.2 302 Certification of Chief Financial Officer
Exhibit 32.1 906 Statement of Chief Executive Officer
Exhibit 32.2 906 Statement of Chief Financial Officer
Exhibit 101 Extensible Business Reporting Language (XBRL)

2
Greene County Bancorp, Inc.
Consolidated Consolidated Statements of Financial Condition
At December 31, 2017September 30, 2023 and June 30, 20172023
(Unaudited)
(In thousands, except share and per share amounts)

ASSETS September 30, 2023  June 30, 2023 
Cash and due from banks $
23,454
  $
15,305
 
Interest-bearing deposits  106,799
   181,140
 
Total cash and cash equivalents  
130,253
   
196,445
 
         
Long-term certificates of deposit  
4,070
   
4,576
 
Securities available-for-sale, at fair value  
308,716
   
281,133
 
Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $498 at September 30, 2023
  
711,716
   
726,363
 
Equity securities, at fair value  
299
   
306
 
Federal Home Loan Bank stock, at cost  
1,979
   
1,682
 
Loans receivable
  
1,448,340
   
1,408,866
 
Allowance for credit losses on loans
  
(20,249
)
  
(21,212
)
Net loans receivable  
1,428,091
   
1,387,654
 
         
Premises and equipment, net  
15,282
   
15,028
 
Bank-owned life insurance  
55,425
   
55,063
 
Accrued interest receivable  
13,761
   
12,249
 
Foreclosed real estate  
302
   
302
 
Prepaid expenses and other assets  
18,301
   
17,482
 
Total assets 
$
2,688,195
  
$
2,698,283
 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Noninterest-bearing deposits 
$
166,054
  
$
159,039
 
Interest-bearing deposits  
2,254,427
   
2,278,122
 
Total deposits  
2,420,481
   
2,437,161
 
         
Borrowings from Federal Home Loan Bank term  
4,374
   
-
 
Subordinated notes payable, net  
49,542
   
49,495
 
Accrued expenses and other liabilities  
29,630
   
28,344
 
Total liabilities  
2,504,027
   
2,515,000
 
         
SHAREHOLDERS’ EQUITY        
Preferred stock, Authorized - 1,000,000 shares; Issued - None
  
-
   
-
 
Common stock, par value $0.10 per share; Authorized - 36,000,000 shares; Issued – 17,222,680 shares at September 30, 2023 and June 30, 2023; Outstanding – 17,026,828 shares at September 30, 2023, and June 30, 2023
  
1,722
   
1,722
 
Additional paid-in capital  
10,156
   
10,156
 
Retained earnings  
198,318
   
193,721
 
Accumulated other comprehensive loss  
(25,120
)
  
(21,408
)
Treasury stock, at cost 195,852 shares at September 30, 2023, and June 30, 2023
  
(908
)
  
(908
)
Total shareholders’ equity  
184,168
   
183,283
 
Total liabilities and shareholders’ equity 
$
2,688,195
  
$
2,698,283
 
ASSETS December 31, 2017  June 30, 2017 
Total cash and cash equivalents $27,714  $16,277 
         
Long term certificate of deposit  1,895   2,145 
Securities available-for-sale, at fair value  102,969   91,483 
Securities held-to-maturity, at amortized cost (fair value $243,287at December 31, 2017; $228,452 at June 30, 2017)  239,140   223,830 
Federal Home Loan Bank stock, at cost  2,488   2,131 
         
Loans  674,435   634,331 
Allowance for loan losses  (11,352)  (11,022)
Unearned origination fees and costs, net  790   878 
Net loans receivable  663,873   624,187 
         
Premises and equipment  13,499   13,615 
Accrued interest receivable  4,610   4,033 
Foreclosed real estate  905   799 
Prepaid expenses and other assets  3,717   3,791 
Total assets $1,060,810  $982,291 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Noninterest-bearing deposits $99,388  $95,929 
Interest-bearing deposits  821,363   763,606 
Total deposits  920,751   859,535 
         
Borrowings from Federal Home Loan Bank, short-term  20,300   6,900 
Borrowings from Federal Home Loan Bank, long-term  20,150   22,650 
Accrued expenses and other liabilities  10,036   9,685 
Total liabilities  971,237   898,770 
         
SHAREHOLDERS' EQUITY        
Preferred stock, Authorized - 1,000,000 shares; Issued - None  -   - 
Common stock, par value $.10 per share; Authorized - 12,000,000 shares; Issued – 8,611,340 shares;Outstanding - 8,506,614 shares at December 31, 2017, and 8,502,614 shares at June 30, 2017
  861   861 
Additional paid-in capital  11,000   10,990 
Retained earnings  79,421   73,072 
Accumulated other comprehensive loss  (1,314)  (992)
Treasury stock, at cost 104,726 shares at December 31, 2017, and 108,726 shares at June 30, 2017
  (395)  (410)
Total shareholders’ equity  89,573   83,521 
Total liabilities and shareholders’ equity $1,060,810  $982,291 


See notes to consolidated financial statements

3
Index
Greene County Bancorp, Inc.
Consolidated Consolidated Statements of Income
For the Three and Six Months Ended December 31, 2017September 30, 2023 and 20162022
(Unaudited)
(In thousands, except share and per share amounts)


  2023
  2022
 
Interest income:      
Loans 
$
17,205
  
$
13,382
 
Investment securities - taxable  
768
   
664
 
Mortgage-backed securities  
1,493
   
1,490
 
Investment securities - tax exempt  
4,290
   
3,077
 
Interest-bearing deposits and federal funds sold  
916
   
27
 
Total interest income  
24,672
   
18,640
 
         
Interest expense:        
Interest on deposits  
10,607
   
2,010
 
Interest on borrowings  
626
   
796
 
Total interest expense  
11,233
   
2,806
 
         
Net interest income  
13,439
   
15,834
 
Provision for credit losses
  
457
   
(499
)
Net interest income after provision for credit losses
  
12,982
   
16,333
 
         
Noninterest income:        
Service charges on deposit accounts  
1,230
   
1,217
 
Debit card fees  
1,133
   
1,142
 
Investment services  
243
   
180
 
E-commerce fees  
29
   
26
 
Bank owned life insurance  
362
   
340
 
Other operating income  
302
   
193
 
Total noninterest income  
3,299
   
3,098
 
         
Noninterest expense:        
Salaries and employee benefits  
5,491
   
5,428
 
Occupancy expense  
537
   
524
 
Equipment and furniture expense  
138
   
158
 
Service and data processing fees  
591
   
702
 
Computer software, supplies and support  
511
   
381
 
Advertising and promotion  
97
   
76
 
FDIC insurance premiums  
312
   
242
 
Legal and professional fees  
383
   
451
 
Other  
785
   
835
 
Total noninterest expense  
8,845
   
8,797
 
         
Income before provision for income taxes  
7,436
   
10,634
 
Provision for income taxes  
967
   
1,598
 
Net income 
$
6,469
  
$
9,036
 
         
Basic and diluted earnings per share $0.38  $0.53 
Basic and diluted average shares outstanding  
17,026,828
   17,026,828
 
  
For the three months ended
December 31,
  
For the six months ended
December 31,
 
  2017  2016  2017  2016 
Interest income:            
Loans $7,287  $6,382  $14,346  $12,435 
Investment securities - taxable  163   146   328   296 
Mortgage-backed securities  791   1,099   1,608   1,883 
Investment securities - tax exempt  1,092   852   2,128   1,676 
Interest-bearing deposits and federal funds sold  87   5   99   8 
Total interest income  9,420   8,484   18,509   16,298 
                 
Interest expense:                
Interest on deposits  867   648   1,676   1,254 
Interest on borrowings  93   105   203   226 
Total interest expense  960   753   1,879   1,480 
                 
Net interest income  8,460   7,731   16,630   14,818 
Provision for loan losses  352   586   699   1,129 
Net interest income after provision for loan losses  8,108   7,145   15,931   13,689 
                 
Noninterest income:                
Service charges on deposit accounts  934   820   1,785   1,593 
Debit card fees  591   510   1,157   1,001 
Investment services  122   67   194   137 
E-commerce fees  35   31   73   63 
Other operating income  205   184   418   367 
Total noninterest income  1,887   1,612   3,627   3,161 
                 
Noninterest expense:                
Salaries and employee benefits  3,110   2,787   6,037   5,455 
Occupancy expense  355   339   711   719 
Equipment and furniture expense  158   132   271   252 
Service and data processing fees  540   499   1,027   947 
Computer software, supplies and support  162   148   305   294 
Advertising and promotion  112   85   167   208 
FDIC insurance premiums  93   93   186   207 
Legal and professional fees  229   220   460   418 
Other  553   485   1,041   1,042 
Total noninterest expense  5,312   4,788   10,205   9,542 
                 
Income before provision for income taxes  4,683   3,969   9,353   7,308 
Provision for income taxes  1,043   1,043   2,241   1,875 
Net income $3,640  $2,926  $7,112  $5,433 
                 
Basic earnings per share $0.43  $0.34  $0.84  $0.64 
Basic average shares outstanding  8,504,168   8,491,929   8,503,451   8,487,554 
Diluted earnings per share $0.43  $0.34  $0.83  $0.64 
Diluted average shares outstanding  8,533,126   8,509,316   8,532,274   8,503,913 
Dividends per share $0.0975  $0.0950  $0.1950  $0.1900 


See notes to consolidated financial statements

4
Index
Greene County Bancorp, Inc.
Consolidated Statements of Comprehensive Income
For the Three and Six Months Ended December 31, 2017September 30, 2023 and 20162022
(Unaudited)
(In thousands)


  2023
  2022
 
Net Income 
$
6,469
  
$
9,036
 
Other comprehensive loss:
        
Unrealized holding losses on available-for-sale securities, gross
  
(5,065
)
  
(9,031
)
Tax effect  
(1,353
)
  
(2,413
)
Unrealized holding losses on available-for-sale securities, net
  (3,712)  (6,618)
         
Total other comprehensive loss, net of taxes
  
(3,712
)
  
(6,618
)
         
Comprehensive income
 
$
2,757
  
$
2,418
 
  
For the three months ended
December 31,
  
For the six months ended
December 31,
 
  2017  2016  2017  2016 
Net Income $3,640  $2,926  $7,112  $5,433 
Other comprehensive loss:                
Unrealized holding losses on available-for-sale securities, net of income tax benefit of ($345) and ($430), for the three months, and  ($200) and ($530), for the six months ended December 31, 2017 and 2016 respectively  (557)  (693)  (322)  (834)
                 
Accretion of unrealized loss on securities transferred to held-to-maturity, net of income taxes of $- and $- for the three months, and $- and $1 for the six months ended December 31, 2017 and 2016, respectively  -   1   -   1 
                 
Total other comprehensive loss, net of taxes  (557)  (692)  (322)  (833)
                 
Comprehensive income $3,083  $2,234  $6,790  $4,600 


See notes to consolidated financial statements.

5
Index
Greene County Bancorp, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
For the SixThree Months Ended December 31, 2017September 30, 2023 and 20162022
(Unaudited)
(In thousands)


  
Common
Stock
  
Additional
Paid-In
Capital
  
Retained
Earnings
  
Accumulated
Other
Comprehensive
Loss
  
Treasury
Stock
  
Total
Shareholders’
Equity
 
Balance at June 30, 2023
 
$
1,722
  
$
10,156
  
$
193,721
  
$
(21,408
)
 
$
(908
)
 
$
183,283
 
Cumulative effect adjustment for ASU 2016-13 Current Expected Credit Losses          (510)          (510)
Dividends declared          
(1,362
)
          
(1,362
)
Net income          
6,469
           
6,469
 
Other comprehensive loss, net of taxes              
(3,712
)
      
(3,712
)
Balance at September 30, 2023
 
$
1,722
  
$
10,156
  
$
198,318
  
$
(25,120
)
 
$
(908
)
 
$
184,168
 
  
Common
Stock
  
Additional
Paid-In
Capital
  
Retained
Earnings
  
Accumulated
Other
Comprehensive
Income
  
Treasury
Stock
  
Total
Shareholders'
Equity
 
Balance at June 30, 2016 $861  $10,872  $63,805  $(725) $(512) $74,301 
Options exercised      67           102   169 
Tax benefit of stock based compensation      51               51 
Dividends declared          (742)          (742)
Net income          5,433           5,433 
Other comprehensive loss, net of taxes              (833)      (833)
Balance at December 31, 2016 $861  $10,990  $68,496  $(1,558) $(410) $78,379 

  
Common
Stock
  
Additional
Paid-In
Capital
  
Retained
Earnings
  
Accumulated
Other
Comprehensive
Loss
  
Treasury
Stock
  
Total
Shareholders’
Equity
 
Balance at June 30, 2022
 
$
1,722
  
$
10,156
  
$
165,127
  
$
(18,383
)
 
$
(908
)
 
$
157,714
 
Dividends declared  
   
   
(546
)
  
   
   
(546
)
Net income  
   
   
9,036
   
   
   
9,036
 
Other comprehensive loss, net of taxes  
   
   
   
(6,618
)
  
   
(6,618
)
Balance at September 30, 2022
 
$
1,722
  
$
10,156
  
$
173,617
  
$
(25,001
)
 
$
(908
)
 
$
159,586
 

  
Common
Stock
  
Additional
Paid-In
Capital
  
Retained
Earnings
  
Accumulated
Other
Comprehensive
Loss
  
Treasury
Stock
  
Total
Shareholders'
Equity
 
Balance at June 30, 2017 $861  $10,990  $73,072  $(992) $(410) $83,521 
Options exercised      10           15   25 
Dividends declared          (763)          (763)
Net income          7,112           7,112 
Other comprehensive loss, net of taxes              (322)      (322)
Balance at December 31, 2017 $861  $11,000  $79,421  $(1,314) $(395) $89,573 

See notes to consolidated financial statements.

6
Index
Greene County Bancorp, Inc.
Consolidated StConsolidated Statementsatements of Cash Flows
For the SixThree Months Ended December 31, 2017September 30, 2023 and 20162022
(Unaudited)
(In thousands)
  2023
  2022
 
Cash flows from operating activities:      
Net Income 
$
6,469
  
$
9,036
 
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation  
220
   
213
 
Deferred income tax benefit
  
(735
)
  
(262
)
Net amortization of investment premiums and discounts  
410
   
755
 
Net amortization of deferred loan costs and fees  
40
   
76
 
Amortization of subordinated debt issuance costs  
47
   
46
 
Provision for credit losses
  
457
   
(499
)
Bank-owned life insurance income  
(362
)
  
(340
)
Net loss on equity securities
  
7
   
19
 
Net loss on sale of foreclosed real estate
  -   5 
Net increase (decrease) in accrued income taxes
  
1,346
   
(72
)
Net increase in accrued interest receivable  
(1,512
)
  
(1,619
)
Net decrease in prepaid expenses and other assets
  
109
   
439
 
Net decrease in accrued expense and other liabilities
  
(238
)
  
(3,396
)
Net cash provided by operating activities  
6,258
   
4,401
 
         
Cash flows from investing activities:        
Securities available-for-sale:        
Proceeds from maturities  
43,355
   
80,476
 
Purchases of securities  
(77,044
)
  
(22,256
)
Proceeds from principal payments on securities  
942
   
6,898
 
Securities held-to-maturity:        
Proceeds from maturities  
18,192
   
21,539
 
Purchases of securities  
(7,997
)
  
(21,292
)
Proceeds from principal payments on securities  
3,649
   
8,297
 
Net (purchase) redemption of Federal Home Loan Bank Stock
  
(297
)
  
4,358
 
Maturity of long-term certificates of deposit  
500
   
245
 
Net increase in loans receivable  
(39,608
)
  
(98,073
)
Proceeds from sale of foreclosed real estate
  -   63 
Purchases of premises and equipment  
(474
)
  
(154
)
Net cash used in investing activities  
(58,782
)
  
(19,899
)
         
Cash flows from financing activities        
Net decrease in short-term FHLB advances
  -   (100,300)
Proceeds from term FHLB advances  
4,374
   
-
 
Payment of cash dividends  
(1,362
)
  
(546
)
Net (decrease) increase in deposits  
(16,680
)
  
114,259
 
Net cash (used in) provided by financing activities  
(13,668
)
  
13,413
 
         
Net decrease in cash and cash equivalents  
(66,192
)
  
(2,085
)
Cash and cash equivalents at beginning of period  
196,445
   
69,009
 
Cash and cash equivalents at end of period 
$
130,253
  
$
66,924
 
         
Cash paid during period for:        
Interest 
$
11,638
  
$
3,266
 
Income taxes 
$
356
  
$
1,932
 

  2017  2016 
Cash flows from operating activities:      
Net Income $7,112  $5,433 
Adjustments to reconcile net income to net cash provided by operating activities        
Depreciation  318   319 
Deferred income tax expense  (2,130)  (2,196)
Net amortization of premiums and discounts  385   443 
Net amortization of deferred loan costs and fees  253   251 
Provision for loan losses  699   1,129 
(Gains) losses on sale of foreclosed real estate  (53)  61 
Excess tax benefit from share based compensation  -   (51)
Net increase in accrued income taxes  3,376   2,438 
Net increase in accrued interest receivable  (577)  (179)
Net increase in prepaid and other assets  (973)  (291)
Net increase (decrease) in other liabilities  351   (786)
Net cash provided by operating activities  8,761   6,571 
         
Cash flows from investing activities:        
Securities available-for-sale:        
Proceeds from maturities  30,543   37,123 
Purchases of securities  (43,784)  (29,683)
Principal payments on securities  1,206   5,573 
Securities held-to-maturity:        
Proceeds from maturities  7,347   5,795 
Purchases of securities  (31,015)  (17,646)
Principal payments on securities  8,001   5,397 
Net purchase of Federal Home Loan Bank Stock  (357)  (978)
Maturity of long term certificate of deposit  250   65 
Net increase in loans receivable  (40,729)  (70,066)
Proceeds from sale of foreclosed real estate  38   94 
Purchases of premises and equipment  (202)  (71)
Net cash used by investing activities  (68,702)  (64,397)
         
Cash flows from financing activities        
Net increase in short-term advances  13,400   19,700 
Proceeds from long-term FHLB advances  -   2,650 
Repayment of long-term FHLB advances  (2,500)  (500)
Payment of cash dividends  (763)  (742)
Proceeds from issuance of stock options  25   169 
Excess tax benefit from share based compensation  -   51 
Net increase in deposits  61,216   36,178 
Net cash provided by financing activities  71,378   57,506 
         
Net increase (decrease)  in cash and cash equivalents  11,437   (320)
Cash and cash equivalents at beginning of period  16,277   15,895 
Cash and cash equivalents at end of period $27,714  $15,575 
         
Non-cash investing activities:        
Foreclosed loans transferred to foreclosed real estate $91  $123 
Cash paid during period for:        
Interest $1,882  $1,471 
Income taxes $994  $1,633 


See notes to consolidated financial statements

7
Index
Greene County Bancorp, Inc.
Notes to Consolidated Financial Statements
At and for the Three and Six Months Ended December 31, 2017September 30, 2023 and 20162022


(1)Basis of Presentation
(1)          Summary of Significant Accounting Policies



Basis of Presentation



Within the accompanying unaudited interim consolidated statement of financial condition,statements and related notes to the consolidated financial statements, the June 30, 20172023 data was derived from the audited consolidated financial statements and notes of Greene County Bancorp, Inc. (the “Company”) and its wholly owned subsidiaries, The Bank of Greene County (the “Bank”) and Greene Risk Management, Inc., and the Bank’s wholly owned subsidiaries, Greene County Commercial Bank (the “Commercial Bank”) and Greene Property Holdings, Ltd. The interim consolidated financial statements at and for the three and six months ended December 31, 2017September 30, 2023 and 20162022 are unaudited.




The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.  To the extent that information and notes required by GAAP for complete financial statements are contained in or are consistent with the audited financial statements incorporated by reference to Greene County Bancorp, Inc.’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017,2023, such information and notes have not been duplicated herein. In the opinion of management, all adjustments (consisting of only normal recurring items) necessary for a fair presentation of the financial position and results of operations and cash flows at and for the periods presented have been included. AmountsCertain previous years’ amounts in the prior year’sunaudited consolidated financial statements and notes thereto, have been reclassified whenever necessary to conform to the current year’s presentation.  These reclassifications, if any, had no effect on net income or retained earnings as previously reported.  All material inter-company accounts and transactions have been eliminated in the consolidation. The results of operations and other data for the three and six months ended December 31, 2017September 30, 2023 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2018.2024. These consolidated financial statements consider events that occurred through the date the consolidated financial statements were issued.issued and should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K.


CRITICAL ACCOUNTING POLICIES


Greene County Bancorp, Inc.’s critical accounting policies relateOn March 23, 2023, the Company effected a 2-for-1 stock split in the form of a stock dividend on its outstanding shares of common stock. All share and per share data throughout this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the stock split. The shares of common stock retain a par value of $0.10 per share. Accordingly, an amount equal to the allowance for loan losses and the evaluation of securities for other-than-temporary impairment.  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 fairpar value of the underlying collateral, economic conditions, historical loan loss experience, management’s estimateincreased shares resulting from the stock split was reclassified from “Additional paid-in capital” to “Common stock”.



Nature 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. There have been no significant changes in the application of this critical accounting policy during the three and six months ended December 31, 2017.Operations

Securities are evaluated for other-than-temporary impairment by performing periodic reviews of individual securities in the investment portfolio.  Greene County Bancorp, Inc. makes an assessment to determine whether there have been any events or economic circumstances to indicate that a security, on which there is an unrealized loss, is impaired on an other-than-temporary basis. 

The Company considers many factors, including the severity and duration of the impairment; the intent and ability of the Company to hold the equity security for a period of time sufficient for a recovery in value; recent events specific to the issuer or industry; and for debt securities, the intent to sell the security, the likelihood to be required to sell the security before it recovers the entire amortized cost, external credit ratings and recent downgrades.  The Company is required to record other-than-temporary impairment charges through earnings, if it has the intent to sell, or will more likely than not be required to sell an impaired debt security before a recovery of its amortized cost basis.  In addition, the Company is required to record other-than-temporary impairment charges through earnings for the amount of credit losses, regardless of the intent or requirement to sell.  Credit loss is measured as the difference between the present value of an impaired debt security’s cash flows and its amortized cost basis.  Non-credit related write-downs to fair value must be recorded as decreases to accumulated other comprehensive income as long as the Company has no intent or requirement to sell an impaired security before a recovery of amortized cost basis.

(2)Nature of Operations

Greene County Bancorp, Inc.’sCompany’s primary business is the ownership and operation of its subsidiaries, Thesubsidiaries.  At September 30, 2023, the Bank of Greene County and Greene Risk Management, Inc.  The Bank of Greene County has 1418 full-service offices and an operations center and lending center located in its market area withinconsisting of the Hudson Valley Regionand Capital District Regions of New York State.  The Bank of Greene County is primarily engaged in the business of attracting deposits from the general public in The Bank of Greene County’sthe Bank’s market area, and investing such deposits, together with other sources of funds, in loans and investment securities.  Greene Risk Management, Inc. is a pooled captive insurance company, which provides additional insurance coverage for the Company and its subsidiaries related to the operations of the Company for which insurance may not be economically feasible.  The Bank of Greene County also owns and operates two subsidiaries, Greene County Commercial Bank and Greene Property Holdings, Ltd. Greene County Commercial Bank’s primary business is to attract deposits from, and provide banking services to, local municipalities.  Greene Property Holdings, Ltd.isLtd. was formed as a New York corporation that has elected under the Internal Revenue Code to be a real estate investment trust, which holdstrust.  Currently, certain mortgages and loan notes which were originated throughheld by the Bank are transferred and servicedbeneficially owned by Greene Property Holdings, Ltd.  The Bank continues to service these loans.



Use of Greene County.Estimates

8
(3)Use of Estimates


The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could materially differ from those estimates.  Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the assessment of other-than-temporary security impairment.

While management uses available information to recognizecredit losses on loans future additionsand on unfunded commitments.


8

Allowance for Credit Losses on Loans


The Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”) approach requires an estimate of the credit losses expected over the life of a loan (or pool of loans). The allowance is a valuation account that is deducted from, or added to, the loans’ amortized cost basis to present the net, lifetime amount expected to be collected on the loans. Loan losses are charged off against the allowance when management believes a loan balance is confirmed to be uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and amounts expected to be charged-off.

Collateral dependent loans that are on nonaccrual status, with a balance of $250,000 or greater are evaluated on an individual basis and excluded from the pooled loan evaluation. The fair value of collateral for collateral dependent loans less selling costs will be compared to the loan balance to determine if a CECL reserve is required. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs.


The loan portfolio is segmented based on the level at which the Company develops and documents a systematic methodology to determine its allowance for credit losses. Management developed the following segments for estimating loss based on type of borrower and collateral which is generally based upon federal call report segmentation and have been combined as needed to ensure loans of similar risk profiles are appropriately pooled: residential real estate, commercial real estate, consumer loan, home equity and commercial loans.


Management estimates the allowance for credit losses on loans by using relevant information, from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts that affect the collectability of loans. Historical loss experience was considered by the Company for estimating expected credit losses and determined the need to use peer data, with similar risk profiles, to develop and calculate the CECL reserve models.


Historical credit loss experience for the Company and peer losses by loan segments, provide a foundation for estimating an expected credit loss. The observed credit losses (the “Allowance”are converted to probability of default (“PD”) may be necessary,rate curves through the use of loss given default (“LGD”) risk factors that converts default rates to estimated loss for each loan segment. This is based on industry-level, observed relationships between the PD and LGD variables for each segment. The historical PD curves correspond to economic variables through historical economic cycles, which establishes a quantitative relationship between forecasted economic conditions and loan performance.


Using the historical quantitative relationship between economic conditions and loan performance, management developed a model, using selected external economic forecasts that is highly correlated for each loan segment. These forecasts are then applied over a period that management has determined to be reasonable and supportable. Beyond the period over which management can develop or source a reasonable and supportable forecast, the model will revert to long-term average economic conditions using a straight-line methodology.


The allowance for credit losses on loans is measured on a collective basis, when similar risk characteristics are present, with both a quantitative and qualitative analysis that is applied on a quarterly basis. The respective quantitative reserve for each segment is calculated using a PD/LGD modeling methodology, with segment-specific regression models. The discounted cash flows methodology uses expected credit losses estimated over the effective life of each loan by measuring the difference between the net present value of modeled cash flows and amortized cost basis. Contractual cash flows over the contractual life of the loans are the basis for modeled cash flows, adjusted for modeled defaults and expected prepayments and discounted at the loan-level stated interest rate.


Management applies a qualitative adjustment for each segment as of the balance sheet date. The qualitative adjustments include limitations inherent in the quantitative model; changes in lending policies and procedures; changes in international, national, regional, and local economic conditions, asset quality orconditions; changes in the nature and volume of the portfolio and terms of loans; the experience, ability and depth of lending management and staff; changes in the volume and severity of past due loans; changes in value of underlying collateral; existence and effect of any concentrations of credit and changes in the levels of such concentrations; and the effect of external factors; such as competition, legal and regulatory requirements.



Allowance for Credit Losses on Unfunded Commitments



The Company estimates expected credit losses over the contractual period in which the Company has exposure to a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on unfunded commitments exposure is recognized in other factors.  In addition, various regulatory authorities,liabilities and is adjusted as an integral partexpense in other noninterest expense. The estimate includes consideration of their examination process, periodically review the Allowance.  Such authorities may requirelikelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over the Company to recognize additions to the Allowance based on their judgments of information available to them at the time of their examination.

Greene County Bancorp, Inc. makes an assessment to determine whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is impaired on an other-than-temporary basis.estimated contractual life. The Company considers many factors including the severityfollowing segments of unfunded commitments exposure; home equity line of credits, commercial line of credits, consumer loans, the residential and durationcommercial real estate loans committed but not closed and the unfunded portion of the impairment;construction loans. The probable funding amount by segment is multiplied by the intentrespective reserve percentage calculated in the allowance for credit losses on loans to calculate a reserve on unfunded commitments.


9

Allowance for Credit Losses on Securities Held-to-Maturity(“HTM”)


The Company is required to utilize the CECL approach to estimate expected credit losses. Management measures expected credit losses on HTM debt securities on a collective basis by major security types that share similar risk characteristics. Management classifies the HTM portfolio into the following major security types: U.S. Treasury securities, state and abilitypolitical subdivisions, mortgage-backed securities-residential, mortgage-backed securities-multi-family, corporate debt securities and other securities.


Expected losses are calculated on a pooled basis using a probability of default/loss given default(PD/LGD) model, based on historical credit loss data from a reliable source. Management utilizes municipal and corporate default and loss rates which provides decades of data across all municipal and corporate sectors and geographies. Management may exercise discretion to make adjustments based on environmental factors. The model calculates the expected loss for each security over the contractual life. If the risk of a held-to-maturity debt security no longer matches the collective assessment pool, it is removed and individually assessed for credit deterioration.


U.S. Treasury and mortgage-backed securities are issued by U.S. government entities and agencies. These securities are either explicitly and/or implicitly guaranteed by the U.S. government as to timely repayment of principal and interest, are highly rated by major rating agencies, and have a long history of zero credit losses. Therefore, the Company determined a zero credit loss assumption, and did not calculate or record an allowance for credit loss for these securities.



Allowance for Credit Losses on Securities Available-for-sale (“AFS”)



The credit loss model for AFS debt securities requires credit losses to be presented as an allowance rather than a direct write-down of debt securities. AFS debt securities continue to be recorded at fair value with changes in fair value reflected in other comprehensive income. When the fair value of an AFS debt security falls below the amortized cost basis it is evaluated to determine if any of the Companydecline in value is attributable to holdcredit loss. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security for a period of time sufficient for a recovery in value; recent events specificare compared to the issuer or industry;amortized cost basis of the security. The cash flows are estimated using information relevant to the collectability of the security, including information about past events, current conditions and reasonable and supportable forecasts. Decreases in fair value attributable to credit loss are recorded directly to earnings with a corresponding allowance for debt securities, intentcredit losses, limited to the amount that the fair value is less than the amortized cost basis. If the credit quality subsequently improves, the allowance is reversed up to a maximum of the previously recorded credit losses. When the Company intends to sell thean impaired AFS debt security, whetheror if it is more likely than not wethat the Company will be required to sell the security before recovery, whetherprior to recovering the amortized cost basis, the entire fair value adjustment will immediately be recognized in earnings with no corresponding allowance for credit losses.



Investments in Federal Home Loan Bank (“FHLB”) stock are required for membership and are carried at cost since there is no market value available. The FHLB New York continues to pay dividends and repurchase stock. As such, the Company has not recognized any credit loss on its holdings of FHLB stock.



Accrued Interest Receivable


Accrued interest receivable balances are presented separately on the consolidated statements of financial condition and are not included in amortized cost when determining the allowance for credit losses. Accrued interest receivable that is deemed uncollectible is written off timely. For loans, write off typically occurs upon becoming over 90 to 120 days past due and therefore the amount of such write offs are immaterial. Historically, the Company has not experienced uncollectible accrued interest receivable on investment securities.



Derivative Instruments



The Company enters into interest rate swap agreements that are not designated as hedges for accounting purposes. As the interest rate swap agreements have substantially equivalent and offsetting terms, they do not present any material exposure to the Company’s consolidated statements of income. The Company records its interest rate swap agreements at fair value and is presented on a gross basis within other assets and other liabilities on the consolidated statements of financial condition. Changes in the fair value of assets and liabilities arising from these derivatives are included, net, in other operating income in the consolidated statement of income.


10
(2)Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In June 2016, the FASB issued an Update (ASU 2016-13) to its guidance on “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 requires credit losses on most financial assets measured at amortized cost and certain other instruments to be measured using an expected external credit ratingsloss model (referred to as the current expected credit loss (CECL) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications) from the date of initial recognition of that instrument. The ASU also replaces the current accounting model for purchased credit impaired loans and recent downgrades.  Securitiesdebt securities. The allowance for credit losses for purchased financial assets with a more-than insignificant amount of credit deterioration since origination (“PCD assets”), should be determined in a similar manner to other financial assets measured on an amortized cost basis. However, upon initial recognition, the allowance for credit losses is added to the purchase price (“gross up approach”) to determine the initial amortized cost basis. The subsequent accounting for PCD financial assets is the same expected loss model described above. Further, the ASU made certain targeted amendments to the existing impairment model for debt securities available-for-sale (AFS). For an AFS debt security for which there is neither the intent nor a more-likely-than-not requirement to sell, an unrealized lossentity will record credit losses as an allowance rather than a write-down of the amortized cost basis.  An entity will apply the amendments in this Update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which aligns the implementation date for nonpublic entities’ annual financial statements with the implementation date for their interim financial statements and clarifies the scope of the guidance in the amendments in ASU 2016-13.  In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The amendments to Topic 326 and other topics in  ASU 2019-04 include items related to the amendments in Update 2016-13 discussed at the June 2018 and November 2018 Credit Losses TRG meetings. The amendments clarify or address stakeholders’ specific issues about certain aspects of the amendments in Update 2016-13 on a number of different topics, including the following:  accrued interest, transfers between classifications or categories for loans and debt securities, recoveries, consideration of prepayments in determining the effective interest rate, consideration of estimated costs to sell when foreclosure is probable, vintage disclosures, line-of-credit arrangements converted to term loans, and contractual extensions and renewals. The effective dates and transition requirements for the amendments related to this Update are the same as the effective dates and transition requirements in Update 2016-13.  In November 2019, the FASB issued ASU 2019-11 Codification Improvements to Topic 326 Financial Instruments Credit Losses provides additional clarification to specific issues about certain aspects of the amendments in Update 2016-13 related to measuring the allowance for loan losses under the new guidance.

For public business entities that is deemedare U.S. Securities and Exchange Commission (SEC) filers, excluding small reporting companies such as the Company, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, FASB issued ASU 2019-10, Financial Instruments – Credit Losses which amends the implementation effective date for small reporting companies, such as the Company, and non-public business entities, for fiscal years beginning after December 15, 2022. All entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

The Company adopted CECL on July 1, 2023 (“Day-one”) using the modified retrospective method for all financial assets measured at amortized cost and off-balance-sheet credit exposures. Results for reporting periods beginning after July 1, 2023 are presented under ASC 326 while prior period amounts continue to be other-than-temporary are written downreported in accordance with previously applicable GAAP. The Company recorded a net decrease to fair value through earnings.retained earnings of $510,000 as of July 1, 2023 for the cumulative effect of adopting ASC 326. The transition adjustment includes a $1.3 million decrease to the allowance for credit losses on loans, a $503,000 increase to the allowance for credit losses on investment securities held-to-maturity, a $1.5 million increase to the allowance for credit losses on unfunded commitment exposures, and a $186,000 impact to the deferred tax asset. Refer to Note 3 Securities and Note 4 Loans and Allowance for Credit Losses on Loans, included in this Form 10-Q for more information.


(4)Securities

Securities at December 31, 2017 consistedIn March 2022, the FASB issued ASU No. 2022-02, amendments related to Troubled Debt Restructurings (TDRs) for all entities after they adopt ASU 2016-13 and amendments related to vintage disclosures that affect public business entities with investments in financing receivables, under Financial Instruments-Credit Losses (Topic 326). The ASU eliminates the guidance on TDRs and requires an evaluation on all loan modifications to determine if they result in a new loan or a continuation of the following:existing loan. The ASU also requires that entities disclose current-period gross charge-offs by year of origination and eliminates the recognition and measurement guidance for TDRs in Subtopic 310-40. The effective dates for the amendments in this Update are the same as the effective dates in ASU 2016-13. The amendments in this Update should be applied prospectively, except for the transition method related to the recognition and measurement of TDRs. An entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. The Company adopted this standard on a prospective basis as of July 1, 2023, concurrent with the adoption of ASU 2016-13.
(In thousands) Amortized Cost  
Gross
Unrealized
Gains
  
Gross
Unrealized
Losses
  
EstimatedFair
Value
 
Securities available-for-sale:            
U.S. government sponsored enterprises $5,552  $83  $12  $5,623 
State and political subdivisions  71,627   97   4   71,720 
Mortgage-backed securities-residential  4,098   41   43   4,096 
Mortgage-backed securities-multi-family  19,899   303   131   20,071 
Corporate debt securities  1,260   -   3   1,257 
Total debt securities  102,436   524   193   102,767 
Equity securities  62   140   -   202 
Total securities available-for-sale  102,498   664   193   102,969 
Securities held-to-maturity:                
U.S. government sponsored enterprises  7,246   -   95   7,151 
State and political subdivisions  127,725   3,967   205   131,487 
Mortgage-backed securities-residential  7,479   184   -   7,663 
Mortgage-backed securities-multi-family  94,183   664   399   94,448 
Corporate debt securities  1,000   15   -   1,015 
Other securities  1,507   19   3   1,523 
Total securities held-to-maturity  239,140   4,849   702   243,287 
Total securities $341,638  $5,513  $895  $346,256 

911
Securities at JuneIn March 2020, the FASB issued an Update (ASU 2020-04), Reference Rate Reform (Topic 848). On January 7, 2021, the FASB issued (ASU 2021-01), which refines the scope of ASC 848 and clarifies some of its guidance. The ASU and related amendments provide temporary optional expedients and exceptions to the existing guidance for applying GAAP to affected contract modifications and hedge accounting relationships in the transition away from the London Interbank Offered Rate (“LIBOR”) or other interbank offered rate on financial reporting. The guidance also allows a one-time election to sell and/or reclassify to AFS or trading HTM debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective March 12, 2020 through December 31, 2022 and permits relief solely for reference rate reform actions and permits different elections over the effective date for legacy and new activity. The Company adopted the standard during the quarter ended September 30, 2017 consisted2023, and it did not have a material impact on the consolidated financial statements as the Company’s LIBOR exposure was minimal and limited to a couple of participation loans and risk participation agreements.

In December 2022, the FASB issued an Update (ASU 2022-06), Reference Rate Reform (Topic 848) Deferral of the following:Sunset Date of Topic 848. The ASU extends the period of time companies can utilize the reference rate reform relief guidance provided by ASU 2020-04 and ASU 2021-01. The guidance, which was effective upon issuance, defers the sunset date from December 31, 2022 to December 31, 2024, after which companies will no longer be permitted to apply the relief guidance in Topic 848. The adoption did not have a material impact on the consolidated financial statements and related disclosures.


(In thousands) Amortized Cost  
Gross Unrealized
Gains
  
Gross Unrealized
Losses
  
Estimated
Fair Value
 
Securities available-for-sale:            
U.S. government sponsored enterprises $4,566  $151  $-  $4,717 
State and political subdivisions  57,885   227   -   58,112 
Mortgage-backed securities-residential  4,868   72   27   4,913 
Mortgage-backed securities-multi-family  20,344   483   62   20,765 
Asset-backed securities  1   -   -   1 
Corporate debt securities  2,765   29   3   2,791 
Total debt securities  90,429   962   92   91,299 
Equity securities  62   122   -   184 
Total securities available-for-sale  90,491   1,084   92   91,483 
Securities held-to-maturity:                
U.S. government sponsored enterprises  6,000   -   53   5,947 
State and political subdivisions  115,805   3,434   95   119,144 
Mortgage-backed securities-residential  10,798   274   2   11,070 
Mortgage-backed securities-multi-family  88,702   1,259   199   89,762 
Corporate debt securities  1,000   -   5   995 
Other securities  1,525   21   12   1,534 
Total securities held-to-maturity  223,830   4,988   366   228,452 
Total securities $314,321  $6,072  $458  $319,935 

Greene County Bancorp, Inc.’s
(3)Securities

The following tables summarize the amortized cost and fair value of securities available-for-sale by major type:

   At September 30, 2023     
(In thousands) 
Amortized
Cost (1)
  
Unrealized
Gains
  
Unrealized
Losses
  Fair Value 
U.S. government sponsored enterprises 
$
13,051  
$
-  
$
2,584  
$
10,467 
U.S. Treasury securities  18,321   -   2,113   16,208 
State and political subdivisions  171,032   593   5   171,620 
Mortgage-backed securities-residential  28,661   -   5,069   23,592 
Mortgage-backed securities-multi-family  90,918   -   22,034   68,884 
Corporate debt securities  19,818   -   1,873   17,945 
Total securities available-for-sale $341,801  $593  $33,678  $308,716 

 At June 30, 2023 
(In thousands)
 
Amortized
Cost (1)
  
Unrealized
Gains
  
Unrealized
Losses
  Fair Value 
U.S. government sponsored enterprises 
$
13,054  
$
-  
$
2,231  
$
10,823 
U.S. Treasury securities  18,349   -   1,849   16,500 
State and political subdivisions  137,343   670   2   138,011 
Mortgage-backed securities-residential  29,586   -   3,985   25,601 
Mortgage-backed securities-multi-family  91,016   -   18,930   72,086 
Corporate debt securities  19,805   -   1,693   18,112 
Total securities available-for-sale $309,153  $670  $28,690  $281,133 

(1)Amortized cost excludes accrued interest receivable of $3.1 million and $2.9 million at September 30, 2023 and June 30, 2023, respectively, which is included in accrued interest receivable in the consolidated statement of financial condition.

There was no allowance for credit losses on securities available-for-sale at the quarter ended September 30, 2023.

12
The following tables summarize the amortized cost, fair value, and allowance for credit loss on securities held-to-maturity by major type:


 At September 30, 2023        
(In thousands) 
Amortized
Cost (1)
  
Unrealized
Gains
  
Unrealized
Losses
  Fair Value  Allowance(2)
  
Net Carrying
Value
 
U.S. Treasury securities $
33,726
  $
-
  $
2,525
  $
31,201
  $-  $33,726 
State and political subdivisions  
467,693
   
1,945
   
48,799
   
420,839
   46   467,647 
Mortgage-backed securities-residential  
35,927
   
-
   
4,507
   
31,420
   -   35,927 
Mortgage-backed securities-multi-family  
152,504
   
-
   
23,140
   
129,364
   -   152,504 
Corporate debt securities  
22,327
   
-
   
3,025
   
19,302
   451   21,876 
Other securities
  37   -   -   37   1   36 
Total securities held-to-maturity 
$
712,214
  
$
1,945
  
$
81,996
  
$
632,163
  $
498  $
711,716 


 At June 30, 2023        
(In thousands) 
Amortized
Cost (1)
  
Unrealized
Gains
  
Unrealized
Losses
  Fair Value  Allowance(2)
  
Net Carrying
Value
 
U.S. Treasury securities $
33,705
  $
-
  $
2,438
  $
31,267
  $-  $33,705 
State and political subdivisions  
478,756
   
5,178
   
30,662
   
453,272
   -   478,756 
Mortgage-backed securities-residential  
37,186
   
-
   
3,625
   
33,561
   -   37,186 
Mortgage-backed securities-multi-family  
155,046
   
-
   
20,324
   
134,722
   -   155,046 
Corporate debt securities  
21,632
   
-
   
3,426
   
18,206
   -   21,632 
Other securities
  38   -   -   38   -   38 
Total securities held-to-maturity 
$
726,363
  
$
5,178
  
$
60,475
  
$
671,066
  $
-  $
726,363 

(1)
Amortized cost excludes accrued interest receivable of $4.6 million and $3.9 million at September 30, 2023 and June 30, 2023, respectively, which is included in accrued interest receivable in the consolidated statement of financial condition.
(2)
The Company adopted ASU 2016-13 (CECL) on July 1, 2023. For periods subsequent to adoption, an allowance is calculated under the CECL methodology. The periods prior to adoption did not have an allowance for credit losses under applicable GAAP for those periods.

U.S. Treasury and mortgage-backed securities are issued by U.S. government entities and agencies. These securities are either explicitly and/or implicitly guaranteed by the U.S. government as to timely repayment of principal and interest, are highly rated by major rating agencies, and have a long history of zero credit losses. Therefore, the Company determined a zero credit loss assumption, and did not calculate or record an allowance for credit loss for these securities. An allowance for credit losses on investment securities held-to-maturity as of September 30, 2023 has been recorded for certain municipal securities issued by state and political subdivisions and corporate debt securities to account for expected lifetime credit loss using the CECL methodology.

The Company’s current policies generally limit securities investments to U.S. Government and securities of government sponsored enterprises, federal funds sold, municipal bonds, corporate debt obligations, subordinated debt of banks and certain mutual funds.  In addition, the Company’s policies permit investments in mortgage-backed securities, including securities issued and guaranteed by Fannie Mae, Freddie Mac, and GNMA, and collateralized mortgage obligations issued by these entities. At December 31, 2017,As of September 30, 2023, all mortgage-backed securities including collateralized mortgage obligations were securities of government sponsored enterprises, no private-label mortgage-backed securities or collateralized mortgage obligations were held in the securities portfolio. The Company’s investments in state and political subdivisions securities generally are municipal obligations that are general obligations supported by the general taxing authority of the issuer, and in some cases are insured. The obligations issued by school districts are supported by state aid. Primarily, these investments are issued by municipalities within New York State.


The Company’s current securities investment strategy utilizes a risk management approach of diversified investing among three categories: short-, intermediate- and long-term. The emphasis of this approach is to increase overall investment securities yields while managing interest rate risk. The Company will only invest in high quality securities as determined by management’s analysis at the time of purchase. The Company generally does not engage in any derivative or hedging transactions, such as balance sheet interest rate swaps or caps.

13
The following table summarizes the activity in the allowance for credit losses on securities held-to-maturity:

(In thousands) 
Three months ended
September 30, 2023
 
Balance beginning of period $- 
Adoption of ASU 2016-13 (CECL) on July 1, 2023  503 
Benefit for credit losses  (5)
Balance end of period $498 

The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2017.September 30, 2023.

  Less Than 12 Months  More Than 12 Months  Total 
(In thousands, except number of securities) 
Fair
Value
  
Unrealized
Losses
  
Number
of
Securities
  
Fair
Value
  
Unrealized
Losses
  
Number
of
Securities
  
Fair
Value
  Unrealized
Losses		  
Number
of
Securities
 
Securities available-for-sale:                           
U.S. government sponsored enterprises 
$
-  
$
-   -  
$
10,467  
$
2,584   5  
$
10,467  
$
2,584   5 
U.S. Treasury securities  756   63   2   15,452   2,050   6   16,208   2,113   8 
State and political subdivisions  5,022   3   3   81   2   1   5,103   5   4 
Mortgage-backed securities-residential  -   -   -   23,592   5,069   27   23,592   5,069   27 
Mortgage-backed securities-multi-family  -   -   -   68,884   22,034   31   68,884   22,034   31 
Corporate debt securities  1,847   49   1   16,098   1,824   16   17,945   1,873   17 
Total securities available-for-sale  7,625   115   6   134,574   33,563   86   142,199   33,678   92 
Securities held-to-maturity:                                    
U.S. Treasury securities  -   -   -   31,201   2,525   8   31,201   2,525   8 
State and political subdivisions  64,946   1,994   649   293,513   46,805   2,215   358,459   48,799   2,864 
Mortgage-backed securities-residential  5   -   2   31,415   4,507   27   31,420   4,507   29 
Mortgage-backed securities-multi-family  -   -   -   129,364   23,140   55   129,364   23,140   55 
Corporate debt securities  6,753   995   6   12,549   2,030   13   19,302   3,025   19 
Total securities held-to-maturity  71,704   2,989   657   498,042   79,007   2,318   569,746   81,996   2,975 
Total securities 
$
79,329  
$
3,104   663  
$
632,616  
$
112,570   2,404  
$
711,945  
$
115,674   3,067 
  Less Than 12 Months  More Than 12 Months  Total 
(In thousands, except number of securities) 
Fair
Value
  
Unrealized
Losses
  
Number of
Securities
  
Fair
Value
  
Unrealized
Losses
  
Number of
Securities
  
Fair
Value
  
Unrealized
Losses
  
Number of
Securities
 
Securities available-for-sale:                           
U.S. government sponsored enterprises $985  $12   1  $-  $-   -  $985  $12   1 
State and political subdivisions  2,122   4   3   -   -   -   2,122   4   3 
Mortgage-backed securities-residential  1,051   43   1   -   -   -   1,051   43   1 
Mortgage-backed securities-multi-family  8,129   131   5   -   -   -   8,129   131   5 
Corporate debt securities  -   -   -   757   3   2   757   3   2 
Total securities available-for-sale  12,287   190   10   757   3   2   13,044   193   12 
Securities held-to-maturity:                                    
U.S. government sponsored enterprises  5,181   64   1   1,969   31   1   7,150   95   2 
State and political subdivisions  18,840   142   116   3,892   63   35   22,732   205   151 
Mortgage-backed securities-multi-family  44,450   388   26   1,424   11   2   45,874   399   28 
Other securities  591   3   1   -   -   -   591   3   1 
Total securities held-to-maturity  69,062   597   144   7,285   105   38   76,347   702   182 
Total securities $81,349  $787   154  $8,042  $108   40  $89,391  $895   194 
The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2017.2023.


  Less Than 12 Months  More Than 12 Months  Total 
(In thousands, except number of securities) 
Fair
Value
  
Unrealized
Losses
  
Number
of
Securities
  
Fair
Value
  
Unrealized
Losses
  
Number
of
Securities
  
Fair
Value
  
Unrealized
Losses
  
Number
of
Securities
 
Securities available-for-sale:                           
U.S. government sponsored enterprises $-  $-   -
  $10,823  $2,231   5
  $10,823  $2,231   5
 
U.S. Treasury securities  761   57   2   15,739   1,792   6   16,500   1,849   8 
State and political subdivisions
  -   -   -   82   2   1   82   2   1 
Mortgage-backed securities-residential  476   29   7   25,125   3,956   21   25,601   3,985   28 
Mortgage-backed securities-multi-family  2,679   182   1   69,407   18,748   30   72,086   18,930   31 
Corporate debt securities  2,352   40   2   15,760   1,653   15   18,112   1,693   17 
Total securities available-for-sale  6,268   308   12   136,936   28,382   78   143,204   28,690   90 
Securities held-to-maturity:                                    
U.S. Treasury securities  -   -   -   31,267   2,438   8   31,267   2,438   8 
State and political subdivisions  40,412   520   448   295,479   30,142   2,018   335,891   30,662   2,466 
Mortgage-backed securities-residential  1,982   120   12   31,579   3,505   18   33,561   3,625   30 
Mortgage-backed securities-multi-family  5,362   245   2   129,360   20,079   54   134,722   20,324   56 
Corporate debt securities  10,236   2,012   9   7,970   1,414   10   18,206   3,426   19 
Total securities held-to-maturity  57,992   2,897   471   495,655   57,578   2,108   553,647   60,475   2,579 
Total securities $64,260  
$
3,205  

483  
$
632,591  
$
85,960  

2,186  
$
696,851  
$
89,165  

2,669 

  Less Than 12 Months  More Than 12 Months  Total 
(In thousands, except number of securities) 
Fair
Value
  
Unrealized
Losses
  
Number of
Securities
  
Fair
Value
  
Unrealized
Losses
  
Number of
Securities
  
Fair
Value
  
Unrealized
Losses
  
Number of
Securities
 
Securities available-for-sale:                           
Mortgage-backed securities-residential $1,164  $27   1  $-  $-   -  $1,164  $27   1 
Mortgage-backed securities-multi-family  6,488   62   4   -   -   -   6,488   62   4 
Corporate debt securities  760   3   2   -   -   -   760   3   2 
Total securities available for sale  8,412   92   7   -   -   -   8,412   92   7 
Securities held to maturity:                                    
U.S. government sponsored enterprises  5,947   53   2   -   -   -   5,947   53   2 
State and political subdivisions  8,976   76   64   514   19   6   9,490   95   70 
Mortgage-backed securities-residential  1,864   2   1   -   -   -   1,864   2   1 
Mortgage-backed securities-multi-family  23,823   199   15   -   -   -   23,823   199   15 
Corporate debt securities  995   5   1   -   -   -   995   5   1 
Other securities  467   11   1   74   1   1   541   12   2 
Total securities held to maturity  42,072   346   84   588   20   7   42,660   366   91 
Total securities $50,484  $438   91  $588  $20   7  $51,072  $458   98 
14

When the fair value of a held-to-maturity or available-for-sale security is less than its amortized cost basis, an assessment is made as to whether other-than-temporary impairment (“OTTI”) is present.  The Company considers numerous factors when determining whether a potential OTTI exists and the period over which the debt security is expected to recover.  The principal factors considered are (1) the length of time and the extent to which the fair value has been less than the amortized cost basis, (2) the financial condition of the issuer (and guarantor, if any) and adverse conditions specifically related to the security, industry or geographic area, (3) failure of the issuer of the security to make scheduled interest or principal payments, (4) any changes to the rating of the security by a rating agency, and (5) the presence of credit enhancements, if any, including the guarantee of the federal government or any of its agencies.

For debt securities, OTTI is considered to have occurred if (1) the Company intends to sell the security before recovery of its amortized cost basis, (2) it is more likely than not the Company will be required to sell the security before recovery of its amortized cost basis, or (3) if the present value of expected cash flows is not sufficient to recover the entire amortized cost basis.  In determining the present value of expected cash flows, the Company discounts the expected cash flows at the effective interest rate implicit in the security at the date of acquisition.  In estimating cash flows expected to be collected, the Company uses available information with respect to security prepayment speeds, default rates and severity.  In determining whether OTTI has occurred for equity securities, the Company considers the applicable factors described above and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

For debt securities, credit-related OTTI is recognized in earnings while noncredit related OTTI on securities not expected to be sold is recognized in other comprehensive income/loss (“OCI”).  Credit-related OTTI is measured as the difference between the present value of an impaired security’s expected cash flows and its amortized cost basis.  Noncredit-related OTTI is measured as the difference between the fair value of the security and its amortized cost less any credit-related losses recognized.  For securities classified as held-to-maturity, the amount of OTTI recognized in OCI is accreted to the credit-adjusted expected cash flow amounts of the securities over future periods.  For equity securities, the entire amount of OTTI is recognized in earnings.  Management evaluated securities considering the factors as outlined above, and based on this evaluation the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2017.  Management believes that the reasons for the decline in fair value are due to interest rates, widening credit spreads and market illiquidity at the reporting date.  Also, a decline in the fair value of tax-exempt securities is due to a decrease in the maximum Federal income tax rate from 35% to 21% effective January 1, 2018, resulting in a lower yield to be realized on these securities on a fully-taxable equivalent basis.

There were no transfers of securities available-for-sale to held-to-maturity during the three and six months ended December 31, 2017September 30, 2023 or 2016.2022. During the three and six months ended December 31, 2017September 30, 2023 and 2016,2022, there were no sales of securities and no gains or losses were recognized.  There was no other-than-temporary impairment loss recognized during the three and six months ended December 31, 2017 and 2016.
The estimated fair values of debt securities at December 31, 2017,September 30, 2023, by contractual maturity are shown below. 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.


(In thousands)
Securities available-for-sale
 Amortized Cost  Fair Value 
Within one year 
$
171,471  $172,049 
After one year through five years  38,162   34,285 
After five years through ten years  11,089   8,757 
After ten years  1,500   1,149 
Total securities available-for-sale  222,222   216,240 
Mortgage-backed and asset-backed securities  119,579   92,476 
Total securities available-for-sale
  341,801   308,716 
         
Securities held-to-maturity
        
Within one year  60,158   58,999 
After one year through five years  167,354   158,761 
After five years through ten years  149,902   133,552 
After ten years  146,369   120,067 
Total securities held-to-maturity
  523,783   471,379 
Mortgage-backed securities  188,431   160,784 
Total securities held-to-maturity
  712,214   632,163 
Total securities 
$
1,054,015  $940,879 

Available-for-sale debt securities Amortized Cost  Fair Value 
Within one year $72,628  $72,719 
After one year through five years  4,814   4,896 
After five years through ten years  997   985 
After ten years  -   - 
Total available-for-sale debt securities  78,439   78,600 
Mortgage-backed and asset-backed securities  23,997   24,167 
Equity securities  62   202 
Total available-for-sale securities  102,498   102,969 
         
Held-to-maturity debt securities        
Within one year  18,927   19,112 
After one year through five years  62,551   63,626 
After five years through ten years  41,479   42,685 
After ten years  14,521   15,753 
Total held-to-maturity debt securities  137,478   141,176 
Mortgage-backed  101,662   102,111 
Total held-to-maturity securities  239,140   243,287 
Total securities $341,638  $346,256 

At December 31, 2017September 30, 2023 and June 30, 2017, respectively,2023, securities with an aggregate fair value of $334.2$825.7 million and $305.7$904.8 million, respectively, were pledged as collateral for deposits in excess of FDIC insurance limits for various municipalities placing deposits with Greene Countythe Commercial Bank.  At December 31, 2017September 30, 2023 and June 30, 2017,2023, securities with an aggregate fair value of $1.3$23.7 million and $2.8$20.8 million, respectively, were pledged as collateral for potential borrowings at the Federal Reserve Bank discount window.  Greene County Bancorp, Inc.window and the Bank Term Funding Program. The Company did not participate in any securities lending programs during the three and six months ended December 31, 2017September 30, 2023 or 2016.2022.

Federal Home Loan Bank Stock


Federal law requires a member institution of the Federal Home Loan Bank (“FHLB”) system to hold stock of its district FHLB according to a predetermined formula. This stock is restricted in that it can only be sold to the FHLB or to another member institution, and all sales of FHLB stock must be at par. As a result of these restrictions, FHLB stock is carried at cost. FHLB stock is held as a long-term investment and its value is determined based on the ultimate recoverability of the par value. ImpairmentEstimated credit loss of this investment is evaluated quarterly and is a matter of judgment that reflects management’s view of the FHLB’s long-term performance, which includes factors such as the following: its operating performance; the severity and duration of declines in the fair value of its net assets related to its capital stock amount; its commitment to make payments required by law or regulation and the level of such payments in relation to its operating performance; the impact of legislative and regulatory changes on the FHLB, and accordingly, on the members of the FHLB; and its liquidity and funding position. After evaluating these considerations, Greene County Bancorp, Inc.the Company concluded that the par value of its investment in FHLB stock will be recovered and, therefore, no other-than-temporary impairment chargecredit loss was recorded during the three and six months ended December 31, 2017September 30, 2023 or 2016.2022.

1215
(4)          Loans and Allowance for Credit Losses on Loans

The Company adopted ASU 2016-13 (CECL) effective July 1, 2023. The loan segmentation has been redefined under CECL and therefore prior year tables are presented separately.

With the adoption of CECL, the Company’s revised loan segments at September 30, 2023 are as follows:

(In thousands) September 30, 2023 
Residential real estate 
$
397,626
 
Commercial real estate  
910,165
 
Home equity  
25,467
 
Consumer
  
4,778
 
Commercial
  
110,304
 
Total gross loans(1)(2)
  
1,448,340
 
Allowance for credit losses on loans
  
(20,249
)
Loans receivable, net 
$
1,428,091
 

(1)Loan balances include net deferred fees/cost of $62,000 at September 30, 2023.
(5)(2)Loans and Allowance for Loan Lossesbalances exclude accrued interest receivable of $6.0 million at September 30, 2023, which is included in accrued interest receivable in the consolidated statement of financial condition.

Loan segments


Nonaccrual Loans

Management places loans on nonaccrual status once the loans have become 90 days or more delinquent. A nonaccrual loan is defined as a loan in which collectability is questionable and classestherefore interest on the loan will no longer be recognized on an accrual basis. A loan is not placed back on accrual status until the borrower has demonstrated the ability and willingness to make timely payments on the loan.  A loan does not have to be 90 days delinquent in order to be classified as nonaccrual. Loans on nonaccrual status totaled $5.5 million at December 31, 2017September 30, 2023, of which there were three residential loans totaling $637,000 and two commercial real estate loans totaling $1.4 million that were in process of foreclosure. Included in nonaccrual loans were $2.9 million of loans which were less than 90 days past due at September 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 $5.5 million at June 30, 20172023 of which 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. The activity in nonperforming loans during the period included $87,000 in loan repayments, $19,000 in loans returning to performing status, $3,000 in charge-offs or transfers to foreclosed, and $138,000 of loans placed into nonperforming status.

The following table sets forth information regarding delinquent and/or nonaccrual loans at September 30, 2023:



(In thousands) 
30-59
days
past due
  
60-89
days
past due
  
90 days
or more
past due
  
Total
past due
  Current  Total Loans  
Loans on
Non-
accrual
 
Residential real estate 
$
19
  
$
306
  
$
1,877
  
$
2,202
  
$
395,424
  
$
397,626
  
$
2,816
 
Commercial real estate  
-
   
233
   
650
   
883
   
909,282
   
910,165
   
1,307
 
Home equity  
43
   
-
   
13
   
56
   
25,411
   
25,467
   
52
 
Consumer
  
31
   
21
   
43
   
95
   
4,683
   
4,778
   
43
 
Commercial loans  
-
   
1,237
   
19
   
1,256
   
109,048
   
110,304
   
1,256
 
Total gross loans 
$
93
  
$
1,797
  
$
2,602
  
$
4,492
  
$
1,443,848
  
$
1,448,340
  
$
5,474
 


16

Allowance for Credit Losses on Loans



The Company’s July 1, 2023 adoption of CECL resulted in a significant change to our methodology for estimating the allowance for credit losses.  The allowance for credit losses for the loan portfolio is established through a provision for credit losses based on the results of life of loan quantitative models, reserves associated with collateral-dependent loans evaluated individually and adjustments for the impact of current economic conditions not accounted for in the quantitative models. The discounted cash flow methodology is used to calculate the CECL reserve for the residential real estate, commercial real estate, home equity and commercial loan segments. The Company uses a four-quarter reasonable and supportable forecast period based on the one year percent change in national GDP and the national unemployment rate, as economic variables. The forecast will revert to long-term economic conditions over a four-quarter reversion period on a straight-line basis. The remaining life method will be utilized to determine the CECL reserve for the consumer loan segment. A qualitative factor framework has been developed to adjust the quantitative loss rates for asset-specific risk characteristics or current conditions at the reporting date. The Company elected to use the practical expedient to evaluate loans individually, if they are summarizedcollateral dependent loans that are on nonaccrual status with a balance of $250,000 or greater, which is consistent with regulatory requirements. The fair value of the collateral dependent loan less selling expenses will be compared to the loan balance to determine if a CECL reserve is required.



In addition, various regulatory agencies, as follows:an integral part of their examination process, periodically review the Company’s allowance for credit 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 charges loans off against the allowance for credit losses when it becomes evident that a loan cannot be collected within a reasonable amount of time, or that it will cost the 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 credit losses, unless equitable arrangements are made. Included within consumer loan charge-offs and recoveries are deposit accounts that have been overdrawn in excess of 60 days. 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 credit losses is increased by a provision for credit losses (which results in a charge to expense) and recoveries of loans previously charged off, and is reduced by charge-offs.


(In thousands) December 31, 2017  June 30, 2017 
Residential real estate:      
Residential real estate $252,015  $245,331 
Residential construction and land  7,391   7,160 
Multi-family  13,707   9,199 
Commercial real estate:        
Commercial real estate  272,253   257,964 
Commercial construction  24,901   28,430 
Consumer loan:        
Home equity  21,090   21,076 
Consumer installment  4,925   4,790 
Commercial loans  78,153   60,381 
Total gross loans  674,435   634,331 
Allowance for loan losses  (11,352)  (11,022)
Deferred fees and costs  790   878 
Loans receivable, net $663,873  $624,187 



The following tables set forth the activity and allocation of the allowance for credit losses on loans by segment:



  Activity for the three months ended September 30, 2023 
(In thousands) Residential Real Estate  
Commercial
Real Estate
  Home Equity  Consumer  Commercial  Total 
Balance at June 30, 2023 
$
2,794
  
$
14,839
  
$
46
  
$
332
  
$
3,201
  
$
21,212
 
Adoption of ASU No. 2016-13  
1,182
   
(2,889
)
  
117
   
137
   
121
   
(1,332
)
Charge-offs  
-
   
-
   
-
   
(122
)
  
(7
)
  
(129
)
Recoveries  
-
   
1
   
-
   
26
   
9
   
36
 
Provision  
317
   
405
   
25
  
117
   
(402
)
  
462
 
Balance at September 30, 2023 
$
4,293
  
$
12,356
  
$
188
  
$
490
  
$
2,922
  
$
20,249
 

The allowance for credit losses on unfunded commitments as of September 30, 2023 was $1.5 million.

Credit monitoring process


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 Countythe Company provides for the classification of loans 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. Generally,For the commercial real estate and commercial loans, generally, an asset is considered Substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. Substandard assets include those characterized by the distinct possibility that the insured financial institution will sustain some loss if the deficiencies are not corrected. Assets classified as Doubtful have all the weaknesses inherent in assets classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable. Assets classified as Loss are those considered uncollectible and of such little value that their continuance as assets without the establishment of a full loss reserve and/or charge-off is not warranted. Assets that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories but otherwise possess weaknesses are designated “Special Mention.” Management also maintains a listing ofResidential real estate, home equity and consumer loans designated “Watch.” These loans represent borrowers with declining earnings, strained cash flow, increasing leverage and/or weakening market fundamentals that indicate above average risk.

When The Bank of Greene County classifies problem assetsare graded as either Substandardnonperforming or Doubtful, itperforming. Nonperforming loans are loans that are generally establishes a specific valuation allowanceover 90 days past due or “loss reserve” in an amount deemed prudent by management.  General allowances represent loss allowances that have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular loans.  When The Bank of Greene County identifies problem loans as being impaired, it is required to evaluate whether the Bank will be able to collect all amounts due either through repayments or the liquidation of the underlying collateral.  If it is determined that impairment exists, the Bank is required either to establish a specific allowance for losses equal to the amount of impairment of the assets, or to charge-off such amount.  The Bank of Greene County’s determination as to the classification of its loans and the amount of its valuation allowance is subject to review by its regulatory agencies, which can order the establishment of additional general or specific loss allowances.  The Bank of Greene County reviews its portfolio monthly to determine whether any assets require classification in accordance with applicable regulations.on nonaccrual status.

The Bank primarily has four segments within its loan portfolio that it considers when measuring credit quality: residential real estate loans, commercial real estate loans, consumer loans and commercial loans.  The residential real estate portfolio consists of residential, construction, and multi-family loan classes. Commercial real estate loans consist of commercial real estate and commercial construction loan classes. Consumer loans consist of home equity loan and consumer installment loan classes. The inherent risk within the loan portfolio varies depending upon each of these loan types.


17
The Bank of Greene County’s primary lending activity is the origination of residential
Residential mortgage loans, including home equity loans, which are collateralized by residences.   Generally, residential mortgage loansresidences are generally made in amounts up to 89.9%85.0% of the appraised value of the property.  However, The Bank of Greene County will originate residential mortgage loans with loan-to-value ratios of up to 95.0%, with private mortgage insurance.  In the event of default by the borrower The Bank of Greene Countythe Company will acquire and liquidate the underlying collateral.  By originating the loan at a loan-to-value ratio of 89.9%85.0% or less, or obtaining private mortgage insurance, The Bank of Greene Countythe Company limits its risk of loss in the event of default.  However, the market values of the collateral may be adversely impacted by declines in the economy.  Home equity loans may have an additional inherent risk if The Bank of Greene Countythe Company does not hold the first mortgage.  The Bank of Greene CountyCompany may stand in a secondary position in the event of collateral liquidation resulting in a greater chance of insufficiency to meet all obligations.
Construction lending generally involves a greater degree of risk than other residential mortgage lending.  The repayment of the construction loan is,repayments to a great degree, are dependent upon the successful and timely completion of the construction of the subject property within specified cost limits.  The Bank of Greene CountyCompany completes inspections during the construction phase prior to any disbursements.  The Bank of Greene CountyCompany limits its risk during the construction as disbursements are not made until the required work for each advance has been completed.  Construction delays may further impair the borrower’s ability to repay the loan.


Loans collateralized by commercial real estate, and multi-family dwellings, such as apartment buildings generally are larger than residential loans and involve a greater degree of risk. Commercial real estate loans often involve large loan balances to single borrowers or groups of related borrowers. Payments on these loans depend to a large degree on the results of operations and management of the properties or underlying businesses, and may be affected to a greater extent by adverse conditions in the real estate market or the economy in general. Accordingly, the nature of commercial real estate loans makes them more difficult for management to monitor and evaluate. The Company has formed relationships with other community banks within our region to participate in larger commercial loan relationships.  These types of loans are generally considered to be riskier due to the size and complexity of the loan relationship.  By entering into a participation agreement with the other bank, the Company can obtain the loan relationship while limiting its exposure to credit loss.  Management completes its due diligence in underwriting these loans and monitors the servicing of these loans.


Consumer loans generally have shorter terms and higher interest rates than residential mortgage loans. In addition, consumer loans expand the products and services offered by The Bank of Greene Countythe Company to better meet the financial services needs of its customers. Consumer loans generally involve greater credit risk than residential mortgage loans because of the difference in the nature of the underlying collateral. Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance because of the greater likelihood of damage, loss or depreciation in the underlying collateral. The remaining deficiency often does not warrant further substantial collection efforts against the borrower beyond obtaining a deficiency judgment. In addition, consumer loan collections depend on the borrower’s personal financial stability.  Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.


Commercial lending generally involves greater risk than residential mortgage lending and involves risks that are different from those associated with residential and commercial real estate mortgage lending. Real estate lending is generally considered to be collateral-based, with loan amounts based on fixed loan-to-collateral values, and liquidation of the underlying real estate collateral is viewed as the primary source of repayment in the event of borrower default. Although commercial loans may be collateralized by equipment or other business assets, the liquidation of collateral in the event of a borrower default is often an insufficient source of repayment because equipment and other business assets may be obsolete or of limited use, among other things. Accordingly, the repayment of a commercial loan depends primarily on the creditworthiness of the borrower (and any guarantors), while liquidation of collateral is a secondary and often insufficient source of repayment.

Loan balances by internal The Company has formed relationships with other community banks within our region to participate in larger commercial loan relationships.  These types of loans are generally considered to be riskier due to the size and complexity of the loan relationship. By entering into a participation agreement with the other bank, the Company can obtain the loan relationship while limiting its exposure to credit quality indicator at December 31, 2017 are shown below.
(In thousands)
 Performing  Watch  Special Mention  Substandard  Total 
Residential real estate $248,721  $930  $90  $2,274  $252,015 
Residential construction and land  7,391   -   -   -   7,391 
Multi-family  12,866   -   756   85   13,707 
Commercial real estate  260,337   -   10,217   1,699   272,253 
Commercial construction  24,725   -   -   176   24,901 
Home equity  20,433   -   -   657   21,090 
Consumer installment  4,915   -   -   10   4,925 
Commercial loans  77,042   16   242   853   78,153 
Total gross loans $656,430  $946  $11,305  $5,754  $674,435 
loss. Management completes its due diligence in underwriting these loans and monitors the servicing of these loans.
1418
The following tables illustrate the Company’s credit quality by loan class by vintage:

  At September 30, 2023 
(In thousands) 2024  2023  2022  2021  2020  Prior  
Revolving
Loans Amortized
Cost Basis
  
Revolving
Loans
Converted
to Term
  Total 
                            
Residential real estate                           
By payment activity status:                           
Performing $16,371  $58,726  $97,228  $85,394  $34,809  $102,282  $-  $-  $394,810 
Non-performing  -   -   -   185   188   2,443   -   -   2,816 
Total residential real estate  16,371   58,726   97,228   85,579   34,997   104,725   -   -   397,626 
Current period gross charge-offs  -   -   -   -   -   -   -   -   - 
 
                                    
Commercial real estate                                    
By internally assigned grade:                                    
Pass  35,352   210,920   259,041   130,106   79,698   161,347   4,705   149   881,318 
Special mention  -   505   2,519   476   682   7,714   1,031   -   12,927 
Substandard  -   1,160   -   440   4,458   9,862   -   -   15,920 
Total commercial real estate  35,352   212,585   261,560   131,022   84,838   178,923   5,736   149   910,165 
Current period gross charge-offs  -   -   -   -   -   -   -   -   - 
 
                                    
Home equity                                    
By payment activity status:                                    
Performing  1,554   3,155   375   521   370   1,638   17,747   55   25,415 
Non-performing  -   -   -   -   -   3   49   -   52 
Total home equity  1,554   3,155   375   521   370   1,641   17,796   55   25,467 
Current period gross charge-offs  -   -   -   -   -   -   -   -   - 
 
                                    
Consumer                                    
By payment activity status:                                    
Performing  1,046   1,772   1,019   486   205   114   93   -   4,735 
Non-performing  -   -   43   -   -   -   -   -   43 
Total Consumer  1,046   1,772   1,062   486   205   114   93   -   4,778 
Current period gross charge-offs  110   -   8   4   -   -   -   -   122 
 
                                    
Commercial                                    
By internally assigned grade:                                    
Pass  2,811   11,945   15,785   16,265   6,276   21,202   28,097   -   102,381 
Special mention  -   -   1,739   -   1   486   306   -   2,532 
Substandard  -   -   -   1,274   98   986   3,033   -   5,391 
Total Commercial $2,811  $11,945  $17,524  $17,539  $6,375  $22,674  $31,436  $-  $110,304 
Current period gross charge-offs $-  $-  $-  $-  $-  $-  $7  $-  $7 

The Company had no loans classified doubtful or loss at September 30, 2023.

Individually Evaluated Loans

As of September 30, 2023, collateral dependent loans evaluated individually had an amortized cost basis of $5.8 million, with an allowance for credit losses on loans of $1.7 million.

19
Loan Modifications to Borrowers Experiencing Financial Difficulties

As previously mentioned in Note 2 Recent Accounting Pronouncements, the Company’s July 1, 2023 adoption of ASU 2022-02 eliminates the recognition and measurement of TDRs. Upon adoption of this guidance, the Company will no longer recognize an allowance for credit losses for the economic concession granted to a borrower for changes in the timing and amount of contractual cash flows when a loan is restructured. The adoption of ASU 2022-02 results in a change to reporting for loan modifications to borrowers experiencing financial difficulties. With the adoption of ASU 2022-02 these modifications require enhanced reporting on the type of modifications granted and the financial magnitude of the concessions granted. When the Company modifies a loan with financial difficulty, such modifications generally include one or a combination of the following: an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; a change in scheduled payment amount; or principal forgiveness.

There were no loans during the three months ended September 30,2023 that were modified to borrowers experiencing financial difficulty since the adoption of ASU 2022-02 effective July 1,2023.

Prior to the adoption of ASU 2016-13 (CECL)

Prior to July 1,2023, the Company calculated the allowance for loan losses using the incurred loss methodology. The following tables are disclosures related to the allowance for loan losses in prior periods.

Loan segments and classes at June 30, 2023 are summarized as follows:

(In thousands)
 June 30, 2023 
Residential real estate:   
   Residential real estate $372,443 
   Residential construction and land  19,072 
   Multi-family  66,496 
Commercial real estate:    
   Commercial real estate  693,436 
   Commercial construction  121,958 
Consumer loan:    
   Home equity  22,752 
   Consumer installment  4,612 
Commercial loans  108,022 
Total gross loans(1)
  1,408,791 
Allowance for loan losses  (21,212)
Deferred fees and cost, net  75 
Loans receivable, net $1,387,654 


(1)Loan balances exclude accrued interest receivable of $5.5 million at June 30, 2023, which is included in accrued interest receivable in the consolidated statement of financial condition.

Loan balances by internal credit quality indicator at June 30, 2017 are shown below.2023:


(In thousands)
 Performing  
Special
Mention
  Substandard  Total 
Residential real estate 
$
366,403
  
$
2,305
  
$
3,735
  
$
372,443
 
Residential construction and land  
19,072
   
-
   
-
   
19,072
 
Multi-family  
66,410
   
86
   
-
   
66,496
 
Commercial real estate  
665,548
   
11,671
   
16,217
   
693,436
 
Commercial construction  
121,958
   
-
   
-
   
121,958
 
Home equity  
22,698
   
-
   
54
   
22,752
 
Consumer installment  
4,530
   
-
   
82
   
4,612
 
Commercial loans  
100,225
   
2,352
   
5,445
   
108,022
 
Total gross loans 
$
1,366,844
  
$
16,414
  
$
25,533
  
$
1,408,791
 
(In thousands)
 Performing  Watch  Special Mention  Substandard  Total 
Residential real estate $242,592  $813  $91  $1,835  $245,331 
Residential construction and land  7,160   -   -   -   7,160 
Multi-family  9,110   -   -   89   9,199 
Commercial real estate  255,090   419   404   2,051   257,964 
Commercial construction  28,254   -   -   176   28,430 
Home equity  20,858   -   -   218   21,076 
Consumer installment  4,770   10   -   10   4,790 
Commercial loans  59,030   -   60   1,291   60,381 
Total gross loans $626,864  $1,242  $555  $5,670  $634,331 

The Company had no loans classified doubtful or loss at December 31, 2017 or June 30, 2017.  The $10.8 million increase in loans designated as special mention at December 31, 2017 compared to June 30, 2017 represented loans which, based on updated annual review, indicated weaknesses in borrowers’ cash flow, warranting management’s closer monitoring.  At December 31, 2017, all of these loans were performing and management believes that the identified weaknesses do not expose the Company to sufficient risk to warrant a classification of substandard.

Nonaccrual Loans

Management places loans on nonaccrual status once the loans have become 90 days or more delinquent.  A nonaccrual loan is defined as a loan in which collectability is questionable and therefore interest on the loan will no longer be recognized on an accrual basis.  A loan is not placed back on accrual status until the borrower has demonstrated the ability and willingness to make timely payments on the loan.  A loan does not have to be 90 days delinquent in order to be classified as nonaccrual.   Nonaccrual loans consisted primarily of loans secured by real estate at December 31, 2017 and June 30, 2017.  Loans on nonaccrual status totaled $3.7 million at December 31, 2017 of which $1.9 million were in the process of foreclosure. At December 31, 2017, there were thirteen residential loans in the process of foreclosure totaling $1.3 million.  Included in nonaccrual loans were $1.7 million of loans which were less than 90 days past due at December 31, 2017, 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.  Included in total loans past due were $66,000 of loans which were making payments pursuant to forbearance agreements. Under the forbearance agreements, the customers have made arrangements with the Bank to bring the loans current over a specified period of time (resulting in an insignificant delay in repayment).  During this term of the forbearance agreement, the Bank has agreed not to continue foreclosure proceedings.  Loans on nonaccrual status totaled $3.6 million at June 30, 2017 of which $1.6 million were in the process of foreclosure. At June 30, 2017, there were twelve residential loans in the process of foreclosure totaling $967,000. Included in nonaccrual loans were $1.9 million of loans which were less than 90 days past due at June 30, 2017, but have a recent history of delinquency greater than 90 days past due.

The following table sets forth information regarding delinquent and/or nonaccrual loans at December 31, 2017:
(In thousands) 
30-59
days
past due
  
60-89
days past
due
  
90 days
or more
past due
  
Total
past due
  Current  
Total
Loans
  
Loans on
Non-
accrual
 
Residential real estate $2,592  $794  $1,187  $4,573  $247,442  $252,015  $1,752 
Residential construction and land  -   -   -   -   7,391   7,391   - 
Multi-family  -   -   -   -   13,707   13,707   - 
Commercial real estate  1,216   806   391   2,413   269,840   272,253   1,108 
Commercial construction  -   -   176   176   24,725   24,901   176 
Home equity  94   119   214   427   20,663   21,090   333 
Consumer installment  104   -   10   114   4,811   4,925   10 
Commercial loans  380   118   -   498   77,655   78,153   284 
Total gross loans $4,386  $1,837  $1,978  $8,201  $666,234  $674,435  $3,663 

1520
The following table sets forth information regarding delinquent and/or nonaccrual loans at June 30, 2017:2023:


(In thousands) 
30-59 days
past due
  
60-89
days
past due
  
90 days
or more past due
  
Total
past due
  Current  Total Loans  
Loans on
Non-
accrual
 
Residential real estate $-  $504  $1,604  $2,108  $370,335  $372,443  $2,747 
Residential construction and land  -   -   -   -   19,072   19,072   - 
Multi-family  -   -   -   -   66,496   66,496   - 
Commercial real estate  -   235   652   887   692,549   693,436   1,318 
Commercial construction  -   -   -   -   121,958   121,958   - 
Home equity  48   -   13   61   22,691   22,752   54 
Consumer installment  63   1   63   127   4,485   4,612   63 
Commercial loans  -   -   19   19   108,003   108,022   1,276 
Total gross loans $111  $740  $2,351  $3,202  $1,405,589  $1,408,791  $5,458 
(In thousands) 
30-59
days
past due
  
60-89
days
past due
  
90 days
or more
past due
  
Total
past due
  Current  Total Loans  
Loans on
Non-
accrual
 
Residential real estate $2,088  $515  $935  $3,538  $241,793  $245,331  $1,240 
Residential construction and land  -   -   -   -   7,160   7,160   - 
Multi-family  -   -   -   -   9,199   9,199   - 
Commercial real estate  74   1,070   540   1,684   256,280   257,964   1,452 
Commercial construction  -   176   -   176   28,254   28,430   176 
Home equity  220   186   33   439   20,637   21,076   218 
Consumer installment  22   10   10   42   4,748   4,790   10 
Commercial loans  18   186   202   406   59,975   60,381   476 
Total gross loans $2,422  $2,143  $1,720  $6,285  $628,046  $634,331  $3,572 


The Bank of Greene CountyCompany had no accruing loans delinquent more than 90 days totaling $0 and $69,000or more at December 31, 2017 and June 30, 2017, respectively.2023.  The loans delinquent more than 90 days and accruing consist of loans that are well collateralized and the borrowers have demonstrated the ability and willingness to pay.  The borrower has made arrangements with the Bank to bring the loanloans current within a specified time period and hashave made a series of payments as agreed.


The table below details additional information related to nonaccrual loans for the three and six months ended December 31:

  
For the three months
ended December 31,
  
For the six months
ended December 31
 
(In thousands) 2017  2016  2017  2016 
Interest income that would have been recorded if loans had been performing in accordance with original terms $59  $56  $137  $136 
Interest income that was recorded on nonaccrual loans  31   26   65   54 

Impaired Loan Analysis

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.  It should be noted that management does not evaluate all loans individually for impairment.  Generally, The Bank of Greene County considers residential mortgages, home equity loans and installment loans as small, homogeneous loans, which are evaluated for impairment collectively based on historical loan experience and other factors.  In contrast, large commercial mortgage, construction, multi-family, business loans and select larger balance residential mortgage loans are reviewed individually and considered impaired 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 agreement.  The measurement of impaired loans is generally based on the fair value of the underlying collateral.  The majority of The Bank of Greene County loans, including most nonaccrual loans, are small homogenous loan types adequately supported by collateral.  Management considers the payment status of loans in the process of evaluating the adequacy of the allowance for loan losses among other factors.  Based on this evaluation, a delinquent loan’s risk rating may be downgraded to either pass-watch, special mention, or substandard, and the allocation of the allowance for loan loss is based upon the risk associated with such designation.  Loans that have been modified as a troubled debt restructuring are included in impaired loans.  The measurement of impairment is generally based on the discounted cash flows based on the original rate of the loan before the restructuring, unless it is determined that the restructured loan is collateral dependent.  If the restructured loan is deemed to be collateral dependent, impairment is based on the fair value of the underlying collateral.
The tables below detail additional information on impaired loans at the date or periods indicated:

  As of June 30, 2023  
For the three months ended
September 30, 2022
 
(In thousands) 
Recorded
Investment
  
Unpaid
Principal
  
Related
Allowance
  
Average
Recorded
Investment
  
Interest
Income Recognized
 
With no related allowance recorded:      
Residential real estate 
$
1,020
  
$
1,020
  
$
-
  
$
986
  
$
9
 
Commercial real estate  
1,518
   
1,518
   
-
   
63
   
2
 
Home equity  
-
   
-
   
-
   
128
   
-
 
Consumer installment
  -   -   -   5   - 
Commercial loans  
334
   
334
   
-
   
344
   
4
 
Impaired loans with no allowance  
2,872
   
2,872
   
-
   
1,526
  
15
 
                    
With an allowance recorded:                    
Residential real estate  
2,086
   
2,086
   
597
   
1,939
   
9
 
Commercial real estate  
3,777
   
3,777
   
245
   
3,229
   
44
 
Commercial construction  
-
   
-
   
-
   
102
   
-
 
Home equity  
-
   
-
   
-
   
320
   
4
 
Commercial Loans  
1,572
   
1,572
   
1,171
   
3,008
   
58
 
Impaired loans with allowance  
7,435
   
7,435
   
2,013
   
8,598
   
115
 
                     
Total impaired:                    
Residential real estate  
3,106
   
3,106
   
597
   
2,925
   
18
 
Commercial real estate  
5,295
   
5,295
   
245
   
3,292
   
46
 
Commercial construction  
-
   
-
   
-
   
102
   
-
 
Home equity  
-
   
-
   
-
   
448
   
4
 
Consumer installment  -   -   -   5   - 
Commercial loans  
1,906
   
1,906
   
1,171
   
3,352
   
62
 
Total impaired loans 
$
10,307
  
$
10,307
  
$
2,013
  
$
10,124
  
$
130
 

  As of December 31, 2017  
For the three months ended
December 31, 2017
  
For the six months ended
December 31, 2017
 
(In thousands) 
Recorded
Investment
  
Unpaid
Principal
  
Related
Allowance
  
Average
Recorded
Investment
  
Interest Income
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
With no related allowance recorded:                
Commercial real estate $801  $801  $-  $803  $7  $805  $15 
Home equity  181   181   -   181   -   182   - 
Commercial loans  359   359   -   361   -   303   - 
Impaired loans with no allowance  1,341   1,341   -   1,345   7   1,290   15 
                             
With an allowance recorded:                            
Residential real estate  1,819   1,819   348   1,668   15   1,602   26 
Commercial real estate  413   413   101   418   -   424   - 
Commercial construction  176   176   22   176   -   176   - 
Home equity  324   324   62   324   5   324   8 
Impaired loans with allowance  2,732   2,732   533   2,586   20   2,526   34 
                             
Total impaired:                            
Residential real estate  1,819   1,819   348   1,668   15   1,602   26 
Commercial real estate  1,214   1,214   101   1,221   7   1,229   15 
Commercial construction  176   176   22   176   -   176   - 
Home equity  505   505   62   505   5   506   8 
Commercial loans  359   359   -   361   -   303   - 
Total impaired loans $4,073  $4,073  $533  $3,931  $27  $3,816  $49 
Prior to the adoption of ASU 2022-02 on July 1,2023, the Company accounted for loan modifications to borrowers experiencing financial difficulty when concessions were granted as TDRs. The following tables are disclosures related to TDRs in prior periods.

  As of June 30, 2017  
For the three months ended
December 31, 2016
  
For the six months ended
December 31, 2016
 
(In thousands) 
Recorded
Investment
  
Unpaid
Principal
  
Related
Allowance
  
Average
Recorded
Investment
  
Interest Income
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
With no related allowance recorded:                
Residential real estate $-  $-  $-  $266  $-  $266  $- 
Commercial real estate  809   809   -   821   4   921   14 
Home equity  186   186   -   2   -   4   - 
Commercial loans  186   186   -   65   1   33   1 
Impaired loans with no allowance  1,181   1,181   -   1,154 �� 5   1,224   15 
                             
With an allowance recorded:                            
Residential real estate  1,455   1,455   278   1,238   12   1,241   24 
Commercial real estate  440   440   135   749   7   576   11 
Commercial construction  176   176   23   -   -   -   - 
Commercial loans  -   -   -   81   -   82   2 
Impaired loans with allowance  2,071   2,071   436   2,068   19   1,899   37 
                             
Total impaired:                            
Residential real estate  1,455   1,455   278   1,504   12   1,507   24 
Commercial real estate  1,249   1,249   135   1,570   11   1,497   25 
Commercial construction  176   176   23   -   -   -   - 
Home equity  186   186   -   2   -   4   - 
Commercial loans  186   186   -   146   1   115   3 
Total impaired loans $3,252  $3,252  $436  $3,222  $24  $3,123  $52 

1721
The table below details loans that have been modified as a troubled debt restructuring during the periods indicated.year ended June 30, 2023.


(Dollars in thousands)
 
Number of
Contracts
  
Pre-Modification
Outstanding
Recorded
Investment
  
Post-Modification
Outstanding
Recorded
Investment
  
Current
Outstanding
Recorded
Investment
 
For the year ended June 30, 2023            
Residential real estate  2  
$
778  
$
778  $778 
Commercial real estate  3  $
1,428  $
1,480  $
1,470 
Commercial loans
  1  $
379  $
379  $
- 

(Dollars in thousands)
 
Number of
Contracts
  
Pre-Modification
Outstanding
Recorded
Investment
  
Post-Modification
Outstanding
Recorded
Investment
  
Current outstanding
Recorded
Investment
 
For the six months ended December 31, 2017
            
Home equity  1  $325  $325  $324 
                 
For the six months ended December 31, 2016
 None   -   -   - 

There were no loans modified as a troubled debt restructuring during the three months ended December 31, 2017 and 2016.  During the six months ended December 31, 2017, a home equity loan was modified to extend the term of the loan thereby reducing the monthly payments for the borrower.

There were no loans that had been modified as a troubled debt restructuring during the twelve months prior to June 30, 20172022 or 20162021, which have subsequently defaulted during the three and sixtwelve months ended December 31, 2017June 30, 2023 or 2016, respectively.

Allowance for Loan Losses

The allowance for2022.  There was one commercial loan losses is established through a provision for loan losses based on management’s evaluation of the risk inherent in the loan portfolio, the composition of the loan portfolio, specific impaired loans and current economic conditions.  Such evaluation, which includes a review of certain identified loans on which full collectability may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, payment status of the loan, historical loan loss experience and other factors that warrant recognition in providing for the loan loss allowance.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review The Bank of Greene County’s allowance for loan losses.  Such agencies may require The Bank of Greene County to recognize additions to the allowance based on their judgment about information available to them at the time of their examination. The Bank of Greene County considers smaller balance residential mortgages, home equity loans, commercial loans and installment loans to customers as small, homogeneous loans, which are evaluated for impairment collectively based on historical loss experience.  Larger balance residential, commercial mortgage and business loans are viewed individually and considered impaired 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 credit losses when it becomes evident that a loan cannot be collected within a reasonable amount of time or that it will cost the Bank more than it will receive, and all possible avenues of repayment have been analyzed, including the potential of future cash flow, the value of the underlying collateral, and strength of any guarantors or co-borrowers.  Generally, consumer loans and smaller business loans (not secured by real estate) in excess of 90 days are charged-off against the allowance for loan losses, unless equitable arrangements are made.   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 $379,000 that loss can be reasonably estimated.had been modified as a troubled debt restructuring during the three months ended September 30, 2022 that subsequently defaulted during the quarter ended March 31, 2023.


The following tables set forth the activity and allocation of the allowance for loan losses by loan categoryclass during and at the periods indicated. The allowance is allocated to each loan categoryclass based on historical loss experience, current economic conditions, and economic conditions.other considerations

  Activity for the three months ended September 30, 2022 
(In thousands) 
Balance at
June 30, 2022
  Charge-offs  Recoveries  Provision  
Balance at
September 30, 2022
 
Residential real estate 
$
2,373
  
$
-
  
$
3
  
$
95
  
$
2,471
 
Residential construction and land  
141
   
-
   
-
   
36
   
177
 
Multi-family  
119
   
-
   
-
   
40
   
159
 
Commercial real estate  
16,221
   
-
   
-
   
(829
)
  
15,392
 
Commercial construction  
1,114
   
-
   
-
   
(70
)
  
1,044
 
Home equity  
89
   
-
   
-
   
(45
)
  
44
 
Consumer installment  
349
   
167
   
46
   
46
   
274
 
Commercial loans  
2,355
   
4
   
7
   
228
   
2,586
 
Total 
$
22,761
  
$
171
  
$
56
  
$
(499
)
 
$
22,147
 

  Allowance for Loan Losses  Loans Receivable 
  
Ending Balance June 30, 2023
Impairment Analysis
  
Ending Balance June 30, 2023
Impairment Analysis
 
(In thousands) 
Individually
Evaluated
  
Collectively
Evaluated
  
Individually
Evaluated
  
Collectively
Evaluated
 
Residential real estate 
$
597  
$
2,016  
$
3,106  
$
369,337 
Residential construction and land  -   181   -   19,072 
Multi-family  -   197   -   66,496 
Commercial real estate  245   12,775   5,295   688,141 
Commercial construction  -   1,622   -   121,958 
Home equity  -   46   -   22,752 
Consumer installment  -   332   -   4,612 
Commercial loans  1,171   2,030   1,906   106,116 
Total 
$
2,013  
$
19,199  
$
10,307  
$
1,398,484 

  Activity for the three months ended December 31, 2017 
(In thousands) 
Balance at
September 30, 2017
  Charge-offs  Recoveries  Provision  
Balance at
December 31, 2017
 
Residential real estate $2,076  $27  $-  $50  $2,099 
Residential construction and land  93   -   -   (7)  86 
Multi-family  76   -   -   19   95 
Commercial real estate  5,759   -   -   145   5,904 
Commercial construction  750   -   -   (147)  603 
Home equity  315   -   -   (3)  312 
Consumer installment  203   89   18   120   252 
Commercial loans  1,748   -   -   253   2,001 
Unallocated  78   -   -   (78)  - 
Total $11,098  $116  $18  $352  $11,352 
  Activity for the six months ended December 31, 2017 
(In thousands) 
Balance at
June 30, 2017
  Charge-offs  Recoveries  Provision  
Balance at
December 31, 2017
 
Residential real estate $2,289  $71  $-  $(119) $2,099 
Residential construction and land  89   -   -   (3)  86 
Multi-family  43   -   -   52   95 
Commercial real estate  5,589   -   -   315   5,904 
Commercial construction  687   -   -   (84)  603 
Home equity  234   -   -   78   312 
Consumer installment  231   177   36   162   252 
Commercial loans  1,680   157   -   478   2,001 
Unallocated  180   -   -   (180)  - 
Total $11,022  $405  $36  $699  $11,352 
  Allowance for Loan Losses  Loans Receivable 
  
Ending Balance At
December 31, 2017
Impairment Analysis
  
Ending Balance At
December 31, 2017
Impairment Analysis
 
(In thousands) 
Individually
Evaluated
  
Collectively
Evaluated
  
Individually
Evaluated
  
Collectively
Evaluated
 
Residential real estate $348  $1,751  $1,819  $250,196 
Residential construction and land  -   86   -   7,391 
Multi-family  -   95   -   13,707 
Commercial real estate  101   5,803   1,214   271,039 
Commercial construction  22   581   176   24,725 
Home equity  62   250   505   20,585 
Consumer installment  -   252   -   4,925 
Commercial loans  -   2,001   359   77,794 
Unallocated  -   -   -   - 
Total $533  $10,819  $4,073  $670,362 

  Activity for the three months ended December 31, 2016 
(In thousands) 
Balance at
September 30, 2016
  Charge-offs  Recoveries  Provision  
Balance at
December 31, 2016
 
Residential real estate $2,242  $90  $-  $82  $2,234 
Residential construction and land  63   -   -   -   63 
Multi-family  18   -   -   -   18 
Commercial real estate  4,981   -   -   384   5,365 
Commercial construction  628   -   -   (25)  603 
Home equity  251   -   -   6   257 
Consumer installment  168   69   18   107   224 
Commercial loans  1,492   -   -   21   1,513 
Unallocated  133   -   -   11   144 
Total $9,976  $159  $18  $586  $10,421 
  Activity for the six months ended December 31, 2016 
(In thousands) 
Balance at
June 30, 2016
  Charge-offs  Recoveries  Provision  
Balance at
December 31, 2016
 
Residential real estate $2,396  $90  $-  $(72) $2,234 
Residential construction and land  75   -   -   (12)  63 
Multi-family  22   -   -   (4)  18 
Commercial real estate  4,541   -   -   824   5,365 
Commercial construction  502   -   -   101   603 
Home equity  309   -   -   (52)  257 
Consumer installment  228   141   35   102   224 
Commercial loans  1,412   -   3   98   1,513 
Unallocated  -   -   -   144   144 
Total $9,485  $231  $38  $1,129  $10,421 
  Allowance for Loan Losses  Loans Receivable 
  
Ending Balance At
June 30, 2017
Impairment Analysis
  
Ending Balance At
June 30, 2017
Impairment Analysis
 
(In thousands) Individually Evaluated  Collectively Evaluated  Individually Evaluated  Collectively Evaluated 
Residential real estate $278  $2,011  $1,455  $243,876 
Residential construction and land  -   89   -   7,160 
Multi-family  -   43   -   9,199 
Commercial real estate  135   5,454   1,249   256,715 
Commercial construction  23   664   176   28,254 
Home equity  -   234   186   20,890 
Consumer installment  -   231   -   4,790 
Commercial loans  -   1,680   186   60,195 
Unallocated  -   180   -   - 
Total $436  $10,586  $3,252  $631,079 

Foreclosed real estate (FRE)


FRE consists of properties acquired through mortgage loan foreclosure proceedings or in full or partial satisfaction of loans. The following table sets forth information regarding FRE at December 31, 2017at:

(in thousands) September 30, 2023  June 30, 2023 
Commercial loans
 
$
302
  
$
302
 
Total foreclosed real estate 
$
302
  
$
302
 

22
(5)          Fair Value Measurements and June 30, 2017:Fair Value of Financial Instruments

(in thousands) December 31, 2017  June 30, 2017 
Residential real estate $79  $- 
Commercial real estate  826   799 
Total foreclosed real estate $905  $799 

(6)Fair Value Measurements and Fair Value of Financial Instruments


Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique.  Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sale transaction on the dates indicated.  The estimated fair value amounts have been measured at December 31, 2017as of September 30, 2023 and June 30, 20172023 and have not been re-evaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates.  As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end.


The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.
The FASB ASC Topic on “Fair Value Measurement” established a fair value hierarchy that prioritized the inputs to valuation techniques used to measure fair value. The fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value measurements are not adjusted for transaction costs. A fair value hierarchy exists within GAAP that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:


Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.


Level 2: Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.


Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).


An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.


23
For assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used are as follows:


     Fair Value Measurements Using 
     
Quoted Prices
In Active
Markets For
Identical Assets
  
Significant
Other Observable
Inputs
  
Significant
Unobservable
Inputs
 
(In thousands) September 30, 2023  (Level 1)  (Level 2)  (Level 3) 
Assets:            
U.S. Government sponsored enterprises 
$
10,467  
$
-  
$
10,467  
$
- 
U.S. Treasury securities  16,208   -   16,208   - 
State and political subdivisions  171,620   -   171,620   - 
Mortgage-backed securities-residential  23,592   -   23,592   - 
Mortgage-backed securities-multi-family  68,884   -   68,884   - 
Corporate debt securities  17,945   -   17,945   - 
Securities available-for-sale  308,716  
$
-   308,716   - 
Equity securities  299   299   -   - 
Total securities measured at fair value 
$
309,015  
$
299  
$
308,716  
$
- 
     Fair Value Measurements Using 
     
Quoted Prices In
Active Markets For
Identical Assets
  
Significant Other
Observable Inputs
  
Significant
Unobservable Inputs
 
(In thousands) December 31, 2017  (Level 1)  (Level 2)  (Level 3) 
Assets:            
U.S. Government sponsored enterprises $5,623  $-  $5,623  $- 
State and political subdivisions  71,720   -   71,720   - 
Mortgage-backed securities-residential  4,096   -   4,096   - 
Mortgage-backed securities-multi-family  20,071   -   20,071   - 
Corporate debt securities  1,257   1,257   -   - 
Equity securities  202   202   -   - 
Securities available-for-sale $102,969  $1,459  $101,510  $- 


     Fair Value Measurements Using 
     
Quoted Prices
In Active
Markets For
Identical Assets
  
Significant
Other Observable
Inputs
  
Significant
Unobservable
Inputs
 
(In thousands) June 30, 2023  (Level 1)  (Level 2)  (Level 3) 
Assets:            
U.S. Government sponsored enterprises 
$
10,823
  
$
-
  
$
10,823
  
$
-
 
U.S. Treasury securities  16,500   -   16,500   - 
State and political subdivisions  
138,011
   
-
   
138,011
   
-
 
Mortgage-backed securities-residential  
25,601
   
-
   
25,601
   
-
 
Mortgage-backed securities-multi-family  
72,086
   
-
   
72,086
   
-
 
Corporate debt securities  
18,112
   
-
   
18,112
   
-
 
Securities available-for-sale  
281,133
   
-
   
281,133
   
-
 
Equity securities  
306
   
306
   
-
   
-
 
Total securities measured at fair value 
$
281,439
  
$
306
  
$
281,133
  
$
-
 
     Fair Value Measurements Using 
     
Quoted Prices
In Active Markets For
Identical Assets
  
Significant
Other Observable
Inputs
  
Significant
Unobservable Inputs
 
(In thousands) June 30, 2017  (Level 1)  (Level 2)  (Level 3) 
Assets:            
U.S. Government sponsored enterprises $4,717  $-  $4,717  $- 
State and political subdivisions  58,112   -   58,112   - 
Mortgage-backed securities-residential  4,913   -   4,913   - 
Mortgage-backed securities-multi-family  20,765   -   20,765   - 
Asset-backed securities  1   1   -   - 
Corporate debt securities  2,791   2,791   -   - 
Equity securities  184   184   -   - 
Securities available-for-sale $91,483  $2,976  $88,507  $- 


Certain investments that are actively traded and have quoted market prices have been classified as Level 1 valuations.  Other available-for-sale investment securities have been valued by reference to prices for similar securities or through model-based techniques in which all significant inputs are observable and, therefore, such valuations have been classified as Level 2.


In addition to disclosures of the fair value of assets on a recurring basis, FASB ASC Topic on “Fair Value Measurement”Measurement” requires disclosures for assets and liabilities measured at fair value on a nonrecurring basis, such as impaired assets,collateral dependent loans evaluated individually for expected credit losses in the period in which a re-measurement at fair value is performed. Loans are generally not recorded atThe Company uses the fair value on a recurring basis. Periodically, the Company records nonrecurring adjustmentsof underlying collateral, less costs to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral-dependent loans calculated as required by the “Receivables –Loan Impairment” subtopic of the FASB ASC when establishingsell, to estimate the allowance for credit losses. Impaired loans are those loans in which the Company has measured impairment based on the fair value of the loan’slosses for individually evaluated collateral or the discounted value of expected future cash flows. Fair value is generally determined based upon market value evaluations by third parties of the properties and/or estimates by management of working capital collateral or discounted cash flows based upon expected proceeds. These appraisalsdependent loans. Management may include up to three approaches to value: the sales comparison approach, the income approach (for income-producing property), and the cost approach. Management modifiesmodify the appraised values, if needed, to take into account recent developments in the market or otherfor qualitative factors such as changes in absorption rates or marketeconomic conditions and estimated liquidation expenses ranging from the time of valuation and anticipated sales values considering management’s plans for disposition.10% to 40%. Such modifications to the appraised values could result in lower valuations of such collateral. Estimated costs to sell are basedBased on current amounts of disposal coststhe valuation techniques used, the fair value measurements for similar assets. These measurementscollateral dependent loans evaluated individually are classified as Level 3 within the valuation hierarchy. Impaired loans are subject to nonrecurring fair value adjustment upon initial recognition or subsequent impairment. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance.3.
Fair values for foreclosed real estate are initially recorded based on market value evaluations by third parties, less costs to sell (“initial cost basis”). Any write-downs required when the related loan receivable is exchanged for the underlying real estate collateral at the time of transfer to foreclosed real estate are charged to the allowance for loancredit losses. Values are derived from appraisals, similar to impairedcollateral dependent loans evaluated individually, of underlying collateral or discounted cash flow analysis.collateral. Subsequent to foreclosure, valuations are updated periodically and assets are marked to current fair value, not to exceed the initial cost basis. In the determination of fair value subsequent to foreclosure, management also considers othermay modify the appraised values, for qualitative factors or recent developments, such as changes in absorption rateseconomic conditions and market conditionsestimated liquidation expenses ranging from 10% to 60%. Such modifications to the time of valuation and anticipated salesappraised values considering management’s plans for disposition. Either change could result in adjustment to lower valuations of such collateral. Based on the propertyvaluation techniques used, the fair value estimates indicated in the appraisals. These measurements for foreclosed real estate are classified as Level 3 within the fair value hierarchy.3.


           Fair Value Measurements Using 
(In thousands) 
Recorded
Investment
  
Related
Allowance
  Fair Value  (Level 1)  (Level 2)  (Level 3) 
December 31, 2017                  
Impaired loans $2,377  $533  $1,844  $-  $-  $1,844 
Foreclosed real estate  905   -   905   -   -   905 
                         
June 30, 2017                        
Impaired loans $1,822  $436  $1,386  $-  $-  $1,386 
Foreclosed real estate  799   -   799   -   -   799 

24
The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Level 3 inputs were utilized to determine fair value:
Index
(Dollars in thousands) Fair Value Valuation TechniqueUnobservable Input Range  
Weighted
Average
 
December 31, 2017           
Impaired Loans $1,308 
Appraisal of collateral(1)
Appraisal adjustments(2)
  26.58%-31.86%  28.35%
        
Liquidation expenses(3)
  4.09%-7.26%  5.10%
   536 Discounted cash flowDiscount rate  4.19%-6.63%  5.36%
Foreclosed real estate  905 
Appraisal of collateral(1)
Appraisal adjustments(2)
  0.00%-0.00%  0.00%
        
Liquidation expenses(3)
  7.68%-11.53%%  8.36%
June 30, 2017              
Impaired loans $845 
Appraisal of collateral(1)
Appraisal adjustments(2)
  25.00%-42.52%  28.46%
        
Liquidation expenses(3)
  3.45%-7.38%  5.93%
   541 Discounted cash flowDiscount rate  4.19%-6.63%  5.36%
Foreclosed real estate  799 
Appraisal of collateral(1)
Appraisal adjustments(2)
  0.00%-0.00%  0.00%
        
Liquidation expenses(3)
  11.64%-17.92%  16.29%
     September 30, 2023  June 30, 2023 
(In thousands) 
Fair Value
Hierarchy
  
Carrying
Amount
  
Estimated
Fair Value
  
Carrying
Amount
  
Estimated
Fair Value
 
September 30, 2023               
Collateral dependent evaluated loans  3  $5,781  $4,090  $7,578  $5,565 
Foreclosed real estate  3  $302  $302  $302  $302 

(1)Fair value is generally determined through independent third-party appraisals of the underlying collateral, which generally includes various Level 3 inputs which are not observable.
(2)Appraisals may be adjusted downwards by management for qualitative factors such as economic conditions.  Higher downward adjustments are caused by negative changes to the collateral or conditions in the real estate market, actual offers or sales contracts received or age of the appraisal.
(3)Appraisals are adjusted downwards by management for qualitative factors such as the estimated costs to liquidate the collateral.


The carrying amounts reported in the statements of financial condition for total cash and cash equivalents, long term certificates of deposit, accrued interest receivable and accrued interest payable approximate their fair values.  Fair values of securities are based on quoted market prices (Level 1), where available, or matrix pricing (Level 2), which is a mathematical technique, used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.  The carrying amount of Federal Home Loan Bank stock approximates fair value due to its restricted nature.  The fair values for loans are measured using the “exit price” notion which is a reasonable estimate of what another party might pay in an orderly transaction.  Fair values for variable rate loans that reprice frequently, with no significant credit risk, are based on carrying value.  Fair valuevalues for fixed rate loans are estimated using discounted cash flows and interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.  Fair values disclosed for demand and savings deposits are equal to carrying amounts at the reporting date.  The carrying amounts for variable rate money market deposits approximate fair values at the reporting date.  Fair values for fixed ratelong term certificates of deposit are estimated using discounted cash flows and interest rates currently being offered in the market on similar certificates.  Fair value for Federal Home Loan Bank long term borrowings are estimated using discounted cash flows and interest rates currently being offered on similar borrowings.  The carrying value of short-term Federal Home Loan Bank borrowings approximates its fair value.
The fair  Fair value of commitments to extend creditfor subordinated notes payable is estimated based on an analysisa discounted cash flow methodology or observations of therecent highly-similar transactions. Fair value for interest rates and fees currently charged to enter into similar transactions, considering the remaining terms of the commitments and the credit-worthiness of the potential borrowers.  At December 31, 2017 and June 30, 2017, the estimated fair values of these off-balance sheet financial instruments were immaterial,rate swaps include any accrued interest and are therefore excluded fromvalued using the table below.present value of cash flows discounted using observable forward rate assumptions.


The carrying amounts and estimated fair value of financial instruments are as follows:



 September 30, 2023  Fair Value Measurements Using 
(In thousands) Carrying
Amount		  Fair Value  (Level 1)  (Level 2)  (Level 3) 
Cash and cash equivalents 
$
130,253
  
$
130,253
  
$
130,253
  
$
-
  
$
-
 
Long term certificates of deposit  
4,070
   
3,905
   
-
   
3,905
   
-
 
Securities available-for-sale  
308,716
   
308,716
   
-
   
308,716
   
-
 
Securities held-to-maturity  
711,716
   
632,163
   
-
   
632,163
   
-
 
Equity securities  
299
   
299
   
299
   
-
   
-
 
Federal Home Loan Bank stock  
1,979
   
1,979
   
-
   
1,979
   
-
 
Net loans receivable  
1,428,091
   
1,314,142
   
-
   
-
   
1,314,142
 
Accrued interest receivable  
13,761
   
13,761
   
-
   
13,761
   
-
 
Interest rate swaps asset
  71   71   -   71   - 
Deposits  
2,420,481
   
2,419,132
   
-
   
2,419,132
   
-
 
Borrowings
  4,374   4,142   -   4,142   - 
Subordinated notes payable, net  
49,542
   
46,357
   
-
   
46,357
   
-
 
Accrued interest payable  
531
   
531
   
-
   
531
   
-
 
Interest rate swaps liability
  71   71   -   71   - 


 June 30, 2023  Fair Value Measurements Using 
(In thousands) Carrying
Amount		  Fair Value  (Level 1)  (Level 2)  (Level 3) 
Cash and cash equivalents 
$
196,445
  
$
196,445
  
$
196,445
  
$
-
  
$
-
 
Long term certificate of deposit  
4,576
   
4,383
   
-
   
4,383
   
-
 
Securities available-for-sale  
281,133
   
281,133
   
-
   
281,133
   
-
 
Securities held-to-maturity  
726,363
   
671,066
   
-
   
671,066
   
-
 
Equity securities  
306
   
306
   
306
   
-
   
-
 
Federal Home Loan Bank stock  
1,682
   
1,682
   
-
   
1,682
   
-
 
Net loans receivable  
1,387,654
   
1,272,361
   
-
   
-
   
1,272,361
 
Accrued interest receivable  
12,249
   
12,249
   
-
   
12,249
   
-
 
Deposits  
2,437,161
   
2,437,357
   
-
   
2,437,357
   
-
 
Subordinated notes payable, net  49,495   47,669   -   47,669   - 
Accrued interest payable  
936
   
936
   
-
   
936
   
-
 

(In thousands) December 31, 2017  Fair Value Measurements Using 
  
Carrying
Amount
  Fair Value  (Level 1)  (Level 2)  (Level 3) 
Cash and cash equivalents $27,714  $27,714  $27,714  $-  $- 
Long term certificate of deposit  1,895   1,895   1,895   -   - 
Securities available-for-sale  102,969   102,969   1,459   101,510   - 
Securities held-to-maturity  239,140   243,287   -   243,287   - 
Federal Home Loan Bank stock  2,488   2,488   -   2,488   - 
Net loans  663,873   666,189   -   -   666,189 
Accrued interest receivable  4,610   4,610   -   4,610   - 
Deposits  920,751   920,896   -   920,896   - 
Borrowings  40,450   40,181   -   40,181   - 
Accrued interest payable  89   89   -   89   - 


(In thousands) June 30, 2017  Fair Value Measurements Using 
  
Carrying
Amount
  Fair Value  (Level 1)  (Level 2)  (Level 3) 
Cash and cash equivalents $16,277  $16,277  $16,277  $-  $- 
Long term certificate of deposit  2,145   2,145   2,145   -   - 
Securities available-for-sale  91,483   91,483   2,976   88,507   - 
Securities held-to-maturity  223,830   228,452   -   228,452   - 
Federal Home Loan Bank stock  2,131   2,131   -   2,131   - 
Net loans  624,187   629,690   -   -   629,690 
Accrued interest receivable  4,033   4,033   -   4,033   - 
Deposits  859,535   859,715   -   859,715   - 
Borrowings  29,550   29,411   -   29,411   - 
Accrued interest payable  92   92   -   92   - 
23
25
(7)Earnings Per Share
(6)Derivative Instruments




The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, primarily by managing the amount, sources and duration of its assets and liabilities. The Company has interest rate derivatives that result from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions.



Derivatives Not Designated as Hedging Instruments



The Company enters into interest rate swap agreements with its commercial customers to provide them with a long-term fixed rate, while simultaneously entering into offsetting interest rate swap agreements with a counterparty to swap the fixed rate to a variable rate to manage interest rate exposure. These interest rate swap agreements are not designated as hedges for accounting purposes. As the interest rate swap agreements have substantially equivalent and offsetting terms, they do not present any material exposure to the Company’s consolidated statements of income. The Company records its interest rate swap agreements at fair value and are presented within other assets and other liabilities on the consolidated statements of financial condition. Changes in the fair value of assets and liabilities arising from these derivatives are included, net, in other operating income in the consolidated statements of income. Under terms of the agreements with the third-party counterparties, the Company provides cash collateral to the counterparty, when required, for the initial trade. Subsequent to the trade, the margin is exchanged in either direction, based upon the estimated fair value of the underlying contracts. Cash collateral represents the amount that is exchanged under master netting agreements that allows the Company to offset the derivative position with the related collateral. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.



The following table present the notional amount and fair values of interest rate derivative positions:


      At September 30, 2023 
  Asset Derivatives Liability Derivatives 
(In thousands)
  
Statement of
Financial
Condition
  Location
 
Notional
Amount
 Fair Value  
Statement of
Financial
Condition
  Location
Notional
Amount
 Fair Value 
Interest rate derivatives  Other Assets
 
$
18,300
  
$
71
  Other Liabilities
 
$
18,300
  
$
71
 
     Less cash collateral         
-
         
-
 
Total after netting        
$
71
        
$
71
 



Risk Participation Agreements



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



RPAs in which the Company acts as the lead bank are referred to as “participations-out,” in reference to the credit risk associated with the customer derivatives being transferred out of the Company.  Participations-out generally occur concurrently with the sale of new customer derivatives.  The Company had no participations-out at September 30, 2023 or June 30, 2023.  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-in as of September 30, 2023 and June 30, 2023 due to the recent rise in interest rates. The RPAs participations-ins are spread out over four financial institution counterparties and terms range between 5 to 14 years. At September 30, 2023 and June 30, 2023, the Company held RPAs with a notional amount of $93.0 million and $82.0 million, respectively.

(7)          Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period.  Diluted earnings per share is computed in a manner similar to that of basic earnings per share except that the weighted-average number of common shares outstanding is increased to include the number of incremental common shares that would have been outstanding under the treasury stock method if all potentially dilutive common shares (such as stock options) issued became vested during the period. There were no dilutive or anti-dilutive securities or contracts outstanding during the three and six months ended December 31, 2017September 30, 2023 and 2016.2022.


  
For the three months
ended December 31,
  
For the six months
ended December 31,
 
  2017  2016  2017  2016 
             
Net Income $3,640,000  $2,926,000  $7,112,000  $5,433,000 
Weighted Average Shares – Basic  8,504,168   8,491,929   8,503,451   8,487,554 
Effect of Dilutive Stock Options  28,958   17,387   28,823   16,359 
Weighted Average Shares - Dilute  8,533,126   8,509,316   8,532,274   8,503,913 
                 
Earnings per share - Basic $0.43  $0.34  $0.84  $0.64 
Earnings per share - Diluted $0.43  $0.34  $0.83  $0.64 

26
(8)Dividends

Index
On March 23, 2023, the Company effected a 2-for-1 stock split in the form of a stock dividend on its outstanding shares of common stock. Weighted-average number of shares and earnings per share have been retroactively adjusted in all periods presented as if the new shares had been issued and outstanding at the same time as the original shares.

  For the three months ended September 30, 
  2023
  2022
 
       
Net Income 
$
6,469,000
  
$
9,036,000
 
Weighted Average Shares – Basic  
17,026,828
   
17,026,828
 
Weighted Average Shares - Diluted  
17,026,828
   
17,026,828
 
         
Earnings per share - Basic 
$
0.38
  
$
0.53
 
Earnings per share - Diluted 
$
0.38
  
$
0.53
 

(8)  Dividends

On October 17, 2017,July 19, 2023, the Company announced that its Board of Directors declaredhas approved a quarterly cash dividend for the quarter ended September 30, 2017 of $0.0975$0.08 per share on Greene County Bancorp, Inc.’sthe Company’s common stock. The dividend reflects an annual cash dividend rate of $0.39$0.32 per share, which was the same rate as the dividend declared duringrepresents a 14.3% increase from the previous quarter.annual cash dividend rate of $0.28 per share. The dividend was payable to stockholders of record as of November 15, 2017,August 14, 2023, and was paid on November 30, 2017.  TheAugust 31, 2023. Greene County Bancorp, MHC waiveddid not waive its right to receive dividends declared on its shares of the Company’s common stock for the quarter ended September 30, 2017.

(9)Impact of Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU) (ASU 2014-09) to amend its guidance on “Revenue from Contracts with Customers (Topic 606).  The objective of the ASU is to align the recognition of revenue with the transfer of promised goods or services provided to customers in an amount that reflects the consideration which the entity expects to be entitled in exchange for those goods or services.  This ASU will replace most existing revenue recognition guidance under GAAP when it becomes effective. In August 2015, the FASB issued an amendment (ASU 2015-14) which defers the effective date of this new guidance by one year. More detailed implementation guidance on Topic 606 was issued in March 2016 (ASU 2016-08), April 2016 (ASU 2016-10), May 2016 (ASU 2016-12), December 2016 (ASU 2016-20), February 2017 (ASU 2017-05), and September 2017 (ASU-2017-13) and the effective date and transition requirements for these ASUs are the same as the effective date and transition requirements of ASU 2014-09.  The amendments in ASU 2014-09 are effective for public business entities for annual periods, beginning after December 15, 2017.  The Company expects to adopt the revenue recognition guidance beginning July 1, 2018. A significant amount of the Company’s revenues are derived from net interest income on financial assets and liabilities, which are excluded from the scope of the amended guidance.  With respect to noninterest income, the Company has identified revenue streams within the scope of the guidance and is in the final stages of its accounting analysis of the underlying contracts. The Company does not presently expect that changes in the timing of revenue recognition will be material to the amount of annual revenue recognized by the Company.

In August 2014, the FASB issued an amendment (ASU 2014-14) to its guidance on “Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40)”.  The objective of the ASU is to reduce the diversity in how creditors classify government-guaranteed mortgage loans, including FHA or VA guaranteed loans, upon foreclosure, to provide more decision-useful information about a creditor’s foreclosed mortgage loans that are expected to be recovered, at least in part, through government guarantees.  The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Public entities would be permitted to elect to early adopt for annual reporting periods beginning after December 15, 2016.  The adoption of this guidance is not expected to have a material impact on our consolidated results of operations or financial position.
24
Index
dividend.
In January 2016, the FASB issued an Update (ASU 2016-01) to its guidance on “Financial Instruments (Subtopic 825-10)”.  This amendment addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments.  These amendments require equity securities to be measured at fair value with changes in the fair value to be recognized through net income. The amendments also simplify the impairment assessment of equity investments without readily determinable fair values by requiring assessment for impairment qualitatively at each reporting period.  For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.  Early adoption of the amendments in this Update is not permitted.  The adoption of this guidance is not expected to have a material impact on our consolidated results of operations or financial position.

In February 2016, the FASB issued an Update (ASU 2016-02) to its guidance on “Leases (Topic 842)”.  The new leases standard applies a right-of-use (ROU) model that requires a lessee to record, for all leases with a lease term of more than 12 months, an asset representing its right to use the underlying asset and a liability to make lease payments. For leases with a term of 12 months or less, a practical expedient is available whereby a lessee may elect, by class of underlying asset, not to recognize an ROU asset or lease liability. The new leases standard requires a lessor to classify leases as either sales-type, direct financing or operating, similar to existing U.S. GAAP. Classification depends on the same five criteria used by lessees plus certain additional factors. The subsequent accounting treatment for all three lease types is substantially equivalent to existing U.S. GAAP for sales-type leases, direct financing leases, and operating leases. However, the new standard updates certain aspects of the lessor accounting model to align it with the new lessee accounting model, as well as with the new revenue standard under Topic 606. Lessees and lessors are required to provide certain qualitative and quantitative disclosures to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The amendments are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The adoption of this ASU will result in a gross up of the Consolidated Statements of Financial Condition for right-of-use assets and associated lease liabilities for operating leases in which the Company is the lessee.  The Company is evaluating the significance and other effects of adoption on the consolidated financial statements and related disclosures. The adoption of this guidance is not expected to have a material impact on our consolidated results of operations. Branch building leases have been reviewed and are considered immaterial to the financial statements; there are no equipment leases to consider.

In March 2016, the FASB issued an Update (ASU 2016-09) to its guidance on “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”.  This amendment is intended to simplify the accounting for stock compensation.  The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The adoption of this guidance did not have a material impact on our consolidated results of operations or financial position.

In June 2016, the FASB issued an Update (ASU 2016-13) to its guidance on “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 requires credit losses on most financial assets measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected credit loss (CECL) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications unless reasonable expectation of a troubled debt restructuring exists) from the date of initial recognition of that instrument. The ASU also replaces the current accounting model for purchased credit impaired loans and debt securities. The allowance for credit losses for purchased financial assets with a more-than insignificant amount of credit deterioration since origination (“PCD assets”), should be determined in a similar manner to other financial assets measured on an amortized cost basis. However, upon initial recognition, the allowance for credit losses is added to the purchase price (“gross up approach”) to determine the initial amortized cost basis. The subsequent accounting for PCD financial assets is the same expected loss model described above. Further, the ASU made certain targeted amendments to the existing impairment model for available-for-sale (AFS) debt securities. For an AFS debt security for which there is neither the intent nor a more-likely-than-not requirement to sell, an entity will record credit losses as an allowance rather than a write-down of the amortized cost basis.  For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. An entity will apply the amendments in this Update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach).  The Company is currently evaluating the potential impact on our consolidated results of operations or financial position. The initial adjustment will not be reported in earnings and therefore will not have any material impact on our consolidated results of operations, but it is expected that it will have an impact on our consolidated financial position at the date of adoption of this Update.  At this time, we have not calculated the estimated impact that this Update will have on our Allowance for Loan Losses, however, we anticipate it will have a significant impact on the methodology process we utilize to calculate the allowance.  Alternative methodologies and software vendors are currently being considered.  Data requirements and integrity are being reviewed and enhancements incorporated into standard processes.  The Company is in the early stages of evaluation and implementation of the guidance.
In August 2016, the FASB issued an Update (ASU 2016-15) which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are intended to reduce diversity in practice. The amendment covers the following cash flows: Cash payments for debt prepayment or extinguishment costs will be classified in financing activities.  Upon settlement of zero-coupon bonds and bonds with insignificant cash coupons, the portion of the payment attributable to imputed interest will be classified as an operating activity, while the portion of the payment attributable to principal will be classified as a financing activity.  Cash paid by an acquirer that isn’t soon after a business combination for the settlement of a contingent consideration liability will be separated between financing activities and operating activities. Cash payments up to the amount of the contingent consideration liability recognized at the acquisition date will be classified in financing activities; any excess will be classified in operating activities. Cash paid soon after the business combination will be classified in investing activities.  Cash proceeds received from the settlement of insurance claims will be classified on the basis of the related insurance coverage (that is, the nature of the loss). Cash proceeds from lump-sum settlements will be classified based on the nature of each loss included in the settlement. Cash proceeds received from the settlement of corporate-owned life insurance (COLI) and bank-owned life insurance (BOLI) policies will be classified as cash inflows from investing activities. Cash payments for premiums on COLI and BOLI may be classified as cash outflows for investing, operating, or a combination of both. A transferor’s beneficial interest obtained in a securitization of financial assets will be disclosed as a noncash activity, and cash received from beneficial interests will be classified in investing activities. Distributions received from equity method investees will be classified using either a cumulative earnings approach or a look- through approach as an accounting policy election.  The ASU contains additional guidance clarifying when an entity should separate cash receipts and cash payments and classify them into more than one class of cash flows (including when reasonable judgment is required to estimate and allocate cash flows) versus when an entity should classify the aggregate amount into one class of cash flows on the basis of predominance.  The amendments are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period.  The Company is currently evaluating the potential impact of adoption of this ASU on our consolidated results of operations or financial position.
(9)        Employee Benefit Plans

In November 2016, the FASB issued an Update (ASU 2016-18) to its guidance on “Statement of Cash Flows (Topic 230) Restricted Cash” addresses diversity in practice from entities classifying and presenting transfers between cash and restricted cash as operating, investing or financing activities or as a combination of those activities in the statement of cash flows.  The ASU requires entities to show the changes in the total cash, cash equivalents, restricted cash and restricted cash equivalents in the Statement of Cash Flows.  As a result, transfers between such categories will no longer be presented in the Statement of Cash Flows.  ASU 2016-18 is effective for the fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  Early adoption is permitted provided all amendments are adopted in the same period.  Management is evaluating the effect that this guidance will have on consolidated financial statements and disclosures.
In March 2017, the FASB issued an Update (ASU 2017-07) to its guidance on “Compensation - Retirement Benefits (Topic 715)” to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost.  ASU 2017-07 requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described.  If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed.  The amendments in this Update are effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods.  Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance.  That is, early adoption should be within the first interim period if an employer issues interim financial statements.  Disclosures of the nature of and reason for the change in accounting principle are required in the first interim and annual periods of adoption.  The amendments in this Update should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit costs in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net period pension cost and net periodic postretirement benefit in assets. The adoption of this guidance is not expected to have a material impact on our consolidated results of operations or financial position.
In March 2017, the FASB issued an Update (ASU 2017-08) to its guidance on “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20) related to premium amortization on purchased callable debt securities. The amendments in this Update shorten the amortization period for certain callable debt securities held at a premium.  Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity.  For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  Early adoption is permitted, including adoption in an interim period.  If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.  An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption.  Additionally, in the period of adoption, an entity should provide disclosure about a change in accounting principle.  The adoption of this guidance is not expected to have a material impact on our consolidated results of operations or financial position.
In May 2017, the FASB issued an Update (ASU 2017-09) to its guidance on “Compensation - Stock Compensation (Topic 718)” such that an entity must apply modification accounting to changes in the terms or conditions of a share-based payment award unless all of the following criteria are met:  (1) The fair value of the modified award is the same as the fair value of the original award immediately before the modification. The standard indicates that if the modification does not affect any of the inputs to the valuation technique used to value the award, the entity is not required to estimate the value immediately before and after the modification. (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the modification. (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the modification.  The amendments are effective for all entities for fiscal years beginning after December 15, 2017, including interim periods within those years.  Early adoption is permitted, including adoption in an interim period.  The Company is currently evaluating the potential impact of adoption of this ASU on our consolidated results of operations or financial position.
(10)Employee Benefit Plans

Defined Benefit Plan


The components of net periodic pension cost related to the defined benefit pension plan for the three and six months ended December 31, 2017 and 2016 were as follows:


  
Three months ended
September 30,
 
(In thousands) 2023
  2022
 
Interest cost 
$
52
  
$
50
 
Expected return on plan assets  
(55
)
  
(55
)
Amortization of net loss  
19
   
27
 
Net periodic pension cost 
$
16
  
$
22
 

  
Three months ended
December 31,
  
Six months ended
December 31,
 
(In thousands) 2017  2016  2017  2016 
Interest cost $55  $53  $110  $107 
Expected return on plan assets  (62)  (46)  (124)  (115)
Amortization of net loss  42   49   84   98 
Net periodic pension cost $35  $56  $70  $90 

The interest cost, expected return on plan assets and amortization of net loss components are included in other noninterest expense on the consolidated statements of income. On an annual basis, upon the completion of the third-party actuarial valuation related to the defined benefit pension plan, the Company records adjustments to accumulated other comprehensive income.The Company does not anticipate that it will make any additional contributions to the defined benefit pension plan during fiscal 2018.2024.

SERP

SERP

The Board of Directors of The Bank of Greene County adopted The Bank of Greene County Supplemental Executive Retirement Plan (the “SERP Plan”“SERP”), effective as of July 1, 2010. The SERP Plan benefits certain key senior executives of the Bank who have been selected by the Board to participate. The SERP Plan is intended to provide a benefit from the Bank upon vested retirement, death or disability or voluntary or involuntary termination of service (other than “for cause”). The SERP Plan is more fully described in Note 9 of the consolidated financial statements and notes thereto for the year ended June 30, 2017.2023.


The net periodic pension costs related to the SERP Plan for the three and six months ended December 31, 2017September 30, 2023 were $107,000$470,000, included within salaries and $208,000, respectively, and forbenefits expense on the three and six months ended December 31, 2016 were $81,000 and $158,000, respectively, consisting primarilyconsolidated statements of service costs and interest costs.income. The total liability for the SERP Plan was $3.3$13.1 million at September 30, 2023 and $2.9$12.3 million as of December 31, 2017 andat June 30, 2017, respectively.2023, and is included in accrued expenses and other liabilities. The total liability for the SERP Plan includes both accumulated net periodic pension costs and participant contributions.

27
Index
(11)
(10)         Stock-Based Compensation


At December 31, 2017, Greene County Bancorp, Inc. had two stock-based compensation plans, which are described more fully in Note 10 of the consolidated financial statements and notes thereto for the year ended June 30, 2017.

Stock Option Plan

At December 31, 2017 and 2016, all granted shares related to the 2008 Option Plan were fully vested, with no remaining compensation cost to be recognized.  A summary of the Company’s stock option activity and related information for its option plan for the six months ended December 31, 2017 and 2016 is as follows:

  2017  2016 
 Shares  
Weighted Average
Exercise Price
Per Share
  Shares  
Weighted Average
Exercise Price
Per Share
 
Outstanding at beginning of year  37,770  $6.25   64,770  $6.25 
Exercised  (4,000) $6.25   (27,000) $6.25 
Outstanding at period end  33,770  $6.25   37,770  $6.25 
Exercisable at period end  33,770  $6.25   37,770  $6.25 

The intrinsic value of options both outstanding and exercisable was $890,000 at December 31, 2017 and $629,000 at December 31, 2016.   The following table presents stock options outstanding and exercisable at December 31, 2017:

Options Outstanding and Exercisable 
Range of
Exercise Prices
  
Number
Outstanding
  
Weighted Average Remaining
Contractual Life
  
Weighted Average
Exercise Price
 
$6.25   33,770   0.75  $6.25 

The total intrinsic value of the options exercised during the three and six months ended December 31, 2017 was approximately $80,000 and $103,000, respectively.  The total intrinsic value of the options exercised during the three and six months ended December 31, 2016 was approximately $208,000 and $339,000, respectively. There were no stock options granted during the three and six months ended December 31, 2017 or 2016.  All outstanding options were fully vested at December 31, 2017 and 2016.

Phantom Stock Option Plan and Long-term Incentive Plan


The Greene County Bancorp, Inc. 2011 Phantom Stock Option and Long-TermLong-term Incentive Plan (the “Plan”) was adopted effective July 1, 2011, to promote the long-term financial success of the Company and its subsidiaries by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company’s shareholders. The Plan is intended to provide benefits to employees and directors of the Company or any subsidiary as designated by the Compensation Committee of the Board of Directors of the Company (“Committee”).  A phantom stock option represents the right to receive a cash payment on the date the award vests. The Plan is more fully described in Note 10 of the consolidated financial statements and notes thereto for the year ended June 30, 2017.2023. All share and per share data has been retroactively adjusted in all periods presented to reflect the 2-for-1 stock split, which was paid on March 23, 2023, as if the new share options had been granted at the same time as the original share options.


A summary of the Company’s phantom stock option activity and related information for its option planthe Plan for the sixthree months ended December 31, 2017September 30, 2023 and 2016 is2022 were as follows:

  2023
  2022
 
Number of options outstanding at beginning of year  2,535,840
   2,959,040 
Options granted  672,095
   807,200 
Options paid in cash upon vesting
  -   (194,000)
Number of options outstanding at period end  3,207,935   3,572,240 
  2017  2016 
Number of options outstanding at beginning of year  1,522,720   1,352,554 
Options granted  594,200   578,200 
Options forfeited  (27,000)  - 
Options paid in cash  (455,760)  (408,034)
Number of options outstanding at period end  1,634,160   1,522,720 

(In thousands) 2023
  2022
 
Cash paid out on options vested $-  $510 
Compensation expense recognized 
$
632
  
$
968
 

  
Three months ended
December 31,
  
Six months ended
December 31,
 
(In thousands) 2017  2016  2017  2016 
Cash paid out on options vested $1,184  $845  $1,187  $845 
Compensation costs recognized  460   347   820   588 
The total liability for the long-term incentive planPlan was $1.7$6.9 million and $2.0$6.3 million at December 31, 2017September 30, 2023 and June 30, 2017,2023, respectively, and is included in accrued expenses and other liabilities.

(12)Income taxes

On December 22, 2017, the U.S. Government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Act”). The Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. For businesses, the Act reduces the corporate federal tax rate from a maximum of 35% to a flat 21% rate. The corporate tax rate reduction was effective January 1, 2018. Because the Company has a fiscal year end of June 30, the reduced corporate tax rate will result in the application of a blended federal statutory tax rate for its fiscal year 2018 and then a flat 21% thereafter.

Under generally accepted accounting principles, the Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. As a result of the reduction in the corporate income tax rate under the Act, the Company revalued its deferred tax assets and liabilities at December 31, 2017. These re-measurements resulted in a discrete tax benefit of $251,000 that was recognized during the three months ended December 31, 2017. The Company’s revaluation of its deferred tax assets and liabilities is subject to further clarification of the Tax Act and refinements of its estimates. As a result, the actual impact on the deferred tax assets and liabilities and income tax expense due to the Tax Act may vary from the amounts estimated.consolidated statements of financial condition.


(13)
(11)        Accumulated Other Comprehensive Loss


The components of accumulated other comprehensive loss at December 31, 2017are presented as follows:

Activity for the three months ended September 30, 2023 and 2022
(In thousands)
 
Unrealized losses
on securities
available-for-sale
  Pension
benefits		  Total 
Balance – June 30, 2023
 
$
(20,531
)
 
$
(877
)
 
$
(21,408
)
Other comprehensive loss before reclassification  
(3,712
)
  
-
   
(3,712
)
Other comprehensive loss for the three months ended September 30, 2023
  
(3,712
)
  
-
   
(3,712
)
Balance – September 30, 2023
 
$
(24,243
)
 
$
(877
)
 
$
(25,120
)
             
Balance – June 30, 2022
 
$
(17,268
)
 
$
(1,115
)
 
$
(18,383
)
Other comprehensive loss before reclassification  
(6,618
)
  
-
   
(6,618
)
Other comprehensive loss for the three months ended September 30, 2022
  
(6,618
)
  
-
   
(6,618
)
Balance – September 30, 2022
 
$
(23,886
)
 
$
(1,115
)
 
$
(25,001
)
 
(12)        Operating leases

The Company leases certain branch properties under long-term, operating lease agreements. The Company’s operating lease agreements contain non-lease components, which are accounted for separately. The Company’s lease agreements do not contain any residual value guarantee.

28
Index
The following includes quantitative data related to the Company’s operating leases as September 30, 2023 and June 30, 20172023, and for the three months ended September 30, 2023 and 2022:

(In thousands, except weighted-average information).      
Operating lease amounts: September 30, 2023  June 30, 2023 
Right-of-use assets 
$
2,109
  
$
2,188
 
Lease liabilities 
$
2,198
  
$
2,277
 

  
For the three months ended
September 30,
 
  2023
  2022
 
(In thousands)      
Other information:      
Operating outgoing cash flows from operating leases 
$
113
  
$
89
 
Right-of-use assets obtained in exchange for new operating lease liabilities
 $
19  $
- 
         
Lease costs:        
Operating lease cost 
$
102
  
$
81
 
Variable lease cost 
$
11
  
$
10
 


The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, as of September 30, 2023:

(in thousands)   
Within the twelve months ended September 30,
   
2024
 
$
457
 
2025
  
457
 
2026
  
445
 
2027
  
372
 
2028
  
310
 
Thereafter  
337
 
Total undiscounted cash flow  
2,378
 
Less net present value adjustment  
(180
)
Lease Liability 
$
2,198
 
     
Weighted-average remaining lease term (Years)  
5.62
 
Weighted-average discount rate  
2.76
%

Right-of-use assets are presentedincluded in prepaid expenses and other assets, and lease liabilities are included in accrued expenses and other liabilities within the Company’s consolidated statements of financial condition.

(13)Commitments and Contingent Liabilities



Credit-Related Financial Instruments



In the normal course of business, the Company offers financial instruments with off-balance sheet risk to meet the financing needs of its customers. These transactions include commitments to extend credit, standby letters of credit, and lines of credit, which involve, to varying degrees, elements of credit risk.



The table summarizes the outstanding amounts of credit-related financial instruments with off-balance sheet risk:


(In thousands) September 30, 2023  June 30, 2023 
Unfunded loan commitments 
$
126,149
  
$
124,498
 
Unused lines of credit  
94,164
   
94,898
 
Standby letters of credit  
179
   
179
 
Total credit-related financial instruments with off-balance sheet risk
 
$
220,492
  
$
219,575
 


29

The Company enters into contractual commitments to extend credit to its customers in the following table:form of loan commitments and lines of credit, generally with fixed expiration dates and other termination clauses, and may require payment of a fee. Substantially all of the Company’s commitments to extend credit are contingent upon its customers maintaining specific credit standards at the time of loan funding, and are often secured by real estate collateral. Since the majority of the Company’s commitments typically expire without being funded, the total contractual amount does not necessarily represent the Company’s future payment requirements.



The Company evaluates each customer’s credit worthiness on a case-by-case basis.  The amount of collateral, if any, required upon an extension of credit is based on management’s evaluation of customer credit. Commitments to extend mortgage credit are primarily collateralized by first liens on real estate. Collateral on extensions of commercial lines of credit vary but may include accounts receivable, inventory, property, plant and equipment, and income producing commercial property.



Allowance for Credit Losses on Unfunded Commitments



The Company estimates expected credit losses over the contractual period in which the Company has exposure to a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on unfunded commitments exposure is recognized in other liabilities and is adjusted as an expense in other noninterest expense. At September 30, 2023, the allowance for credit losses on unfunded commitments totaled $1.5 million.



Litigation



The Company and its subsidiaries are, from time to time, parties to various legal proceedings arising out of their businesses. Except as noted below, management believes there are no such legal proceedings pending or threatened against the Company or its subsidiaries, if determined adversely, would have a material adverse effect on the business, consolidated financial condition, results of operations or cash flows of the Company or any of its subsidiaries.



On April 26, 2022, Andrew Broockmann, a customer of The Bank of Greene County (the “Bank”), filed a putative class action complaint against the Bank in the United States District Court for the Northern District of New York. The complaint alleges that the Bank improperly assessed overdraft fees on debit-card transactions that were authorized on a positive account balance but settled on a negative balance. Mr. Broockmann, on behalf of the putative class, seeks compensatory damages, punitive damages, enjoinment of the conduct complained of, and costs and fees. The complaint is similar to complaints filed against other financial institutions pertaining to overdraft fees. The Bank denies that it improperly assessed overdraft fees or breached any agreement with Mr. Broockmann or with members of the putative class. On February 28, 2023, the parties entered into a settlement agreement which contemplates, among other things, that the Bank will (a) pay a cash payment of $1.15 million, (b) forgive, waive, and not collect an additional $64,500 in uncollected overdraft fees, and (c) cease collecting certain types of overdraft fees.  On October 25, 2023, the Court granted final approval of the class action settlement and closed the case. The Company established a settlement fund of $1.15 million during the quarter ended June 30, 2023, which had been accrued for in the quarter ended December 31, 2022.  Pursuant to the terms of the parties’ settlement agreement, and subject to any requested extensions, the court-approved claims administrator will distribute the class members’ payments from the settlement fund in the quarter ended December 31, 2023.

(In thousands)      
Accumulated other comprehensive loss: December 31, 2017  June 30, 2017 
Unrealized gain on available-for-sale securities, net of tax $290  $612 
Net losses and past service liability for defined benefit plan, net of tax  (1,604)  (1,604)
Accumulated other comprehensive loss $(1,314) $(992)

(14)        Subsequent events
As a result of the enactment of the Tax Cuts and Jobs Act in December 2017, the tax effects of the rate change on deferred taxes associated with accumulated other comprehensive loss where recognized as a tax benefit through income tax expense.  This resulted in a “stranded” credit in accumulated other comprehensive loss representing the adjustment from 35% to 21% tax rate of $259,000.

(14)Subsequent events

On January 16, 2018,October 18, 2023, the Board of Directors declaredannounced a cash dividend for the quarter ended December 31, 2017September 30, 2023 of $0.0975$0.08 per share on Greene County Bancorp, Inc.’sthe Company’s common stock. The dividend reflects an annual cash dividend rate of $0.39$0.32 per share, which was the same rate as the dividend declared during the previous quarter.  The dividend will be payable to stockholders of record as of FebruaryNovember 15, 2018,2023, and willis expected to be paid on February 28, 2018.  TheNovember 30, 2023. Greene County Bancorp, MHC intends to waive its receipt of this dividend.

29
30
Index
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operation


Overview of the Company’s Activities and Risks


Greene County Bancorp, Inc.’sThe Company’s results of operations depend primarily on its net interest income, which is the difference between the income earned on Greene County Bancorp, Inc.’sthe 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 Greene County Bancorp, Inc.’sthe Company’s provision for loancredit losses, gains and losses from sales of securities, noninterest income and noninterest expense.  Noninterest income consists primarily of fees and service charges.  Greene County Bancorp, Inc.’sThe 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 Greene County Bancorp, Inc.the Company.


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


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


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


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


Liquidity risk is the risk the Company may not be able to satisfy current or future financial commitments or may become unduly reliant on alternate funding sources. The Company’s objective is to fund balance sheet growth while meeting the cash flow requirements of depositors. Management is responsible for liquidity monitoring and has available different sources of liquidity as requirements and demands change. These demands include loan growth and repayments, security purchases and maturities, deposit inflows and outflows, and payments on borrowings.  Management continually monitors trends to identify patterns that might improve the predictability and timing of the Company’s liquidity position.

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

31
Special Note Regarding Forward-Looking Statements


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

(a)
changes in general market interest rates,

(b)
general economic conditions, including unemployment rates and real estate values,

(c)
legislative and regulatory changes,

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

(e)
changes in the quality or composition of The Bank of Greene County’s loan portfolio or the consolidated investment portfolios of The Bank of Greene County and Greene County Bancorp, Inc.,’s loan and investment portfolios,

(f)
deposit flows,

(g)
competition, and

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


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


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


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

3132
Critical Accounting Policies

Critical accounting estimates as those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations. The more significant of these policies are summarized in Note 1 to the consolidated financial statements presented in our 2023 Annual Report on Form 10-K.  Refer to Note 2 in this Quarterly Report on Form 10-Q for recently adopted accounting standards. Not all significant accounting policies require management to make difficult, subjective or complex judgments. The allowance for credit losses on loans and unfunded commitments policies noted below are deemed the Company’s critical accounting estimate.

The allowance for credit losses consists of the allowance for credit losses for loans and unfunded commitments. Effective July 1, 2023, the measurement of Current Expensed Credit Losses (“CECL”) on financial instruments requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses under the CECL approach is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. The Company then considers whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. Finally, the Company considers forecasts about future economic conditions that are reasonable and supportable. The allowance for credit losses for loans, as reported in our consolidated statements of financial condition, are adjusted by a provision (expense) for credit losses, which is recognized in earnings, and reduced by the charge-off of loans, net of recoveries. The allowance for credit losses on unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit. However, a liability is not recognized for commitments unconditionally cancellable by the Company. The allowance for credit losses on unfunded commitments is determined by estimating future draws and applying the expected loss rates on those draws, and is included in accrued expenses and other liabilities on the Company’s consolidated statements of financial condition.

Management of the Company considers the accounting policy relating to the allowance for credit losses to be a critical accounting estimate given the uncertainty in evaluating the level of the allowance required to cover management’s estimate of all expected credit losses over the expected contractual life of our loan portfolios. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolios, in light of the factors then prevailing, may result in significant changes in the allowance for credit losses in those future periods. While management’s current evaluation of the allowance for credit losses indicates that the allowance is appropriate, the allowance may need to be increased under adversely different conditions or assumptions. Going forward, the impact of utilizing the CECL approach to calculate the allowance for credit losses will be significantly influenced by the composition, characteristics and quality of our loan portfolios, as well as the prevailing economic conditions and forecasts utilized. Material changes to these and other relevant factors may result in greater volatility to the allowance for credit losses, and therefore, greater volatility to our reported earnings. This critical accounting policy and its application are periodically reviewed with the Audit Committee and the Board of Directors.

The Company’s policies on the CECL method for allowance for credit losses are disclosed in Note 1 to the consolidated financial statements presented in this Quarterly Report on Form 10-Q. Refer to Note 2 to the consolidated financial statements in this Quarterly Report on Form 10-Q for recently adopted accounting standards.

Comparison of Financial Condition at December 31, 2017September 30, 2023 and June 30, 20172023


ASSETS


Total assets of the Company were $1.1remained unchanged at $2.7 billion at December 31, 2017 as compared to $982.3 millionSeptember 30, 2023 and at June 30, 2017, an increase of $78.5 million, or 8.0%.2023.  Securities available-for-sale and held-to-maturity amounted to $342.1 million,remained unchanged at December 31, 2017 as compared to $315.3 million,$1.0 billion at September 30, 2023 and at June 30, 2017, an increase of $26.82023. Net loans receivable increased $40.4 million, or 8.5%.   Net loans grew by $39.7 million, or 6.4%2.9%, to $663.9 million$1.43 billion at December 31, 2017 as compared to $624.2 millionSeptember 30, 2023 from $1.39 billion at June 30, 2017.2023.


CASH AND CASH EQUIVALENTS


Total cash and cash equivalents increased $11.4 million to $27.7for the Company were $130.3 million at December 31, 2017 from $16.3September 30, 2023 and $196.4 million at June 30, 2017.2023. 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 held excess cash balances for both quarter ends in response to the recent industry turmoil and has continued to maintain strong capital and liquidity positions as of September 30, 2023.


33
SECURITIES


Securities available-for-sale and held-to-maturity increased $26.8 million, or 8.5%, to $342.1 millionremained unchanged at December 31, 2017 as compared to $315.3 million$1.0 billion at September 30, 2023 and at June 30, 2017.2023. Securities purchases totaled $74.8$85.0 million during the sixthree months ended December 31, 2017September 30, 2023 and consisted primarily of $62.1$84.3 million of state and political subdivision securities. Principal pay-downs and maturities during the three months ended September 30, 2023 amounted to $66.1 million, primarily consisting of $61.5 million of state and political subdivision securities, $10.4and $3.8 million of mortgage backed securities, and $2.3 million of U.S. government sponsored enterprises securities. Principal pay-downs and maturities during the six months amounted to $47.1 million, of which $9.2 million were mortgage-backed securities, $36.4 million were state and political subdivision securities, and $1.5 million were corporate debt securities. At December 31, 2017, 58.3%September 30, 2023, 62.6% of our securities portfolio consisted of state and political subdivision securities to take advantage of tax savings and to promote Greene County Bancorp, Inc.’sthe Company’s participation in the communities in which it operates. As a result of a reduction in the maximum Federal income tax rate from 35% to 21% effective January 1, 2018, the tax benefits to be received on these tax-exempt securities will be reduced in the future, resulting in a lower yield to be realized on these securities on a fully-taxable equivalent basis.  With this lower yield, the unrealized gain on state and political subdivision securities has decreased at December 31, 2017.  Mortgage-backed securities, and asset-backedwhich represent 27.5% of our securities held within the portfolio at September 30, 2023, do not contain sub-prime loans and are not exposed to the credit risk associated with such lending.


  December 31, 2017  June 30, 2017 
(Dollars in thousands) Balance  
Percentage
of portfolio
  Balance  
Percentage
of portfolio
 
Securities available-for-sale:            
U.S. government sponsored enterprises $5,623   1.6% $4,717   1.5%
State and political subdivisions  71,720   21.0   58,112   18.4 
Mortgage-backed securities-residential  4,096   1.2   4,913   1.5 
Mortgage-backed securities-multifamily  20,071   5.9   20,765   6.6 
Asset-backed securities  -   -   1   0.0 
Corporate debt securities  1,257   0.4   2,791   1.0 
Total debt securities  102,767   30.1   91,299   29.0 
Equity securities  202   0.1   184   0.1 
Total securities available-for-sale  102,969   30.2   91,483   29.1 
Securities held-to-maturity:                
U.S. government sponsored enterprises  7,246   2.1   6,000   1.9 
State and political subdivisions  127,725   37.3   115,805   36.7 
Mortgage-backed securities-residential  7,479   2.2   10,798   3.4 
Mortgage-backed securities-multifamily  94,183   27.5   88,702   28.1 
Corporate debt securities  1,000   0.3   1,000   0.3 
Other securities  1,507   0.4   1,525   0.5 
Total securities held-to-maturity  239,140   69.8   223,830   70.9 
Total securities $342,109   100.0% $315,313   100.0%
The Company adopted ASU 2016-13 (CECL) as of July 1, 2023. For periods subsequent to adoption, the allowance for credit losses (ACL) is calculated under the CECL methodology and the resulting provision for credit losses includes expected credit losses on securities held-to-maturity. The periods prior to adoption did not have an allowance for credit losses under applicable Generally Accepted Accounting Principles (GAAP) for those periods.

U.S. Treasury and mortgage-backed securities are issued by U.S. government entities and agencies. These securities are either explicitly and/or implicitly guaranteed by the U.S. government as to timely repayment of principal and interest, are highly rated by major rating agencies, and have a long history of zero credit losses. Therefore, the Company determined a zero credit loss assumption, and did not calculate or record an allowance for credit loss for these securities. An allowance for credit losses on investment securities held-to-maturity has been recorded for certain municipal securities issued by state and political subdivisions and corporate debt securities to account for expected lifetime credit loss using the CECL methodology.

The following table summarizes the securities portfolio by classification as a percentage of the portfolio. The values are reported at the balance sheet carrying value, as of September 30, 2023 and June 30, 2023. Refer to financial statements Note 3 Securities for the complete fair value of securities.

  September 30, 2023  June 30, 2023 
(Dollars in thousands) Balance  Percentage of portfolio  Balance  Percentage of portfolio 
Securities available-for-sale (at fair value):            
U.S. Government sponsored enterprises 
$
10,467
   
1.0
%
 
$
10,823
   
1.1
%
U.S. Treasury securities  
16,208
   
1.6
   
16,500
   
1.6
 
State and political subdivisions  
171,620
   
16.8
   
138,011
   
13.7
 
Mortgage-backed securities-residential  
23,592
   
2.3
   
25,601
   
2.5
 
Mortgage-backed securities-multifamily  
68,884
   
6.7
   
72,086
   
7.2
 
Corporate debt securities  
17,945
   
1.8
   
18,112
   
1.8
 
Total securities available-for-sale  
308,716
   
30.2
   
281,133
   
27.9
 
Securities held-to-maturity (at amortized cost):                
U.S. treasury securities  
33,726
   
3.3
   
33,705
   
3.4
 
State and political subdivisions  
467,647
   
45.8
   
478,756
   
47.5
 
Mortgage-backed securities-residential  
35,927
   
3.5
   
37,186
   
3.7
 
Mortgage-backed securities-multifamily  
152,504
   
15.0
   
155,046
   
15.4
 
Corporate debt securities  
21,876
   
2.2
   
21,632
   
2.1
 
Other securities  
36
   
0.0
   
38
   
0.0
 
Total securities held-to-maturity  
711,716
   
69.8
   
726,363
   
72.1
 
Total securities 
$
1,020,432
   
100.0
%
 
$
1,007,496
   
100.0
%

32There was no ACL recorded on available-for-sale securities as of either period presented as each of the securities in the  portfolio are investment grade, current as to principal and interest and their price changes are consistent with interest and credit spreads when adjusting for convexity, rating, and industry differences.

Held-to-maturity securities are evaluated for credit losses on a quarterly basis under the CECL methodology. At September 30, 2023, the ACL on held-to-maturity securities was $498,000.

34
LOANS


Net loans receivable increased $39.7$40.4 million, or 6.4%2.9%, to $663.9 million$1.43 billion at December 31, 2017September 30, 2023 from $624.2 million$1.39 billion at June 30, 2017.2023.  The loan growth experienced during the six month periodthree months consisted primarily of $14.3$27.9 million in commercial real estate loans, $17.8 million in commercial loans, $4.5 million in multi-family real estate loans, and $6.7 million in residential real estate loans. This growth was partially offset by a decrease of $3.5loans, $2.6 million in home equity loans and $2.3 million in commercial construction loans. We believe that theThe Company continues to experience loan growth as a result of continued low interest rate environmentgrowth in its customer base and strong customer satisfaction from personal service continued to enhanceits relationships with other financial institutions in originating loan growth. If long term rates begin to rise, theparticipations.  The Company anticipates some slowdown in new loan demand as well as refinancing activities.  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.  A significant decline in home values, however, in the Company’s markets could have a negative effect on the consolidated results of operations, as any such decline in home values would likely lead to a decrease in residential real estate loans and new home equity loan originations and increased delinquencies and defaults in both the consumer home equity loan and the residential real estate loan portfolios and result in increased losses in these portfolios.  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.


  September 30, 2023  June 30, 2023 
(Dollars in thousands) Balance  Percentage of Portfolio  Balance  Percentage of Portfolio 
Residential real estate 
$
397,626
   
27.5
%
 
$
390,944
   
27.8
%
Commercial real estate  
910,165
   
62.8
   
882,388
   
62.6
 
Home equity  
25,467
   
1.8
   
22,887
   
1.6
 
Consumer  
4,778
   
0.3
   
4,646
   
0.3
 
Commercial loans  
110,304
   
7.6
   
108,001
   
7.7
 
Total gross loans(1)(2)
  
1,448,340
   
100.0
%
  
1,408,866
   
100.0
%
Allowance for credit losses on loans  
(20,249
)
      
(21,212
)
    
Total net loans 
$
1,428,091
      
$
1,387,654
     
(Dollars in thousands) December 31, 2017  June 30, 2017 
  Balance  
Percentage of
Portfolio
  Balance  
Percentage of
Portfolio
 
Residential real estate $252,015   37.4% $245,331   38.7%
Residential construction and land  7,391   1.1   7,160   1.1 
Multi-family  13,707   2.0   9,199   1.4 
Commercial real estate  272,253   40.4   257,964   40.7 
Commercial construction  24,901   3.7   28,430   4.5 
Home equity  21,090   3.1   21,076   3.3 
Consumer installment  4,925   0.7   4,790   0.8 
Commercial loans  78,153   11.6   60,381   9.5 
Total gross loans  674,435   100.0%  634,331   100.0%
Allowance for loan losses  (11,352)      (11,022)    
Deferred fees and costs  790       878     
Total net loans $663,873      $624,187     

(1)
Loan balances include net deferred fees/cost of ($62,000) and $75,000 at September 30, 2023 and at June 30, 2023, respectively.
(2)
Loan balances exclude accrued interest receivable of $6.0 million and $5.5 million at September 30, 2023 and at June 30, 2023, respectively, which is included in accrued interest receivable in the consolidated statement of financial condition.


ALLOWANCE FOR LOANCREDIT LOSSES ON LOANS


The allowance for loancredit losses on loans (the “ACL”) is established through a provision made periodically by charges or benefits to the provision for loan losses based on management’s evaluationcredit losses. This is necessary to maintain the ACL at a level which management believes is reasonably reflective of the risk inherent inoverall loss expected over the loan portfolio, the compositioncontractual life of the loan portfolio, specific impairedportfolio. Management has an established ACL policy to govern the use of judgments exercised in evaluating the ACL required to estimate the expected credit losses over the expected contractual life of the loan portfolios and the material effect that such judgments can have on the consolidated financial statements. While management uses available information to recognize losses on loans, additions or reductions to the allowance may fluctuate from one reporting period to another. These fluctuations are reflective of changes in the reasonable and supportable forecast, analysis of loans evaluated individually, and/or changes in management’s assessment of factors.

The ACL is based on the results of life of loan quantitative models, reserves associated with collateral-dependent loans evaluated individually and adjustments for the impact of current economic conditions.  Such evaluation,conditions not accounted for in the quantitative models. The discounted cash flow methodology is used to calculate the CECL reserve for the residential real estate, commercial real estate, home equity and commercial loan segments. The remaining life method is utilized to determine the CECL reserve for the consumer loan segment. The Company elected to use the practical expedient to evaluate loans individually, if they are collateral dependent loans that are on nonaccrual status with a balance of $250,000 or greater, 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 theis consistent with regulatory requirements. The fair value of the underlying collateral economic conditions, payment status offor collateral dependent loans less selling expenses will be compared to the loan historical loanbalance to determine if a CECL reserve is required. A qualitative factor framework has been developed to adjust the quantitative loss experience and other factors that warrant recognition in providingrates 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 themasset-specific risk characteristics or current conditions at the time of their examination.  reporting date.

The Bank of Greene County considers smaller balance residential mortgages, home equity loans and installment loans to customers as small, homogeneous loans, which are evaluated for impairment collectively based on historical loss experience.  Larger balance residential and commercial mortgage and business loans are viewed individually and considered impaired 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 CountyCompany charges loans off against the allowance for loan lossesACL when it becomes evident that a loan cannot be collected within a reasonable amount of time or that it will cost the BankCompany 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,ACL, unless equitable arrangements are made. Included within consumer installment loan charge-offs and recoveries are deposit accounts that have been overdrawn in excess of 60 days. 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 lossesACL is increased by a provision for loancredit losses (which results in a charge to expense) and recoveries of loans previously charged off, and is reduced by charge-offs.

3335
Analysis
Additional information about the ACL is included in Note 4 to the consolidated financial statements. Management considers the ACL to be appropriate based on evaluation and analysis of the loan portfolio.

The ACL totaled $20.2 million at September 30, 2023, compared to $21.2 million at June 30, 2023 and $19.9 million at July 1, 2023. The ACL to total loans receivable was 1.40% at September 30, 2023 compared to 1.51% at June 30, 2023 and 1.42% at day-one CECL adoption (July 1, 2023). The ACL as of September 30, 2023 is consistent with the July 1, 2023 day-one ACL. The decrease in the ACL from June 30, 2023 to September 30, 2023 was primarily due to the CECL adoption.

The allowance for loancredit losses activityon unfunded commitments as of September 30, 2023 was $1.5 million.


  At or for the six months ended December 31, 
(Dollars in thousands) 2017  2016 
 Balance at the beginning of the period $11,022  $9,485 
Charge-offs:        
Residential real estate  71   90 
Consumer installment  177   141 
Commercial loans  157   - 
Total loans charged off  405   231 
         
Recoveries:        
Consumer installment  36   35 
Commercial loans  -   3 
Total recoveries  36   38 
         
Net charge-offs  369   193 
         
Provisions charged to operations  699   1,129 
Balance at the end of the period $11,352  $10,421 
         
Net charge-offs to average loans outstanding (annualized)  0.12%  0.07%
Net charge-offs to nonperforming assets (annualized)  16.16%  9.27%
Allowance for loan losses to nonperforming loans  309.91%  272.30%
Allowance for loan losses to total loans receivable  1.68%  1.73%

Nonaccrual Loans and Nonperforming Assets


Nonperforming assets consist of nonaccrual loans, loans over 90 days past due and still accruing, troubled loans that have modifications, foreclosed real estate and nonperforming securities. Loans are reviewedgenerally placed on a regular basis to assess collectability of all principal and interest payments due.  Management determines that a loan is impaired or nonperformingnonaccrual 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 ofpayments become 90 days past due, unless 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 questionablewell secured 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.  It should be noted that management does not evaluate all loans individually for impairment.  Generally, The Bank of Greene County considers residential mortgages, home equity loans and installment loans as small, homogeneous loans, which are evaluated for impairment collectively based on historical loan experience and other factors.  In contrast, large commercial mortgage, construction, multi-family, business loans and select larger balance residential mortgage loans are viewed individually and considered impaired 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 agreement.  The measurement of impaired loans is generally based on the fair value of the underlying collateral.  The majority of The Bank of Greene County loans, including most nonaccrual loans, are small homogenous loan types adequately supported by collateral.  Management considers the payment status of loans in the process of evaluatingcollection. A loan is not placed back on accrual status until the adequacy ofborrower has demonstrated the allowance for loan losses among other factors.  Basedability and willingness to make timely payments on this evaluation, a delinquent loan’s risk rating may be downgraded to either pass-watch, special mention, or substandard, and the allocation of the allowance for loan loss is based upon the risk associated with such designation.loan.  A loan does not have to be 90 days delinquent in order to be classified as nonperforming.nonaccrual, and may be placed on nonaccrual when circumstances indicate that the borrower may be unable to meet the contractual principal or interest payments. The threshold for evaluating classified and nonperforming loans specifically evaluated for individual credit loss is $250,000. Foreclosed real estate represents property acquired through foreclosure and is considered to be a nonperforming asset.vale lower of the carrying amount or fair value, less any estimated disposal costs.

34
Analysis of Nonaccrual Loans and Nonperforming Assets


(Dollars in thousands) September 30, 2023  June 30, 2023 
Nonaccrual loans:      
Residential real estate 
$
2,816
  
$
2,747
 
Commercial real estate  
1,307
   
1,318
 
Home equity  
52
   
54
 
Consumer installment  
43
   
63
 
Commercial  
1,256
   
1,276
 
Total nonaccrual loans 
$
5,474
  
$
5,458
 
Foreclosed real estate:        
Commercial  
302
   
302
 
Total foreclosed real estate  
302
   
302
 
Total nonperforming assets 
$
5,776
  
$
5,760
 
         
Total nonperforming assets of total assets  
0.21
%  
0.21
%
Total nonperforming loans to net loans  
0.38
%  
0.39
%
Allowance for credit losses on loans to nonperforming loans  
369.91
%  
388.64
%
Allowance for credit losses on loans to total loans receivable  
1.40
%  
1.51
%

(Dollars in thousands) December 31, 2017  June 30, 2017 
Nonaccruing loans:      
Residential real estate $1,752  $1,240 
Commercial real estate  1,108   1,452 
Commercial construction  176   176 
Home equity  333   218 
Consumer installment  10   10 
Commercial  284   476 
Total nonaccruing loans  3,663   3,572 
90 days & accruing        
Residential real estate  -   69 
Total 90 days & accruing  -   69 
Total nonperforming loans  3,663   3,641 
Foreclosed real estate:        
Residential real estate  79   - 
Commercial real estate  826   799 
Total foreclosed real estate  905   799 
Total nonperforming assets $4,568  $4,440 
         
Troubled debt restructuring:        
Nonperforming (included above) $594  $932 
Performing (accruing and excluded above)  1,556   916 
         
Total nonperforming assets as a percentage of total assets  0.43%  0.45%
Total nonperforming loans to net loans  0.55%  0.58%
At September 30, 2023 and June 30, 2023, there were no loans greater than 90 days and accruing.

The table below details additional information related to nonaccrual loans for the three and six months ended December 31:

  
For the three months
ended December 31,
  
For the six months
ended December 31
 
(In thousands) 2017  2016  2017  2016 
Interest income that would have been recorded if loans had been performing in accordance with original terms $59  $56  $137  $136 
Interest income that was recorded on nonaccrual loans  31   26   65   54 


Nonperforming assets amounted to $4.6$5.8 million at December 31, 2017September 30, 2023 and $4.4 million at June 30, 2017, an increase of $128,000 or 2.9%.2023.  Loans on nonaccrual status totaled $3.7$5.5 million at December 31, 2017September 30, 2023, of which $1.9there were three residential loans totaling $637,000 and two commercial real estate loans totaling $1.4 million that were in the process of foreclosure. At December 31, 2017, there were thirteen residential loans in the process of foreclosure totaling $1.3 million. Included in nonaccrual loans were $1.7$2.9 million of loans which were less than 90 days past due at December 31, 2017,September 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. Included in total loans past due were $66,000 of loans which were making payments pursuant to forbearance agreements.   Under the forbearance agreements, the customers have made arrangements with the Bank to bring the loans current over a specified period of time (resulting in an insignificant delay in repayment).  During this term of the forbearance agreement, the Bank has agreed not to continue foreclosure proceedings.  While the Bank makes every reasonable effort to work with the borrowers to collect amounts due, the number of loans in process of foreclosure has grown substantially over the past several years.  Loans on nonaccrual status totaled $3.6$5.5 million at June 30, 20172023 of which $1.6three residential real estate loans totaling $625,000 and two commercial real estate loans totaling $1.4 million were in the process of foreclosure. Included in nonaccrual loans were $1.9$3.1 million of loans which were less than 90 days past due at June 30, 2017,2023, 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.  Included in total loans past due were $179,000 of loans which were making payments pursuant to forbearance agreements.

3536
Impaired LoansDEPOSITS


The Company identifies impaired loansDeposits totaled $2.4 billion at both September 30, 2023 and measures the impairment in accordance with FASB ASC subtopic “Receivables – Loan Impairment”.  A loan is considered impairedat June 30, 2023. NOW deposits increased $28.4 million, or 1.6%, and noninterest-bearing deposits increased $7.0 million, or 4.4%, when it is probable that the borrower will be unable to repay the loan according to the original contractual terms of the loan agreement or the loan is restructured in a troubled debt restructuring.

The table below details additional information on impaired loans at December 31, 2017comparing September 30, 2023 and June 30, 2017:

(In thousands) December 31, 2017  June 30, 2017 
Balance of impaired loans, with a valuation allowance $2,732  $2,071 
Allowances relating to impaired loans included in allowance for loan losses  533   436 
Balance of impaired loans, without a valuation allowance  1,341   1,181 
Total impaired loans  4,073   3,252 

  
For the three months
ended December 31,
  
For the six months
ended December 31,
 
(In thousands) 2017  2016  2017  2016 
Average balance of impaired loans for the periods ended $3,931  $3,222  $3,816  $3,123 
Interest income recorded on impaired loans during the periods ended  27   24   49   52 
DEPOSITS

Total2023. Certificates of deposits increased to $920.8 million at December 31, 2017 from $859.5 million at June 30, 2017, an increase of $61.3decreased $16.3 million, or 7.1%. NOW deposits increased $59.5 million, or 15.2%12.7%, money market deposits increased $2.0decreased $14.1 million, or 1.7%12.3%, and savings deposits increased $8.1decreased $21.7 million, or 4.1% and noninterest-bearing deposits increased $3.4 million, or 3.6%7.2%, when comparing December 31, 2017September 30, 2023 and June 30, 2017. These increases were partially offset by a decrease2023.  As of September 30, 2023, the overall brokered deposit balance amounted to $62.7 million, which included $15.0 million of NOW deposits in the form of IntraFi Insured Network Deposits and $47.7 million of certificates of depositdeposits in the form of $11.9brokered certificates of deposits. As of June 30, 2023, the overall brokered deposits balance amounted to $60.0 million or 22.2%, when comparing December 31, 2017of brokered certificates of deposits. The Company maintained the increased level of brokered deposits to support overall liquidity and a higher cash position.

Major classifications of deposits at September 30, 2023 and June 30, 2017. Included within certificates of deposits at December 31, 2017 and June 30, 2017 were $3.9 million and $15.0 million, respectively, in brokered certificates of deposit. These increases were the result of a $39.9 million increase in municipal deposits at Greene County Commercial Bank, primarily from continued growth in new account relationships2023 are summarized as well as tax collection.follows:


(In thousands) September 30, 2023  Percentage of Portfolio  June 30, 2023  Percentage of Portfolio 
Noninterest-bearing deposits 
$
166,054
   
6.8
%
 
$
159,039
   
6.5
%
Certificates of deposit  
111,803
   
4.6
   
128,077
   
5.3
 
Savings deposits  
277,380
   
11.5
   
299,038
   
12.3
 
Money market deposits  
100,900
   
4.2
   
115,029
   
4.7
 
NOW deposits  
1,764,344
   
72.9
   
1,735,978
   
71.2
 
Total deposits 
$
2,420,481
   
100.0
%
 
$
2,437,161
   
100.0
%
(In thousands) 
December 31, 2017
  
Percentage of
Portfolio
  
June 30, 2017
  
Percentage of
Portfolio
 
Noninterest-bearing deposits $99,388   10.8% $95,929   11.2%
Certificates of deposit  41,826   4.6   53,742   6.3 
Savings deposits  205,426   22.3   197,288   22.9 
Money market deposits  121,838   13.2   119,806   13.9 
NOW deposits  452,273   49.1   392,770   45.7 
Total deposits $920,751   100.0% $859,535   100.0%


BORROWINGS


At December 31, 2017, TheSeptember 30, 2023, the Bank of Greene County had pledged approximately $273.7$579.8 million of its residential and commercial mortgage portfolio as collateral for borrowing and irrevocable stand-bymunicipal letters of credit at the Federal Home Loan Bank of New York (“FHLB”). The maximum amount of funding available from the FHLB was $225.1$368.2 million at December 31, 2017,September 30, 2023, of which $40.5there were $4.4 million interm fixed rate borrowings, and $44.0$190.0 million in irrevocable stand-bymunicipal letters of credit were outstanding at December 31, 2017.  There were $20.3 million ofand no short-term or overnight borrowings outstanding at December 31, 2017. The remaining $20.2 million consistedSeptember 30, 2023. There were no overnight borrowings at September 30, 2023 and June 30, 2023, respectively. Interest rates on overnight borrowings are determined at the time of borrowing. There were no long-term fixed rate, fixed term advances with a weighted average rate of 1.62% and a weighted average maturity of 25 months.at June 30, 2023. The $44.0$190.0 million of irrevocable stand-bymunicipal letters of credit with the FHLB have been issued to secure municipal transactional deposit accounts, on behalf of Greene County Commercial Bank.


The FHLB term fixed rate borrowing of $4.4 million has a stated rate of 5.7%, maturing September 2024. The Company received a corresponding credit related to the FHLB term fixed rate borrowing, from the “FHLB 0% Development Advance (ZDA) Program”, which effectively reduces the interest rate paid to zero percent.

The Bank of Greene County also pledges securities and certificates of deposit as collateral at the Federal Reserve Bank discount window for overnight borrowings. At December 31, 2017,September 30, 2023, approximately $1.3$23.7 million of collateral was available to be pledged against potential borrowings at the Federal Reserve Bank discount window.window the Bank Term Funding Program. There were no balances outstanding with the Federal Reserve Bank at December 31, 2017 or JuneSeptember 30, 2017.2023.
The Bank of Greene County has established unsecured lines of credit with Atlantic Central Bankers Bank and another financial institution for $6.0$15.0 million and $5.0 million, respectively. At December 31, 2017 and June 30, 2017, there were no balances outstanding on either of these lines of credit. Greene County Bancorp, Inc.two other financial institutions for $50.0 million. The Company has also established an unsecured line of credit with Atlantic Central Bankers Bank for $7.5 million. At December 31, 2017 and June 30, 2017 there were no balances outstanding on this line of credit. All of theseThe lines of credit provide for overnight borrowing and the interest rate is determined at the time of the borrowing. There were no borrowings outstanding with these lines of credit for both the Company and the Bank at September 30, 2023 and June 30, 2023.


ScheduledOn September 17, 2020, the Company entered into Subordinated Note Purchase Agreements with 14 qualified institutional investors, issued at 4.75% Fixed-to-Floating Rate due September 17, 2030, in the aggregate principal amount of $20.0 million, carried net of issuance costs of $424,000 amortized over a period of 60 months.  These notes are callable on September 15, 2025.  At September 30, 2023, there were $19.8 million of these Subordinated Note Purchases Agreements outstanding, net of issuance costs.

On September 15, 2021, the Company entered into Subordinated Note Purchase Agreements with 18 qualified institutional investors, issued at 3.00% Fixed-to-Floating Rate due September 15, 2031, in the aggregate principal amount of $30.0 million, carried net of issuance costs of $499,000 amortized over a period of 60 months.  These notes are callable on September 15, 2026. At September 30, 2023, there were $29.7 million of these Subordinated Note Purchases Agreements outstanding, net of issuance costs.

At September 30, 2023, there were no other long-term borrowings and therefore no scheduled maturities of long-term borrowings at December 31, 2017 were as follows:borrowings.


(In thousands)   
Within the twelve months ended December 31,   
2018 $5,000 
2019  3,500 
2020  6,500 
2021  2,950 
2022  2,200 
  $20,150 
37

EQUITY


Shareholders’ equity increased to $89.6$184.2 million at December 31, 2017September 30, 2023 from $83.5$183.3 million at June 30, 2017, as2023, resulting primarily from net income of $7.1$6.5 million, was partially offset by dividends declared and paid of $763,000, and  a $322,000$1.4 million, an increase in accumulated other comprehensive loss.loss of $3.7 million and the day-one CECL adoption impact of $510,000. Unrealized loss on available for sale securities increased at September 30, 2023 compared to June 30, 2023, as the market yields on bonds increased during the three months ended September 30, 2023.

The Federal Reserve raised their target benchmark interest rate in 2022 and into the third quarter of calendar year 2023, resulting in subsequent prime lending rate increases of 525 basis points, and a significant increase in market rates between March 2022 and September 2023. If market interest rates continue to rise, the fair value of the fixed income bond portfolio will decrease, resulting in additional unrealized losses, and depending on the extent of the rise in interest rates, the increase in unrealized losses could be significant. The non-credit portion of unrealized losses are recorded to Accumulated Other changesComprehensive Income, a component of Shareholders' Equity. A significant increase in equity,market rates may have a negative impact on book value per share. The Company's bond portfolio is expected to mature at par and therefore the unrealized losses in the portfolio that result from higher market interest rates will decrease as the bonds become closer to maturity. However, if the Company were required to sell investment securities with an increaseunrealized loss for any reason, including liquidity needs, the unrealized loss would become realized and reduce both net income for the reported period and regulatory capital, which as currently reported, excludes unrealized losses on investment securities.

On September 17, 2019, the Board of $25,000, wereDirectors of the resultCompany adopted a stock repurchase program. Under the repurchase program, the Company may repurchase up to 400,000 shares of options exercised withits common stock. Repurchases will be made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s 2008 Stock Option Plan.financial performance.  For the three months ended September 30, 2023, the Company did not repurchase any shares.

Selected Equity Data:   
  September 30, 2023  June 30, 2023 
Shareholders’ equity to total assets, at end of period  
6.85
%
  
6.79
%
Book value per share1
 
$
10.82
  
$
10.76
 
Closing market price of common stock 
$
24.05
  
$
29.80
 
         
  For the three months ended September 30, 
   
2023
   
2022
 
Average shareholders’ equity to average assets  
7.00
%
  
6.32
%
Dividend payout ratio1
  
21.05
%
  
13.21
%
Actual dividends paid to net income2
  
21.05
%
  
6.04
%
Selected Equity Data:
  December 31, 2017  June 30, 2017 
Shareholders’ equity to total assets, at end of period  8.44%  8.50%
         
Book value per share $10.53  $9.82 
Closing market price of common stock $32.60  $27.20 
  For the six months ended December 31, 
  2017  2016 
Average shareholders’ equity to average assets  8.49%  8.65%
Dividend payout ratio1
  23.21%  29.69%
Actual dividends paid to net income2
  10.73%  13.66%


1The dividend payout ratio has been calculated based on the dividends declared per share divided by basic earnings per share.  No adjustments have been made for dividends waived by Greene County Bancorp, MHC (“MHC”), the owner of 54.2%54.1% of the Company’s shares outstanding.
2 Dividends declared divided by net income. The MHC waived its right to receive dividends declared during the sixthree months December 31, 2021, March 31, 2022, September 30, 2022, December 31, 2022, March 31, 2023 and June 30, 2023. Dividends declared during the three months ended December 31, 2017June 30, 2022 and 2016.September 30, 2023 were paid to the MHC. The MHC’s ability to waive the receipt of dividends is dependent upon annual approval of its members as well as receiving the non-objection of the Federal Reserve Board.
Comparison of Operating Results for the Three and Six Months Ended December 31, 2017September 30, 2023 and 20162022


Average Balance Sheet


The following table sets forth certain information relating to Greene County Bancorp, Inc.the Company for the three and six months ended December 31, 2017September 30, 2023 and 2016.2022. For the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, are expressed both in dollars and rates.  No tax equivalent adjustments were made.  Average balances were based on daily averages. Average loan balances include nonperforming loans. The loan yields include net amortization of certain deferred fees and costs that are considered adjustments to yields.


  Three months ended December 31, 
  2017  2016 
(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 receivable, net1
 $658,990  $7,287   4.42% $578,184  $6,382   4.42%
Securities2
  340,403   2,016   2.37   298,137   2,061   2.77 
Interest-bearing bank balances and federal funds  27,159   87   1.28   3,872   5   0.52 
FHLB stock  1,689   30   7.10   2,289   36   6.29 
Total interest-earning assets  1,028,241   9,420   3.66%  882,482   8,484   3.85%
Cash and due from banks  8,933           7,829         
Allowance for loan losses  (11,167)          (10,110)        
Other noninterest-earning assets  18,362           18,074         
Total assets $1,044,369          $898,275         
                         
Interest-Bearing Liabilities:                        
Savings and money market deposits $324,300  $261   0.32% $298,967  $238   0.32%
NOW deposits  464,907   523   0.45   348,601   331   0.38 
Certificates of deposit  38,768   83   0.86   42,432   79   0.74 
Borrowings  22,783   93   1.63   36,107   105   1.16 
Total interest-bearing liabilities  850,758   960   0.45%  726,107   753   0.41%
Noninterest-bearing deposits  99,200           87,690         
Other noninterest-bearing liabilities  6,412           7,199         
Shareholders' equity  87,999           77,279         
Total liabilities and equity $1,044,369          $898,275         
                         
Net interest income     $8,460          $7,731     
Net interest rate spread          3.21%          3.44%
Net earnings assets $177,483          $156,375         
Net interest margin          3.29%          3.50%
Average interest-earning assets to average interest-bearing liabilities  120.86%          121.54%        
38
  Three months ended September 30, 
  2023  2022 
(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 receivable, net1
 
$
1,429,657
  
$
17,205
   
4.81
%
 
$
1,314,095
  
$
13,382
   
4.07
%
Securities non-taxable  
638,478
   
4,290
   
2.69
   
698,137
   
3,077
   
1.76
 
Securities taxable
  
400,024
   
2,224
   
2.22
   
433,522
   
2,120
   
1.96
 
Interest-bearing bank balances and federal funds  
64,719
   
916
   
5.66
   
5,471
   
27
   
1.97
 
FHLB stock  
2,040
   
37
   
7.25
   
3,254
   
34
   
4.18
 
Total interest-earning assets  
2,534,918
   
24,672
   
3.89
%
  
2,454,479
   
18,640
   
3.04
%
Cash and due from banks  
12,317
           
12,907
         
Allowance for credit losses on loans  
(20,001
)
          
(23,046
)
        
Allowance for credit losses on securities held-to-maturity  
(492
)
          
-
         
Other noninterest-earning assets  
97,787
           
90,701
         
Total assets 
$
2,624,529
          
$
2,535,041
         
                         
Interest-Bearing Liabilities:                        
Savings and money market deposits 
$
399,629
  
$
286
   
0.29
%
 
$
499,168
  
$
203
   
0.16
%
NOW deposits  
1,675,568
   
9,174
   
2.19
   
1,499,209
   
1,586
   
0.42
 
Certificates of deposit  
117,750
   
1,147
   
3.90
   
69,788
   
221
   
1.27
 
Borrowings  
58,997
   
626
   
4.24
   
94,129
   
796
   
3.38
 
Total interest-bearing liabilities  
2,251,944
   
11,233
   
2.00
%
  
2,162,294
   
2,806
   
0.52
%
Noninterest-bearing deposits  
158,278
           
184,216
         
Other noninterest-bearing liabilities  
30,653
           
28,213
         
Shareholders' equity  
183,654
           
160,318
         
Total liabilities and equity 
$
2,624,529
          
$
2,535,041
         
                         
Net interest income     
$
13,439
          
$
15,834
     
Net interest rate spread          
1.89
%
          
2.52
%
Net earnings assets 
$
282,974
          
$
292,185
         
Net interest margin          
2.12
%
          
2.58
%
Average interest-earning assets to average interest-bearing liabilities  
112.57
%          
113.51
%        
         
1Calculated net of deferred loan fees and costs, loan discounts, and loans in process.
2Includes tax-free securities, mortgage-backed securities, and asset-backed securities.
Taxable-equivalent net interest income and net interest margin 
For the three months ended
September 30,
 
(Dollars in thousands) 2023  2022 
Net interest income (GAAP) 
$
13,439
  
$
15,834
 
Tax-equivalent adjustment(1)
  
1,563
   
1,125
 
Net interest income (fully taxable-equivalent) 
$
15,002
  
$
16,959
 
         
Average interest-earning assets 
$
2,534,918
  
$
2,454,479
 
Net interest margin (fully taxable-equivalent)  
2.37
%
  
2.76
%

Taxable-equivalent net interest income and net interest margin
  For the three months ended December 31, 
(Dollars in thousands) 2017  2016 
Net interest income (GAAP) $8,460  $7,731 
Tax-equivalent adjustment(1)
  532   537 
Net interest income (fully taxable-equivalent) $8,992  $8,268 
         
Average interest-earning assets $1,028,241  $882,482 
Net interest margin (fully taxable-equivalent)  3.50%  3.75%


1Net interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if the Company’s investment in tax-exempt securities and loans had been subject to federal and New York State income taxes yielding the same after-tax income. The rate used for this adjustment was approximately 28.1% and 34%21% for federal income taxes and 3.62% and 3.32%4.44% for New York State income taxes for the periodperiods ended December 31, 2017September 30, 2023 and 2016,2022, respectively.

3839
  Six months ended December 31, 
  2017  2016 
(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 receivable, net1
 $649,121  $14,346   4.42% $560,427  $12,435   4.44%
Securities2
  334,645   4,005   2.39   300,023   3,794   2.53 
Interest-bearing bank balances and federal funds  16,035   99   1.23   2,486   8   0.64 
FHLB stock  1,838   59   6.42   2,574   61   4.74 
Total interest-earning assets  1,001,639   18,509   3.69%  865,510   16,298   3.77%
Cash and due from banks  9,115           7,847         
Allowance for loan losses  (11,117)          (9,845)        
Other noninterest-earning assets  18,575           18,153         
Total assets $1,018,212          $881,665         
                         
Interest-Bearing Liabilities:                        
Savings and money market deposits $321,304  $517   0.32% $295,218  $470   0.32%
NOW deposits  438,882   986   0.45   329,174   628   0.38 
Certificates of deposit  41,202   173   0.84   42,626   156   0.73 
Borrowings  25,566   203   1.59   42,449   226   1.06 
Total interest-bearing liabilities  826,954   1,879   0.45%  709,467   1,480   0.42%
Noninterest-bearing deposits  97,626           87,988         
Other noninterest-bearing liabilities  7,184           7,952         
Shareholders' equity  86,448           76,258         
Total liabilities and equity $1,018,212          $881,665         
                         
Net interest income     $16,630          $14,818     
Net interest rate spread          3.24%          3.35%
Net earnings assets $174,685          $156,043         
Net interest margin          3.32%          3.42%
Average interest-earning assets to average interest-bearing liabilities  121.12%          121.99%        

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

Non-GAAP taxable-equivalent net interest income and net interest margin
  For the six months ended December 31, 
(Dollars in thousands) 2017  2016 
Net interest income (GAAP) $16,630  $14,818 
Tax-equivalent adjustment(1)
  1,037   1,057 
Net interest income (fully taxable-equivalent) $17,667  $15,875 
         
Average interest-earning assets $1,001,639  $865,510 
Net interest margin (fully taxable-equivalent)  3.53%  3.67%

1Net interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if the Company’s investment in tax-exempt securities and loans had been subject to federal and New York State income taxes yielding the same after-tax income. The rate used for this adjustment was approximately 28.1% and 34% for federal income taxes and 3.62% and 3.32% for New York State income taxes for the period ended December 31, 2017 and 2016, respectively.
Rate / Volume Analysis


The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected Greene County Bancorp, Inc.’sthe Company’s interest income and interest expense during the periods indicated.  Information is provided in each category with respect to:
(i)
Change attributable to changes in volume (changes in volume multiplied by prior rate);

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

(iii)
The net change.
The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.


  Three months ended September 30, 
  2023 versus 2022 
  Increase/(Decrease)  Total 
  Due To  Increase/ 
(Dollars in thousands) Volume  Rate  (Decrease) 
Interest-earning Assets:         
Loans receivable, net1
 
$
1,246
  
$
2,577
  
$
3,823
 
Securities non-taxable  
(283
)
  
1,496
   
1,213
 
Securities taxable  
(169
)
  
273
   
104
 
Interest-bearing bank balances and federal funds  
758
   
131
   
889
 
FHLB stock  
(16
)
  
19
   
3
 
Total interest-earning assets  
1,536
   
4,496
   
6,032
 
             
Interest-Bearing Liabilities:            
Savings and money market deposits  
(48
)
  
131
   
83
 
NOW deposits  
206
   
7,382
   
7,588
 
Certificates of deposit  
231
   
695
   
926
 
Borrowings  
(342
)
  
172
   
(170
)
Total interest-bearing liabilities  
47
   
8,380
   
8,427
 
Net change in net interest income 
$
1,489
  
$
(3,884
)
 
$
(2,395
)
(Dollars in thousands) 
Three Months Ended December 31,
2017 versus 2016
  
Six Months Ended December 31,
2017 versus 2016
 
             
  
Increase/(Decrease)
Due To
  
Total
Increase/
(Decrease)
  
Increase/(Decrease)
Due To
  
Total
Increase/
(Decrease)
 
  Volume  Rate Volume  Rate
                   
Interest Earning Assets:                  
Loans receivable, net1
 $905  $-  $905  $1,967  $(56) $1,911 
Securities2
  273   (318)  (45)  427   (216)  211 
Interest-bearing bank balances and federal funds  66   16   82   78   13   91 
FHLB stock  (10)  4   (6)  (20)  18   (2)
Total interest-earning assets  1,234   (298)  936   2,452   (241)  2,211 
                         
Interest-Bearing Liabilities:                        
Savings and money market deposits  23   -   23   47   -   47 
NOW deposits  124   68   192   231   127   358 
Certificates of deposit  (7)  11   4   (5)  22   17 
Borrowings  (46)  34   (12)  (110)  87   (23)
Total interest-bearing liabilities  94   113   207   163   236   399 
Net change in net interest income $1,140  $(411) $729  $2,289  $(477) $1,812 
 
1 Calculated net of deferred loan fees, loan discounts, and loans in process.
2 Includes tax-free securities, mortgage-backed securities, and asset-backed securities.


GENERAL


Return on average assets and return on average equity are common methods of measuring operating results. Annualized return on average assets increaseddecreased to 1.39%0.99% for the three months ended December 31, 2017September 30, 2023 as compared to 1.30%1.43% for the three months ended December 31, 2016, and was 1.40% and 1.23% for the six months ended December 31, 2017 and 2016, respectively.September 30, 2022.  Annualized return on average equity increaseddecreased to 16.55%14.09% for the three months and 16.45% for the six months ended December 31, 2017September 30, 2023 as compared to 15.15%22.55% for the three months and 14.25% for the six months ended December 31, 2016.September 30, 2022.  The increasedecrease in return on average assets and return on average equity for the three months ended September 30, 2023 was primarily the result of growth inthe balance sheet growing at a faster rate than net income resulting from growth in earning assets.growth. Net income amounted to $3.6$6.5 million and $2.9$9.0 million for the three months ended December 31, 2017September 30, 2023 and 2016,2022, respectively, an increasea decrease of $714,000 or 24.4% and amounted to $7.1 million and $5.4 million for the six months ended December 31, 2017 and 2016, respectively, an increase of $1.7 million or 30.9%.$2.5 million. Average assets increased $146.1$89.5 million, or 16.3%3.5%, to $1.0$2.6 billion for the three months ended December 31, 2017September 30, 2023 as compared to $898.3$2.5 billion for the three months ended September 30, 2022. Average equity increased $23.3 million, or 14.6%, to $183.7 million for the three months ended December 31, 2016.  Average equity increased $10.7 million, or 13.8%,September 30, 2023 as compared to $88.0$160.3 million for the three months ended December 31, 2017 as compared to $77.3 million for the three months ended December 31, 2016. Average assets increased $136.5 million, or 15.5%, to $1.0 billion for the six months ended December 31, 2017 as compared to $881.7 million for the six months ended December 31, 2016.  Average equity increased $10.1 million, or 13.2%, to $86.4 million for the six months ended December 31, 2017 as compared to $76.3 million for the six months ended December 31, 2016.September 30, 2022.

INTEREST INCOME


Interest income amounted to $9.4$24.7 million for the three months ended December 31, 2017September 30, 2023 as compared to $8.5$18.6 million for the three months ended December 31, 2016,September 30, 2022, an increase of $936,000, or 11.0%.  Interest income amounted to $18.5 million for the six months ended December 31, 2017 as compared to $16.3 million for the six months ended December 31, 2016, an increase of $2.2$6.0 million, or 13.5%32.4%. The increase in average loanyields earned on loans and securities balances had the greatest impact on interest income when comparingincome. The average balances of loans also increased during the three and six months ended December 31, 2017 and 2016, which were offset by a decrease in the yield on loans and securities. comparative periods contributing to higher interest income.

40
Average loan balances increased $80.8 million and $88.7 million while the yield on loans remained unchanged and decreased two basis points when comparing the three and six months ended December 31, 2017 and 2016, respectively.   Average securities increased $42.3 million and $34.6$115.6 million and the yield on such securities decreased 40 basis points and 14 basis points when comparing the three and six months ended December 31, 2017 and 2016, respectively.  The lower yield on securities is the result of a decrease in prepayment penalty income on mortgage-backed securities, included in interest income, of $355,000 when comparing the three months ended December 31, 2017 and 2016 and $256,000 when comparing the six months ended December 31, 2017 and 2016.

INTEREST EXPENSE

Interest expense amounted to $960,000 for the three months ended December 31, 2017 as compared to $753,000 for the three months ended December 31, 2016, an increase of $207,000, or 27.5%. Interest expense amounted to $1.9 million for the six months ended December 31, 2017 as compared to $1.5 million for the six months ended December 31, 2016, an increase of $399,000, or 27.0%.  Increases in average balances on interest-bearing liabilities as well as an increase in rates paid on deposits contributed to the increase in overall interest expense.  As illustrated in the rate/volume table, interest expenseloans increased $94,000 and $163,000 when comparing the three and six months ended December 31, 2017 and 2016, respectively, due to a $124.7 million and $117.5 million increase in the average balances on interest-bearing liabilities when comparing these same periods.  The average rate paid on interest-bearing liabilities increased four basis points to 0.45% from 0.41% when comparing the three months ended December 31, 2017 and 2016, respectively, and increased three basis points to 0.45% from 0.42% when comparing the six months ended December 31, 2017 and 2016.

Average deposits increased $138.0 million and $134.4 million for the three and six months ended December 31, 2017 and 2016, respectively, as a result of continued growth across all three of our primary banking lines – retail, commercial and municipal.  The average rate paid on NOW deposits increased seven74 basis points when comparing the three months ended December 31, 2017September 30, 2023 and 2016, and the average balance of such accounts grew by $116.3 million when comparing these same periods. The average rate paid on NOW deposits increased seven basis points when comparing the six months ended December 31, 2017 and 2016, and the average balance of such accounts increased $109.7 million when comparing these same periods.2022. The average balance of savings and money market deposits increased $25.3securities decreased $93.2 million and $26.1 million when comparing the three and six months ended December 31, 2017 and 2016, respectively. The rates paidyield on savings and money market deposits remained unchanged when comparing the three and six months ended December 31, 2017 and 2016. The average balance of certificates of deposit decreased $3.6 million and $1.4 million when comparing the three and six months ended December 31, 2017 and 2016, respectively. The average rate paid on certificate of depositssuch securities increased 1267 basis points when comparing the three months ended December 31, 2017September 30, 2023 and 2016,2022.  Average interest-bearing bank balances and federal funds increased 11 basis points when comparing the six months ended December 31, 2017 and 2016. This increase in rate paid on certificates of deposit for the six months is the result of the promotion of a five year certificate product.

The average balance on borrowings decreased $13.3$59.2 million and the rateyield increased 47369 basis points when comparing the three months ended December 31, 2017September 30, 2023 and 2016.  The average balance on borrowings decreased $16.8 million and the rate increased 53 basis points when comparing the six months ended December 31, 2017 and 2016.  This was the result of a decrease in the average balance of short-term borrowings when comparing both the three and six month periods ended December 31, 2017 and 2016, resulting in a higher mix of longer term, higher rate borrowings.2022.


NET INTEREST INCOMEEXPENSE


Net interest income increased $729,000Interest expense amounted to $8.5$11.2 million for the three months ended December 31, 2017 from $7.7September 30, 2023 as compared to $2.8 million for the three months ended December 31, 2016. NetSeptember 30, 2022, an increase of $8.4 million, or 300.3%. The increase in the cost of funds on NOW deposits and certificates of deposit had the greatest impact on interest income increased $1.8 million to $16.6 million forexpense during the sixthree months ended December 31, 2017 from $14.8 million forSeptember 30, 2023, reflecting higher market interest rates when comparing the sixperiods.

The cost of NOW deposits increased 177 basis points, the cost of certificates of deposit increased 263 basis points, and the cost of savings and money market deposits increased 13 basis points when comparing the three months ended December 31, 2016.  These increasesSeptember 30, 2023 and 2022. The increase in net interest income were primarily the resultcost of theinterest-bearing liabilities was also due to growth in the average balance of interest-bearing liabilities of $89.7 million. This was due to an increase in NOW deposits of $176.4 million and an increase in average certificates of deposits of $48.0 million, offset by a decrease in average savings and money market deposits of $99.5 million and a decrease in average borrowings of $35.1 million when comparing the three months ended September 30, 2023 and 2022. Yields on interest-earning assets.

Net interest spread decreased 23 basis points to 3.21%assets and costs of interest-bearing deposits increased for the three months ended December 31, 2017 comparedSeptember 30, 2023, as the Federal Reserve Board raised interest rates throughout the calendar year 2022 and into the third quarter of calendar year 2023.

NET INTEREST INCOME

Net interest income decreased $2.4 million to 3.44%$13.4 million for the three months ended December 31, 2016. Net interest margin decreased 21 basis points to 3.29%September 30, 2023 from $15.8 million for the three months ended December 31, 2017 comparedSeptember 30, 2022. The decrease in net interest income was due to 3.50%an increase in the average balance of interest-bearing liabilities, which increased $89.7 million when comparing the three months ended September 30, 2023 and 2022, and increases in rates paid on interest-bearing liabilities, which increased 148 basis points when comparing the three months ended September 30, 2023 and 2022. The decrease in net interest income was partially offset by increases in the average balance of interest-earning assets, which increased $80.4 million when comparing the three months ended September 30, 2023 and 2022, and increases in interest rates on interest-earning assets, which increased 85 basis points when comparing the three months ended September 30, 2023 and 2022.

Net interest rate spread and margin both decreased when comparing the three months ended September 30, 2023 and 2022. Net interest rate spread decreased 63 basis points to 1.89% for the three months ended December 31, 2016.September 30, 2023 compared to 2.52% for the three months ended September 30, 2022. Net interest spread and margin decreased 11 and 1046 basis points to 3.24% and 3.32%, respectively,2.12% for the sixthree months ended December 31, 2017September 30, 2023 compared to 3.35% and 3.42%, respectively,2.58% for the sixthree months ended December 31, 2016.September 30, 2022. The decrease during the current quarter was due to the higher interest rate environment, which resulted in higher rates paid on deposits, resulting in higher interest expense. This was partially offset by increases in interest income on loans and securities, as they reprice at higher yields and the interest rates earned on new balances were higher than the historic low levels from the prior year period.
Net interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if the Company’s investment in tax-exempt securities and loans had been subject to federal and New York State income taxes yielding the same after-tax income. Tax equivalent net interest margin was 3.50%2.37% and 3.75%2.76% for the three months ended December 31, 2017September 30, 2023 and 2016, respectively. Tax equivalent net interest margin was 3.53% and 3.67% for the six months ended December 31, 2017 and 2016, respectively.  Tax equivalent net interest margin for the three and six months ended December 31, 2017 have been adjusted to reflect the Federal blended statutory tax rate applicable to our fiscal year 2018 of 28.1% resulting from the TCJA.  As a result of utilizing this lower statutory tax rate for the periods ended December 31, 2017, the tax equivalent net interest margin decreased six basis points for both the three and six months ended December 31, 2017.2022.


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


The Federal Reserve Board has raised rates since March of 2022. The rise in the federal funds rate is expected to have a positive impact to the Company’s interest spread and margin as the rates on new loans and securities purchased are at higher rates than in the prior year, however given how quickly the rate rise has been, it has not allowed the Company to reprice assets as quickly as deposits.

PROVISION FOR LOANCREDIT LOSSES ON LOANS


Management continues to closely monitor asset quality and adjust the level of the allowanceProvision 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. The provision for loancredit losses amounted to $352,000 and $586,000$457,000 for the three months ended December 31, 2017 and 2016, respectively.September 30, 2023. The provision for loancredit losses on loans amounted to $699,000 and $1.1 million for the six months ended December 31, 2017 and 2016, respectively.   Net charge-offs amounted to $98,000 and $141,000$462,000 for the three months ended December 31, 2017 and 2016, respectively, and amountedSeptember 30, 2023, compared to $369,000 and $193,000a benefit of $499,000 for the sixthree months ended December 31, 2017September 30, 2022. The loan provision for the three months ended September 30, 2023 was primarily due to the increase in gross loans and 2016, respectively.

Allowanceincreases in the qualitative factor adjustments. The allowance for loancredit losses on loans to total loans receivable decreased to 1.68% as of December 31, 2017 aswas 1.40% at September 30, 2023 compared to 1.74% as of1.51% at June 30, 2016,2023 and 1.73%1.42% at day-one CECL adoption (July 1, 2023).

41
Loans classified as substandard or special mention totaled $43.8 million at September 30, 2023 and $41.9 million at June 30, 2023, an increase of December 31, 2016. Nonperforming$1.9 million. There were no loans classified as doubtful or loss at September 30, 2023 or June 30, 2023.

Net charge-offs amounted to $3.7 million$93,000 and $3.6 million at December 31, 2017$115,000 for the three months ended September 30, 2023 and June2022, respectively, a decrease of $22,000. There were no significant charge-offs in any loan segment during the three months ended September 30, 2017,2023. Net charge-offs to average loans was 3 bps and 4 bps for the three months ended September 30, 2023 and 2022, respectively. At December 31, 2017 and June 30, 2017, respectively,Net charge-offs to nonperforming assets to total assets were 0.43%was 6.4% and 0.45%8.5% for the three months ended September 30, 2023 and nonperforming loans to net loans were 0.55% and 0.58%.  At December 31, 2016, nonperforming assets to total assets were 0.45% and nonperforming loans to net loans were 0.65%. The Company has not been an originator of “no documentation” mortgage loans, and the loan portfolio does not include any mortgage loans that the Company classifies as sub-prime.2022, respectively.


NONINTEREST INCOME


(Dollars in thousands) 
For the three months
ended September 30,
  
Change from
Prior Year
 
Noninterest income: 2023  2022  Amount  Percent 
Service charges on deposit accounts 
$
1,230
  
$
1,217
  
$
13
   
1.1
%
Debit card fees  
1,133
   
1,142
   
(9
)
  
(0.8
)
Investment services  
243
   
180
   
63
   
35.0
 
E-commerce fees  
29
   
26
   
3
   
11.5
 
Bank owned life insurance  
362
   
340
   
22
   
6.5
 
Other operating income  
302
   
193
   
109
   
56.5
 
Total noninterest income 
$
3,299
  
$
3,098
  
$
201
   
6.5
%
(In thousands) 
For the three months
ended December 31,
  Change from Prior Year  
For the six months
ended December 31,
  Change from Prior Year 
Noninterest income: 2017  2016  Amount  Percent  2017  2016  Amount  Percent 
Service charges on deposit accounts $934  $820  $114   13.90% $1,785  $1,593  $192   12.05%
Debit card fees  591   510   81   15.88   1,157   1,001   156   15.58 
Investment services  122   67   55   82.09   194   137   57   41.61 
E-commerce fees  35   31   4   12.90   73   63   10   15.87 
Other operating income  205   184   21   11.41   418   367   51   13.90 
Total noninterest income $1,887  $1,612  $275   17.06% $3,627  $3,161  $466   14.74%


Noninterest income increased $275,000,$201,000, or 17.1%6.5%, to $1.9$3.3 million for the three months ended December 31, 2017 asSeptember 30, 2023 compared to $1.6$3.1 million for the three months ended December 31, 2016.  Noninterest income increased $466,000, or 14.7%, to $3.6 millionSeptember 30, 2022. The increase for the six months ended December 31, 2017 as compared to $3.2 million for the six months ended December 31, 2016. These increases arethree month period was primarily due to increasesan increase in debit card feesinvestment service income and service chargesfee income earned on deposit accounts resulting from continued growth in the number of checking accounts with debit cards,customer interest rate swap contracts, as well as increased monthly or transactional service charges on deposit accounts.income from bank owned life insurance.


NONINTEREST EXPENSE


(Dollars in thousands) 
For the three months
ended September 30,
  
Change from
Prior Year
 
Noninterest expense: 2023  2022  Amount  Percent 
Salaries and employee benefits 
$
5,491
  
$
5,428
  
$
63
   
1.2
%
Occupancy expense  
537
   
524
   
13
   
2.5
 
Equipment and furniture expense  
138
   
158
   
(20
)
  
(12.7
)
Service and data processing fees  
591
   
702
   
(111
)
  
(15.8
)
Computer software, supplies and support  
511
   
381
   
130
   
34.1
 
Advertising and promotion  
97
   
76
   
21
   
27.6
 
FDIC insurance premiums  
312
   
242
   
70
   
28.9
 
Legal and professional fees  
383
   
451
   
(68
)
  
(15.1
)
Other  
785
   
835
   
(50
)
  
(6.0
)
Total noninterest expense 
$
8,845
  
$
8,797
  
$
48
   
0.5
%
(In thousands) 
For the three months
ended December 31
  Change from Prior Year  
For the six months
ended December 31,
  Change from Prior Year 
Noninterest expense: 2017  2016  Amount  Percent  2017  2016  Amount  Percent 
Salaries and employee benefits $3,110  $2,787  $323   11.59% $6,037  $5,455  $582   10.67%
Occupancy expense  355   339   16   4.72   711   719   (8)  (1.11)
Equipment and furniture expense  158   132   26   19.70   271   252   19   7.54 
Service and data processing fees  540   499   41   8.22   1,027   947   80   8.45 
Computer software, supplies and support  162   148   14   9.46   305   294   11   3.74 
Advertising and promotion  112   85   27   31.76   167   208   (41)  (19.71)
FDIC insurance premiums  93   93   -   0.00   186   207   (21)  (10.14)
Legal and professional fees  229   220   9   4.09   460   418   42   10.05 
Other  553   485   68   14.02   1,041   1,042   (1)  (0.10)
Total noninterest expense $5,312  $4,788  $524   10.94% $10,205  $9,542  $663   6.95%
Noninterest expense increased $524,000, or 10.9%, to $5.3remained unchanged at $8.8 million for the three months ended December 31, 2017 as compared to $4.8 million forSeptember 30, 2023 and September 30, 2022. During the three months ended December 31, 2016. Noninterest expense increased $663,000, or 7.0%, to $10.2 million for the six months ended December 31, 2017 as compared to $9.5 million for the six months ended December 31, 2016. These increases in noninterest expense are primarily the result ofSeptember 30, 2023, there was an increase in salariescomputer software and employee benefits expenses, resulting from additional staffing to support the Bank’s growth.  New positions were added within the Bank’s lending department, customer service center, investment center and for the Bank’s new branch in Copake, New York. The increase is alsosupplies of $130,000 due to higherthe Company purchasing new equipment to upgrade our IT infrastructure, which was partially offset by a decrease in service and data processing fees resulting from costs associated with offering more servicespaid, as compared to customers through online banking.the three months ended September 30, 2022.


INCOME TAXES


The provisionProvision for income taxes directly reflects the expected tax associated with the pre-tax income generated for the given yearperiod and certain regulatory requirements. The effective tax rate was 22.3% and 24.0% for the three and six months ended December 31, 2017, respectively compared to 26.3% and 25.7% for the three and six months ended December 31, 2016.   The decrease in the effective tax rate for the three and six months ended December 31, 2017 is primarily the result of a net tax benefit of $251,000 recognized at December 31, 2017 as a result of the enactment of the Tax Cuts and Jobs Act (“TCJA”) in December 2017. The effective tax rate decreased from 27.6% to 22.3%13.0% for the three months ended December 31, 2017September 30, 2023 and decreased from 26.6% to 24.0%15.0% for the sixthree months ended December 31, 2017 as a result of this adjustment.

September 30, 2022. The TCJA permanently reduces the maximum corporate incomestatutory tax rate from 35% to 21% effective for tax years beginning after December 31, 2017.  The lower corporate income tax rate means that deferred tax assets and liabilities that will be deductible or taxable in the future would need to be computed at the new tax rate.  Additionally, fiscal year-end taxpayers such as Greene County Bancorp, Inc. are required to utilize a “blended rate” in calculating the effective tax rate for the fiscal year based on a ratio utilizing the number of days at the 35% tax rate and the number of days at the 21% tax rate.  Greene County Bancorp, Inc.’s statutory blended rate for fiscal 2018 is approximately 28%. This statutory rate is impacted by the benefits derived from tax-exempt bond and loan income, the Company’s real estate investment trust subsidiary income, as well asand income received on the tax benefit derived from premiums paid to the Company’s pooled captivebank owned life insurance, subsidiary to arrive at the effective tax rate. The decrease in the current quarter’s effective tax rate was the result of an increase in tax-exempt income proportional to total income.


42
LIQUIDITY AND CAPITAL RESOURCES


Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates or prices such as interest rates, foreign currency exchange rates, commodity prices, and equity prices. Greene County Bancorp, Inc.’sThe Company’s most significant form of market risk is interest rate risk since the majority of Greene County Bancorp, Inc.’sthe Company’s assets and liabilities are sensitive to changes in interest rates.  Greene County Bancorp, Inc.’sThe Company’s primary sources of funds are deposits and proceeds from principal and interest payments on loans, mortgage-backed securities and debt securities, with lines of credit available through the Federal Home Loan Bank, and Atlantic Central Bankers Bank and two other financial institutions, as needed. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit outflows, mortgage prepayments, and lending activities are greatly influenced by general interest rates, economic conditions and competition.

The Bank At September 30, 2023, the Company had $130.3 million in cash and cash equivalents, representing 4.8% of Greene County’s unfunded loan commitmentstotal assets, and had $270.2 million available in unused lines of credit.

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. BTFP advances can be requested through March 11, 2024. The Company has not requested funding through the BTFP as of September 30, 2023, but has an established relationship with the Federal Reserve to take advantage of this program.

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 or through IntraFi’s one-way CDARS and ICS products, including IntraFi’s Insured Network Deposits (“IND”). The Banks can place and obtain brokered deposits from a national brokerage network up to 10% of total deposits, in the amount of $242.0 million based on policy. The Banks can also place and obtain brokered deposits from IntraFi up to 10% of total deposits, in the amount of $242.0 million based on policy. Additionally, both Banks participate in the IntraFi reciprocal (“two-way”) CDARS and the ICS products, which provides for reciprocal two-way transactions among other institutions, facilitated by IntraFi, for the purpose of maximizing FDIC insurance for depositors.

As of September 30, 2023, the overall brokered deposit balance amounted to $62.7 million, which included $15.0 million of NOW deposits in the form of IntraFi IND and $47.7 million of certificates of deposits in the form of brokered certificates of deposits. As of June 30, 2023, the overall brokered deposits balance amounted to $60.0 million of brokered certificates of deposits. The Company maintained the increased level of brokered deposits to support overall liquidity and a higher cash position.

  At September 30, 2023, liquidity measures were as follows:

Cash equivalents/(deposits plus short term borrowings)
5.37
%
(Cash equivalents plus unpledged securities)/(deposits plus short term borrowings)
8.43
%
(Cash equivalents plus unpledged securities plus additional borrowing capacity)/(deposits plus short term borrowings)
19.58
%

The Company’s off-balance sheet credit are as followsexposures at December 31, 2017:September 30, 2023:


(In thousands)   
Unfunded loan commitments
 
$
126,149
 
Unused lines of credit
  
94,164
 
Standby letters of credit
  
179
 
Total commitments
 
$
220,492
 

(In thousands) 2017 
Unfunded loan commitments $52,544 
Unused lines of credit  55,525 
Total commitments $108,069 

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

43

The Bank of Greene County and its wholly-owned subsidiary, Greene County Commercial Bank, met all applicable regulatory capital requirements at December 31, 2017September 30, 2023 and June 30, 2017.  Consolidated shareholders’ equity represented 8.4% of total assets at December 31, 2017 and 8.5% at June 30, 2017.2023.


              To Be Well       
        For Capital  Capitalized Under       
        Adequacy  Prompt Corrective  Capital Conservation 
(Dollars in thousands) Actual  Purposes  Action Provisions  Buffer 
The Bank of Greene County Amount  Ratio  Amount  Ratio  Amount  Ratio  Actual  Required 
As of September 30, 2023:                        
                         
Total risk-based capital 
$
261,189
   
16.6
%
 
$
126,247
   
8.0
%
 
$
157,809
   
10.0
%
  
8.55
%
  
2.50
%
Tier 1 risk-based capital  
241,432
   
15.3
   
94,686
   
6.0
   
126,247
   
8.0
   
9.30
   
2.50
 
Common equity tier 1 capital  
241,432
   
15.3
   
71,014
   
4.5
   
102,576
   
6.5
   
10.80
   
2.50
 
Tier 1 leverage ratio  
241,432
   
9.1
   
106,075
   
4.0
   
132,594
   
5.0
   
5.10
   
2.50
 
                                 
As of June 30, 2023:                                
                                 
Total risk-based capital 
$
249,165
   
16.5
%
 
$
121,020
   
8.0
%
 
$
151,275
   
10.0
%
  8.47
%
  
2.50
%
Tier 1 risk-based capital  
230,228
   
15.2
   
90,765
   
6.0
   
121,020
   
8.0
   9.22   
2.50
 
Common equity tier 1 capital  
230,228
   
15.2
   
68,074
   
4.5
   
98,328
   
6.5
   10.72   
2.50
 
Tier 1 leverage ratio  
230,228
   
8.7
   
106,141
   
4.0
   
132,676
   
5.0
   4.68   
2.50
 
(Dollars in thousands) Actual  
For Capital
Adequacy Purposes
  
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
  
Capital Conservation
Buffer
 
The Bank of Greene County
 Amount  Ratio  Amount  Ratio  Amount  Ratio  Actual  Required 
                         
As of December 31, 2017:                        
                         
Total risk-based capital $96,076   15.7% $48,936   8.0% $61,170   10.0%  7.706%  1.250%
Tier 1 risk-based capital  88,321   14.4   36,702   6.0   48,936   8.0   8.439   1.250 
Common equity tier 1 capital  88,321   14.4   27,527   4.5   39,761   6.5   9.939   1.250 
Tier 1 leverage ratio  88,321   8.5   41,747   4.0   52,184   5.0   4.462   1.250 
                                 
As of June 30, 2017:                                
                                 
Total risk-based capital $87,719   15.8% $44,433   8.0% $55,542   10.0%  7.794%  1.250%
Tier 1 risk-based capital  80,671   14.5   33,325   6.0   44,433   8.0   8.525   1.250 
Common equity tier 1 capital  80,671   14.5   24,994   4.5   36,102   6.5   10.024   1.250 
Tier 1 leverage ratio  80,671   8.5   38,056   4.0   47,571   5.0   4.479   1.250 
                         
Greene County Commercial Bank
 
                         
As of December 31, 2017:                        
                         
Total risk-based capital $32,552   42.9% $6,069   8.0% $7,587   10.0%  34.907%  1.250%
Tier 1 risk-based capital  32,552   42.9   4,552   6.0   6,069   8.0   36.907   1.250 
Common equity tier 1 capital  32,552   42.9   3,414   4.5   4,931   6.5   38.407   1.250 
Tier 1 leverage ratio  32,552   8.31   15,675   4.0   19,593   5.0   4.307   1.250 
                                 
As of June 30, 2017:                                
                                 
Total risk-based capital $30,095   40.1% $6,011   8.0% $7,514   10.0%  32.053%  1.250%
Tier 1 risk-based capital  30,095   40.1   4,508   6.0   6,011   8.0   34.053   1.250 
Common equity tier 1 capital  30,095   40.1   3,381   4.5   4,884   6.5   35.550   1.250 
Tier 1 leverage ratio  30,095   9.6   12,508   4.0   15,635   5.0   5.624   1.250 

Greene County Commercial Bank                        
As of September 30, 2023:                        
                         
Total risk-based capital 
$
105,641
   
44.0
%
 
$
19,188
   
8.0
%
 
$
23,985
   
10.0
%
  
36.00
%
  
2.50
%
Tier 1 risk-based capital  
105,641
   
44.0
   
14,391
   
6.0
   
19,188
   
8.0
   
38.00
   
2.50
 
Common equity tier 1 capital  
105,641
   
44.0
   
10,793
   
4.5
   
15,590
   
6.5
   
39.50
   
2.50
 
Tier 1 leverage ratio  
105,641
   
9.4
   
44,771
   
4.0
   
55,964
   
5.0
   
5.44
   
2.50
 
                                 
As of June 30, 2023:                                
                                 
Total risk-based capital 
$
104,781
   
46.6
%
 
$
17,975
   
8.0
%
 
$
22,469
   
10.0
%
  38.63
%
  2.50%
Tier 1 risk-based capital  
104,781
   
46.6
   
13,481
   
6.0
   
17,975
   
8.0
   40.63   2.50 
Common equity tier 1 capital  
104,781
   
46.6
   
10,111
   
4.5
   
14,605
   
6.5
   42.13   2.50 
Tier 1 leverage ratio  
104,781
   
9.1
   
45,958
   
4.0
   
57,447
   
5.0
   5.12   2.50 


Item 3.Quantitative and Qualitative Disclosures About Market Risk


Not applicable to smaller reporting companies.

Item 4.Controls and Procedures


Under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the  Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and in timely altering them to material information relating to the Company (or its consolidated subsidiaries) required to be filed in its periodic SEC filings.

44
During the quarter ended September 30, 2023, the Company implemented new CECL accounting policies, procedures, and controls as part of its adoption of ASU No. 2016-13 and subsequent ASU’s issued to amend ASC Topic 326. There has beenwere no change other changes in the Company's internal control over financial reporting in connection with the quarterly evaluation that occurred during the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.


44
Part II.Other Information

 Item 1.
Legal Proceedings
Greene County Bancorp, Inc.The Company and its subsidiaries are, not engaged in any materialfrom time to time, parties to various legal proceedings atarising out of their businesses. Except as noted below, management believes there are no such legal proceedings pending or threatened against the present time.Company or its subsidiaries, if determined adversely, would have a material adverse effect on the business, consolidated financial condition, results of operations or cash flows of the Company or any of its subsidiaries. See Note 13 – Commitments and Contingent Liabilities to the Notes to the unaudited financial statements for a description of a current lawsuit in which the Company has been named a party.

Item 1A.
Risk Factors
Not applicable to smaller reporting companies.



Item 2.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

a)
Not applicable

b)
Not applicable

c)Not applicable
On September 17, 2019, the Board of Directors of the Company adopted a stock repurchase program.  Under the repurchase program, the Company is authorized to repurchase up to 400,000 shares of its common stock. Repurchases will be made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. There were no additional share repurchases during the quarter ended September 30, 2023.


Item 3.
Item 3.
Defaults Upon Senior Securities
Not applicableapplicable.

Item 4.
Item 4.
Mine Safety Disclosures
Not applicableapplicable.

Item 5.
Item 5.
Other Information

a)
Not applicable

b)
There were no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors during the period covered by this Form 10-Q.


Item 6.
Exhibits


Exhibits
Exhibits3.1
 Greene County Bancorp, Inc. Stock Holding Company Charter as amended on January 19, 2023 (filed as Exhibit 3.1 to Registrant’s Form 10-Q, filed on February 10, 2023 and incorporated herein by reference).
Certification of Chief Executive Officer, adopted pursuant to Rule 13a-14(a)/15d-14(a)
Certification of Chief Financial Officer, adopted pursuant to Rule 13a-14(a)/15d-14(a)
Statement of Chief Executive Officer, furnished pursuant to U.S.C. Section 1350
Statement of Chief Financial Officer, furnished pursuant to U.S.C. Section 1350
101
The following materials from Greene County Bancorp, Inc. Form 10-Q for the quarter ended December 31, 2017,September 30, 2023, formatted in Inline Extensible Business Reporting Language (XBRL)(iXBRL): (i) the Consolidated Statements of Income,Financial Condition, (ii) the Consolidated Statements of Financial Condition,Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows and (iv) related notes, tagged as blocks of text.Notes to Consolidated Financial Statements, (detail tagged).
104Cover Page Integrative Data File (formatted in iXBRL and included in exhibit 101).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned thereunto duly authorized.

Greene County Bancorp, Inc.
Date:  February 14, 2018
By: /s/ Donald E. Gibson


Date:  November 13, 2023

By: /s/ Donald E. Gibson

Donald E. Gibson
President and Chief Executive Officer

Date:  February 14, 2018
By: /s/ Michelle M. Plummer
Date:  November 13, 2023


By: /s/ Michelle M. Plummer

Michelle M. Plummer, CPA, CGMA
Senior Executive Vice President, Chief Financial Officer, and Chief Operating Officer


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