~~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~~

2023

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

Commission File Number: 0-25165

GREENE COUNTY BANCORP, INC.

(Exact ~~name~~Name of ~~registrant~~Registrant as ~~specified~~Specified 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's~~Registrant’s telephone number, including area code: (518) 943-2600

~~Check~~Securities registered pursuant to Section 12(b) of the Act:

Title of class	Trading symbol	Name 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,~~8, 2024, the registrant had ~~8,513,614~~17,026,828 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	~~8-29~~ 8-32

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~30-44~~ 33-47

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44 47

Item 4.	Controls and Procedures	44 48

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	45 48

Item 1A.	Risk Factors	45 48

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45 48

Item 3.	Defaults Upon Senior Securities	45 48

Item 4.	Mine Safety Disclosures	45 48

Item 5.	Other Information	45 48

Item 6.	Exhibits	45 49

	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)~~	50

Index

Greene County Bancorp, Inc.

Consolidated Statements of Financial Condition

At December 31, ~~2017~~2023 and June 30, ~~2017~~2023

(Unaudited)

(In thousands, except share and per share amounts)

ASSETS	December 31, 2023			June 30, 2023
Cash and due from banks	$	12,147		$	15,305
Interest-bearing deposits		163,933			181,140
Total cash and cash equivalents		176,080			196,445

Long-term certificates of deposit		3,822			4,576
Securities available-for-sale, at fair value		307,809			281,133
Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $485 at December 31, 2023		700,853			726,363
Equity securities, at fair value		325			306
Federal Home Loan Bank stock, at cost		7,654			1,682

Loans receivable		1,457,175			1,408,866
Allowance for credit losses on loans		(20,309	)		(21,212	)
Net loans receivable		1,436,866			1,387,654

Premises and equipment, net		15,232			15,028
Bank-owned life insurance		56,003			55,063
Accrued interest receivable		14,499			12,249
Foreclosed real estate		302			302
Prepaid expenses and other assets		17,243			17,482
Total assets	$	2,736,688		$	2,698,283

LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits	$	137,424		$	159,039
Interest-bearing deposits		2,197,413			2,278,122
Total deposits		2,334,837			2,437,161

Borrowings from Federal Home Loan Bank, short-term		125,000			-
Borrowings from Federal Home Loan Bank, long-term		4,374			-
Subordinated notes payable, net		49,588			49,495
Accrued expenses and other liabilities		27,593			28,344
Total liabilities		2,541,392			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 December 31, 2023 and June 30, 2023; Outstanding – 17,026,828 shares at December 31, 2023, and June 30, 2023		1,722			1,722
Additional paid-in capital		10,156			10,156
Retained earnings		203,396			193,721
Accumulated other comprehensive loss		(19,070	)		(21,408	)
Treasury stock, at cost 195,852 shares at December 31, 2023, and June 30, 2023		(908	)		(908	)
Total shareholders’ equity		195,296			183,283
Total liabilities and shareholders’ equity	$	2,736,688		$	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

Index

Greene County Bancorp, Inc.

Consolidated Statements of Income

For the Three and Six Months Ended December 31, ~~2017~~2023 and ~~2016~~2022

(Unaudited)

(In thousands, except share and per share amounts)

	For the three months ended December 31,					For the six months ended December 31,
	2023		2022			2023		2022
Interest income:
Loans	$	17,776	$	14,801		$	34,981	$	28,183
Investment securities - taxable		805		690			1,573		1,354
Mortgage-backed securities		1,573		1,364			3,066		2,854
Investment securities - tax exempt		4,334		3,504			8,624		6,581
Interest-bearing deposits and federal funds sold		1,105		169			2,021		196
Total interest income		25,593		20,528			50,265		39,168

Interest expense:
Interest on deposits		12,558		3,738			23,165		5,748
Interest on borrowings		647		867			1,273		1,663
Total interest expense		13,205		4,605			24,438		7,411

Net interest income		12,388		15,923			25,827		31,757
Provision for credit losses		170		244			627		(255	)
Net interest income after provision for credit losses		12,218		15,679			25,200		32,012

Noninterest income:
Service charges on deposit accounts		1,227		1,234			2,457		2,451
Debit card fees		1,120		1,138			2,253		2,280
Investment services		206		198			449		378
E-commerce fees		30		29			59		55
Bank-owned life insurance		574		340			936		680
Net loss on sale of available-for-sale securities		-		(251	)		-		(251	)
Other operating income		321		207			623		400
Total noninterest income		3,478		2,895			6,777		5,993

Noninterest expense:
Salaries and employee benefits		5,654		5,449			11,145		10,877
Occupancy expense		593		513			1,130		1,037
Equipment and furniture expense		238		221			376		379
Service and data processing fees		614		664			1,205		1,366
Computer software, supplies and support		471		369			982		750
Advertising and promotion		102		145			199		221
FDIC insurance premiums		314		205			626		447
Legal and professional fees		417		1,697			800		2,148
Other		923		688			1,708		1,523
Total noninterest expense		9,326		9,951			18,171		18,748

Income before provision for income taxes		6,370		8,623			13,806		19,257
Provision for income taxes		663		1,425			1,630		3,023
Net income	$	5,707	$	7,198		$	12,176	$	16,234

Basic and diluted earnings per share	$	0.34	$	0.42		$	0.72	$	0.95
Basic and diluted average shares outstanding		17,026,828		17,026,828			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

Index

Greene County Bancorp, Inc.

Consolidated Statements of Comprehensive Income

For the Three and Six Months Ended December 31, ~~2017~~2023 and ~~2016~~2022

(Unaudited)

(In thousands)

	For the three months ended December 31,				For the six months ended December 31,
	2023		2022		2023		2022
Net Income	$	5,707	$	7,198	$	12,176	$	16,234
Other comprehensive income (loss):
Unrealized holding gain (losses) on available-for-sale securities, gross		8,257		2,445		3,192		(6,587	)
Tax effect		2,207		654		854		(1,760	)
Unrealized holding gain (losses) on available-for-sale securities, net		6,050		1,791		2,338		(4,827	)

Reclassification adjustment for loss on sale of available-for-sale securities realized in net income, gross		-		251		-		251
Tax effect		-		67		-		67
Reclassification adjustment for loss on sale of available-for-sale securities realized in net income, net		-		184		-		184

Total other comprehensive income (loss), net of taxes		6,050		1,975		2,338		(4,643	)

Comprehensive income	$	11,757	$	9,173	$	14,514	$	11,591

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.

Index

Greene County Bancorp, Inc.

Consolidated Statements of Changes in Shareholders’ Equity

For the Three Months Ended December 31, 2023 and 2022

(Unaudited)

(In thousands)

	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Shareholders’ Equity
Balance at September 30, 2023	$	1,722	$	10,156	$	198,318		$	(25,120	)	$	(908	)	$	184,168
Dividends declared						(629	)								(629	)
Net income						5,707									5,707
Other comprehensive income, net of taxes									6,050						6,050
Balance at December 31, 2023	$	1,722	$	10,156	$	203,396		$	(19,070	)	$	(908	)	$	195,296

	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Shareholders’ Equity
Balance at September 30, 2022	$	1,722	$	10,156	$	173,617		$	(25,001	)	$	(908	)	$	159,586
Dividends declared						(552	)								(552	)
Net income						7,198									7,198
Other comprehensive income, net of taxes									1,975						1,975
Balance at December 31, 2022	$	1,722	$	10,156	$	180,263		$	(23,026	)	$	(908	)	$	168,207

Greene County Bancorp, Inc.

Consolidated Statements of Changes in Shareholders’ Equity

For the Six Months Ended December 31, ~~2017~~2023 and ~~2016~~2022

(Unaudited)

(In thousands)

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, 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						(1,991	)								(1,991	)
Net income						12,176									12,176
Other comprehensive income, net of taxes									2,338						2,338
Balance at December 31, 2023	$	1,722	$	10,156	$	203,396		$	(19,070	)	$	(908	)	$	195,296

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

	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						(1,098	)								(1,098	)
Net income						16,234									16,234
Other comprehensive loss, net of taxes									(4,643	)					(4,643	)
Balance at December 31, 2022	$	1,722	$	10,156	$	180,263		$	(23,026	)	$	(908	)	$	168,207

See notes to consolidated financial statements.

Index

Greene County Bancorp, Inc.

Consolidated Statements of Cash Flows

For the Six Months Ended December 31, ~~2017~~2023 and ~~2016~~2022

(Unaudited)

(In thousands)

	2023			2022
Cash flows from operating activities:
Net Income	$	12,176		$	16,234
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		440			429
Deferred income tax (benefit) expense		(48	)		671
Net amortization of investment premiums and discounts		657			1,410
Net amortization of deferred loan costs and fees		177			101
Amortization of subordinated debt issuance costs		93			93
Provision for credit losses		627			(255	)
Bank-owned life insurance income		(936	)		(680	)
Net loss on sale of available-for-sale securities		-			251
Net gain on equity securities		(19	)		(8	)
Net loss on sale of foreclosed real estate		-			5
Net increase (decrease) in accrued income taxes		678			(2,119	)
Net increase in accrued interest receivable		(2,250	)		(3,151	)
Net increase in prepaid expenses and other assets		(1,060	)		(238	)
Net decrease in accrued expense and other liabilities		(2,275	)		(2,701	)
Net cash provided by operating activities		8,260			10,042

Cash flows from investing activities:
Securities available-for-sale:
Proceeds from maturities		82,091			129,742
Proceeds from sale of securities		-			1,675
Purchases of securities		(107,484	)		(75,377	)
Proceeds from principal payments on securities		1,757			9,764
Securities held-to-maturity:
Proceeds from maturities		27,168			36,451
Purchases of securities		(13,824	)		(32,162	)
Proceeds from principal payments on securities		11,185			14,247
Net (purchase) redemption of Federal Home Loan Bank Stock		(5,972	)		644
Purchase of long-term certificate of deposit		-			(245	)
Maturity of long-term certificates of deposit		745			245
Surrender of bank owned life insurance		23,100			-
Purchase of bank owned life insurance		(23,104	)		-
Net increase in loans receivable		(48,702	)		(138,357	)
Proceeds from sale of foreclosed real estate		-			63
Purchases of premises and equipment		(644	)		(517	)
Net cash used in investing activities		(53,684	)		(53,827	)

Cash flows from financing activities
Net increase (decrease) in short-term FHLB advances		125,000			(16,100	)
Proceeds from long-term FHLB advances		4,374			-
Payment of cash dividends		(1,991	)		(1,098	)
Net (decrease) increase in deposits		(102,324	)		52,790
Net cash provided by financing activities		25,059			35,592

Net decrease in cash and cash equivalents		(20,365	)		(8,193	)
Cash and cash equivalents at beginning of period		196,445			69,009
Cash and cash equivalents at end of period	$	176,080		$	60,816

Cash paid during period for:
Interest	$	24,354		$	7,198
Income taxes	$	1,000		$	4,471

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

Index

Greene County Bancorp, Inc.

Notes to Consolidated Financial Statements

At and for the Three and Six Months Ended December 31, ~~2017~~2023 and ~~2016~~2022

~~(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, ~~2017~~2023 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, ~~2017~~2023 and ~~2016~~2022 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. ~~Amounts~~Certain previous years’ amounts in the ~~prior year’s~~unaudited 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, ~~2017~~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 relate~~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. 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 estimate~~increased 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.’s~~Company’s primary business is the ownership and operation of its ~~subsidiaries, The~~subsidiaries. At December 31, 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 ~~within~~consisting of the Hudson Valley ~~Region~~and 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’s~~the 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.is~~Ltd. was formed as a New York corporation that has elected under the Internal Revenue Code to be a real estate investment ~~trust, which holds~~trust. Currently, certain mortgages and loan notes ~~which were originated through~~held by the Bank are transferred and ~~serviced~~beneficially owned by Greene Property Holdings, Ltd. The Bank ~~of Greene County.~~continues to service these loans.

~~Index~~

~~(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 recognize~~credit losses on loans ~~future additions~~and on unfunded commitments.

Interest-bearing deposits

Included within interest bearing deposits, is $23.1 million of restricted cash. The restriction is due to the surrender of bank owned life insurance during the quarter ended December 31, 2023.

Index

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 or~~conditions; 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.

Index

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 part~~expense in other noninterest expense. The estimate includes consideration of ~~their examination process, periodically review~~ the ~~Allowance. Such authorities may require~~likelihood 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 ~~severity~~following segments of unfunded commitments exposure; home equity line of credits, commercial line of credits, consumer loans, the residential and ~~duration~~commercial 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 ~~intent~~respective reserve percentage calculated in the allowance for credit losses on loans to calculate a reserve on unfunded commitments.

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 ~~ability~~political 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.

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 ~~Company~~decline in value is attributable to ~~hold~~credit 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 specific~~are 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, intent~~credit 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 ~~the~~an impaired AFS debt security, ~~whether~~or if it is more likely than not wethat the Company will be required to sell the security ~~before recovery, whether~~prior 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.

Index

(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 ~~ratings~~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) 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. Securities~~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 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 loss~~entity 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 deemed~~are 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 down~~reported 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 consisted~~In 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

Index

~~Securities at June~~In 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 consisted~~2023, 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 December 31, 2023
(In thousands)	Amortized Cost⁽¹⁾		Unrealized Gains		Unrealized Losses		Fair Value
U.S. government sponsored enterprises	$	13,048	$	-	$	1,989	$	11,059
U.S. Treasury securities		18,292		-		1,575		16,717
State and political subdivisions		162,736		1,099		1		163,834
Mortgage-backed securities-residential		27,925		-		3,540		24,385
Mortgage-backed securities-multi-family		90,805		-		17,557		73,248
Corporate debt securities		19,831		41		1,306		18,566
Total securities available-for-sale	$	332,637	$	1,140	$	25,968	$	307,809

	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 $3.6 million and $2.9 million at December 31, 2023 and June 30, 2023, respectively, which is included in accrued interest receivable in the consolidated statements of financial condition.

There was no allowance for credit losses on securities available-for-sale at the quarter ended December 31, 2023.

Index

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

	At December 31, 2023
(In thousands)	Amortized Cost⁽¹⁾		Unrealized Gains		Unrealized Losses		Fair Value		Allowance⁽²⁾		Net Carrying Value
U.S. Treasury securities	$	33,747	$	-	$	1,808	$	31,939	$	-	$	33,747
State and political subdivisions		463,515		6,243		31,654		438,104		46		463,469
Mortgage-backed securities-residential		34,912		-		2,969		31,943		-		34,912
Mortgage-backed securities-multi-family		145,915		-		17,282		128,633		-		145,915
Corporate debt securities		23,212		5		2,660		20,557		438		22,774
Other securities		37		-		-		37		1		36
Total securities held-to-maturity	$	701,338	$	6,248	$	56,373	$	651,213	$	485	$	700,853

	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 $4.5 million and $3.9 million at December 31, 2023 and June 30, 2023, respectively, which is included in accrued interest receivable in the consolidated statements 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 December 31, 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. AtAs of December 31, ~~2017,~~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.

Index

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

(In thousands)	Three months ended December 31, 2023			Six months ended December 31, 2023
Balance beginning of period	$	498		$	-
Adoption of ASU 2016-13 (CECL) on July 1, 2023		-			503
Benefit for credit losses		(13	)		(18	)
Balance end of period	$	485		$	485

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.~~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	$	-	$	-		-	$	11,059	$	1,989		5	$	11,059	$	1,989		5
U.S. Treasury securities		778		41		2		15,939		1,534		6		16,717		1,575		8
State and political subdivisions		-		-		-		83		1		1		83		1		1
Mortgage-backed securities-residential		-		-		-		24,379		3,540		26		24,379		3,540		26
Mortgage-backed securities-multi-family		-		-		-		73,248		17,557		31		73,248		17,557		31
Corporate debt securities		-		-		-		16,623		1,306		16		16,623		1,306		16
Total securities available-for-sale		778		41		2		141,331		25,927		85		142,109		25,968		87
Securities held-to-maturity:
U.S. Treasury securities		-		-		-		31,939		1,808		8		31,939		1,808		8
State and political subdivisions		11,853		182		131		298,626		31,472		2,149		310,479		31,654		2,280
Mortgage-backed securities-residential		3		-		2		31,940		2,969		27		31,943		2,969		29
Mortgage-backed securities-multi-family		-		-		-		128,633		17,282		52		128,633		17,282		52
Corporate debt securities		3,090		409		3		16,582		2,251		16		19,672		2,660		19
Total securities held-to-maturity		14,946		591		136		507,720		55,782		2,252		522,666		56,373		2,388
Total securities	$	15,724	$	632		138	$	649,051	$	81,709		2,337	$	664,775	$	82,341		2,475

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

~~Index~~

	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

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.

Index

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, ~~2017 or 2016.~~2023 and 2022, respectively. During the three and six months ended December 31, ~~2017 and 2016,~~2023, there were no sales of securities and no gains or losses were ~~recognized. There was no other-than-temporary impairment loss recognized during~~recognized. During the three and six months ended December 31, ~~2017 and 2016.~~2022, a loss of $251,000 was recognized from one sale of an available-for-sale security. The proceeds were used to fund higher yielding loans.

~~Index~~

The estimated fair values of debt securities at December 31, ~~2017,~~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	$	163,173	$	164,266
After one year through five years		40,328		37,375
After five years through ten years		8,906		7,342
After ten years		1,500		1,193
Total securities available-for-sale		213,907		210,176
Mortgage-backed and asset-backed securities		118,730		97,633
Total securities available-for-sale		332,637		307,809

Securities held-to-maturity
Within one year		59,515		59,094
After one year through five years		164,587		160,857
After five years through ten years		157,796		147,834
After ten years		138,613		122,852
Total securities held-to-maturity		520,511		490,637
Mortgage-backed securities		180,827		160,576
Total securities held-to-maturity		701,338		651,213
Total securities	$	1,033,975	$	959,022

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, ~~2017~~2023 and June 30, ~~2017, respectively,~~2023, securities with an aggregate fair value of ~~$334.2~~$809.1 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 County~~the Commercial Bank. At December 31, ~~2017~~2023 and June 30, ~~2017,~~2023, securities with an aggregate fair value of ~~$1.3~~$24.3 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, ~~2017~~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. ~~Impairment~~Estimated 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 charge~~credit loss was recorded during the three and six months ended December 31, ~~2017~~2023 or ~~2016.~~2022.

Index

~~(5)~~

~~Loans and Allowance for Loan Losses~~

(4)Loans and Allowance for Credit Losses on Loans

~~Loan~~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 ~~and classes~~ at December 31, ~~2017~~2023 are as follows:

(In thousands)	December 31, 2023
Residential real estate	$	401,656
Commercial real estate		911,731
Home equity		26,167
Consumer		4,691
Commercial		112,930
Total gross loans⁽¹⁾⁽²⁾		1,457,175
Allowance for credit losses on loans		(20,309	)
Loans receivable, net	$	1,436,866

(1)

Loan balances include net deferred fees/cost of $54,000 at December 31, 2023.

(2)

Loan balances exclude accrued interest receivable of $6.4 million at December 31, 2023, which is included in accrued interest receivable in the consolidated statement of financial condition.

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. Loans on nonaccrual status totaled $5.6 million at December 31, 2023, of which there were two residential loans totaling $449,000 and two commercial real estate loans totaling $1.4 million that were in the process of foreclosure. Included in nonaccrual loans were $1.7 million of loans which were less than 90 days past due at December 31, 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, ~~2017~~2023 of which three 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 $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 six months ended, December 31, 2023, included $403,000 in loan repayments, $19,000 in loans returning to performing status, $46,000 in charge-offs or transfers to foreclosed, and $665,000 of loans placed into nonperforming status.

The following table sets forth information regarding delinquent and/or nonaccrual loans at December 31, 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	$	3,470	$	609	$	1,323	$	5,402	$	396,254	$	401,656	$	2,524
Commercial real estate		1,829		54		1,247		3,130		908,601		911,731		1,682
Home equity		300		35		13		348		25,819		26,167		50
Consumer		13		-		-		13		4,678		4,691		-
Commercial loans		7		-		1,392		1,399		111,531		112,930		1,392
Total gross loans	$	5,619	$	698	$	3,975	$	10,292	$	1,446,883	$	1,457,175	$	5,648

Index

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 ~~summarized~~collateral 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 December 31, 2023
(In thousands)	Residential Real Estate		Commercial Real Estate		Home Equity		Consumer			Commercial			Total
Balance at September 30, 2023	$	3,869	$	12,356	$	188	$	490		$	3,346		$	20,249
Charge-offs		-		-		-		(154	)		(6	)		(160	)
Recoveries		-		-		-		28			9			37
Provision		141		167		4		122			(251	)		183
Balance at December 31, 2023	$	4,010	$	12,523	$	192	$	486		$	3,098		$	20,309

	Activity for the six months ended December 31, 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		-		-			-		(276	)		(13	)		(289	)
Recoveries		-		1			-		54			18			73
Provision		34		572			29		239			(229	)		645
Balance at December 31, 2023	$	4,010	$	12,523		$	192	$	486		$	3,098		$	20,309

The allowance for credit losses on unfunded commitments as of December 31, 2023 was $1.6 million.

Index

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 County~~the 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 of~~Residential 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 assets~~are graded as either ~~Substandard~~nonperforming or ~~Doubtful, it~~performing. Nonperforming loans are loans that are generally ~~establishes a specific valuation allowance~~over 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.

~~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 loans~~residences 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 County~~the 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 County~~the 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 County~~the Company does not hold the first mortgage. The ~~Bank of Greene County~~Company may stand in a secondary position in the event of collateral liquidation resulting in a greater chance of insufficiency to meet all obligations.

~~Index~~

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 County~~Company completes inspections during the construction phase prior to any disbursements. The ~~Bank of Greene County~~Company 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 County~~the 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. 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.

~~Loan balances by internal 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

Index

~~Loan balances by internal~~

The following tables illustrate the Company’s credit quality ~~indicator at June 30, 2017 are shown below.~~by loan class by vintage:

(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

	At December 31, 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	$	25,674	$	60,830	$	96,270	$	83,565	$	33,900	$	98,868	$	-	$	25	$	399,132
Non-performing		-		-		-		185		173		2,166		-		-		2,524
Total residential real estate		25,674		60,830		96,270		83,750		34,073		101,034		-		25		401,656
Current period gross charge-offs		-		-		-		-		-		-		-		-		-

Commercial real estate
By internally assigned grade:
Pass		50,679		212,331		248,273		129,556		78,840		150,593		4,563		246		875,081
Special mention		-		1,120		5,602		311		442		6,448		652		-		14,575
Substandard		332		1,114		-		598		4,655		15,303		73		-		22,075
Total commercial real estate		51,011		214,565		253,875		130,465		83,937		172,344		5,288		246		911,731
Current period gross charge-offs		-		-		-		-		-		-		-		-		-

Home equity
By payment activity status:
Performing		3,298		3,088		362		498		327		1,558		16,932		54		26,117
Non-performing		-		-		-		-		-		2		48		-		50
Total home equity		3,298		3,088		362		498		327		1,560		16,980		54		26,167
Current period gross charge-offs		-		-		-		-		-		-		-		-		-

Consumer
By payment activity status:
Performing		1,445		1,586		923		401		159		92		85		-		4,691
Non-performing		-		-		-		-		-		-		-		-		-
Total Consumer		1,445		1,586		923		401		159		92		85		-		4,691
Current period gross charge-offs		204		13		47		4		-		-		8		-		276

Commercial
By internally assigned grade:
Pass		6,653		11,536		15,134		15,786		5,970		19,435		26,468		-		100,982
Special mention		-		-		55		-		-		456		4,352		-		4,863
Substandard		-		-		1,794		1,273		93		1,283		2,642		-		7,085
Total Commercial	$	6,653	$	11,536	$	16,983	$	17,059	$	6,063	$	21,174	$	33,462	$	-	$	112,930
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	13	$	-	$	13

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~~2023.

Individually Evaluated Loans

As of December 31, ~~2017 compared~~2023, collateral dependent loans evaluated individually had an amortized cost basis of $5.8 million, with an allowance for credit losses on loans of $2.0 million.

Index

Loan Modifications to ~~June 30, 2017 represented loans which, based on updated annual review, indicated weaknesses~~Borrowers Experiencing Financial Difficulties

As mentioned in ~~borrowers’ cash flow, warranting management’s closer monitoring. At December 31, 2017, all~~Note 2 Recent Accounting Pronouncements, the Company’s July 1, 2023 adoption of ~~these loans were performing~~ASU 2022-02 eliminates the recognition and ~~management believes that~~measurement of TDRs. Upon adoption of this guidance, 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~~recognize an ~~accrual basis. A~~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 ~~not placed back on accrual status until~~restructured. The adoption of ASU 2022-02 results in a change to reporting for loan modifications to borrowers experiencing financial difficulties. With the ~~borrower has demonstrated the ability and willingness to make timely payments~~adoption of ASU 2022-02 these modifications require enhanced reporting on the ~~loan. A~~type of modifications granted and the financial magnitude of the concessions granted. When the Company modifies a loan ~~does not have to be 90 days delinquent~~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 ~~order to be classified as nonaccrual. Nonaccrual~~scheduled payment amount; or principal forgiveness.

There were no loans ~~consisted primarily of loans secured by real estate at~~during the six months ended December 31, ~~2017~~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 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 millionclasses 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 due2023 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, but have a recent history of delinquency greater than 90 days past due.~~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

~~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

Index

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 County~~Company had no accruing loans delinquent ~~more than~~ 90 days ~~totaling $0 and $69,000~~or 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 ~~loan~~loans current within a specified time period and ~~has~~have 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.

~~Index~~

The tables below detail additional information on impaired loans at the date or periods indicated:

		As of December 31, 2017						For the three months ended December 31, 2017				For the six months ended December 31, 2017					At June 30, 2023						For the three months ended December 31, 2022				For the six months ended December 31, 2022
(In thousands)		Recorded Investment		Unpaid Principal		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized			Recorded Investment		Unpaid Principal		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:	With no related allowance recorded:															With no related allowance recorded:
Residential real estate																	$	1,020	$	1,020	$	-	$	923	$	2	$	954	$	2
Commercial real estate		$	801	$	801	$	-	$	803	$	7	$	805	$	15			1,518		1,518		-		372		6		218		8
Home equity			181		181		-		181		-		182		-			-		-		-		128		-		128		-
Consumer Installment																		-		-		-		4		-		5		1
Commercial loans			359		359		-		361		-		303		-			334		334		-		341		4		343		8
Impaired loans with no allowance			1,341		1,341		-		1,345		7		1,290		15			2,872		2,872		-		1,768		12		1,648		19

With an allowance recorded:
Residential real estate			1,819		1,819		348		1,668		15		1,602		26			2,086		2,086		597		2,301		5		2,120		7
Commercial real estate			413		413		101		418		-		424		-			3,777		3,777		245		3,805		41		3,517		73
Commercial construction			176		176		22		176		-		176		-			-		-		-		102		-		102		-
Home equity			324		324		62		324		5		324		8			-		-		-		-		-		160		4
Commercial loans																		1,572		1,572		1,171		2,591		11		2,799		27
Impaired loans with allowance			2,732		2,732		533		2,586		20		2,526		34			7,435		7,435		2,013		8,799		57		8,698		111

Total impaired:
Residential real estate			1,819		1,819		348		1,668		15		1,602		26			3,106		3,106		597		3,224		7		3,074		9
Commercial real estate			1,214		1,214		101		1,221		7		1,229		15			5,295		5,295		245		4,177		47		3,735		81
Commercial construction			176		176		22		176		-		176		-			-		-		-		102		-		102		-
Home equity			505		505		62		505		5		506		8			-		-		-		128		-		288		4
Consumer Installment																		-		-		-		4		-		5		1
Commercial loans			359		359		-		361		-		303		-			1,906		1,906		1,171		2,932		15		3,142		35
Total impaired loans		$	4,073	$	4,073	$	533	$	3,931	$	27	$	3,816	$	49		$	10,307	$	10,307	$	2,013	$	10,567	$	69	$	10,346	$	130

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

17Prior 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.

Index

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~~was one commercial loan in the amount of $379,000 that had been modified as a troubled debt restructuring during the three months ended ~~December~~September 30, 2022 that subsequently defaulted during the quarter ended March 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.~~

2023. There were no other loans that had been modified as a troubled debt restructuring during the twelve months prior to June 30, ~~2017~~2022 or ~~2016~~2021, which have subsequently defaulted during the ~~three and six~~twelve months ended ~~December 31, 2017~~June 30, 2023 or ~~2016, respectively.~~2022.

~~Allowance for Loan Losses~~

The allowance for loan losses is established through a provision for loan losses based on management’s evaluation of the risk inherent in the loan portfolio, the composition of the loan portfolio, specific impaired loans and current economic conditions. Such evaluation, which includes a review of certain identified loans on which full collectability may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, payment status of the loan, historical loan loss experience and other factors that warrant recognition in providing for the loan loss allowance. In addition, various regulatory agencies, as an integral part of their examination process, periodically review The Bank of Greene County’s allowance for loan losses. Such agencies may require The Bank of Greene County to recognize additions to the allowance based on their judgment about information available to them at the time of their examination. The Bank of Greene County 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 that loss can be reasonably estimated.

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

	Activity for the three months ended December 31, 2022
(In thousands)	Balance at September 30, 2022		Charge-offs		Recoveries		Provision			Balance at December 31, 2022
Residential real estate	$	2,471	$	-	$	2	$	19		$	2,492
Residential construction and land		177		-		-		16			193
Multi-family		159		-		-		8			167
Commercial real estate		15,392		-		-		58			15,450
Commercial construction		1,044		-		-		56			1,100
Home equity		44		-		-		(6	)		38
Consumer installment		274		137		29		118			284
Commercial loans		2,586		7		11		(25	)		2,565
Total	$	22,147	$	144	$	42	$	244		$	22,289

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, 2022
(In thousands)	Balance at June 30, 2022		Charge-offs		Recoveries		Provision			Balance at December 31, 2022
Residential real estate	$	2,373	$	-	$	5	$	114		$	2,492
Residential construction and land		141		-		-		52			193
Multi-family		119		-		-		48			167
Commercial real estate		16,221		-		-		(771	)		15,450
Commercial construction		1,114		-		-		(14	)		1,100
Home equity		89		-		-		(51	)		38
Consumer installment		349		304		75		164			284
Commercial loans		2,355		11		18		203			2,565
Total	$	22,761	$	315	$	98	$	(255	)	$	22,289

Index

	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 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

~~Index~~

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, 2017~~at:

(In thousands)	December 31, 2023		June 30, 2023
Commercial loans	$	302	$	302
Total foreclosed real estate	$	302	$	302

(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 atas of December 31, ~~2017~~2023 and June 30, ~~2017~~2023 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.

~~Index~~

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.

Index

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)	December 31, 2023		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Government sponsored enterprises	$	11,059	$	-	$	11,059	$	-
U.S. Treasury securities		16,717		-		16,717		-
State and political subdivisions		163,834		-		163,834		-
Mortgage-backed securities-residential		24,385		-		24,385		-
Mortgage-backed securities-multi-family		73,248		-		73,248		-
Corporate debt securities		18,566		-		18,566		-
Securities available-for-sale		307,809		-		307,809		-
Equity securities		325		325		-		-
Total securities measured at fair value	$	308,134	$	325	$	307,809	$	-

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 at~~The Company uses the fair value ~~on a recurring basis. Periodically, the Company records nonrecurring adjustments~~of 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 establishing~~sell, 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’s~~losses 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 modifies~~modify the appraised values, ~~if needed, to take into account recent developments in the market or other~~for qualitative factors such as ~~changes in absorption rates or market~~economic 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 based~~Based on ~~current amounts of disposal costs~~the valuation techniques used, the fair value measurements for ~~similar assets. These measurements~~collateral 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.

Index

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 ~~loan~~credit losses. Values are derived from appraisals, similar to ~~impaired~~collateral 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 other~~may modify the appraised values, for qualitative factors ~~or recent developments,~~ such as ~~changes in absorption rates~~economic conditions and ~~market conditions~~estimated liquidation expenses ranging from 10% to 60%. Such modifications to the ~~time of valuation and anticipated sales~~appraised values ~~considering management’s plans for disposition. Either change~~ could result in ~~adjustment to~~ lower valuations of such collateral. Based on the ~~property~~valuation 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

			December 31, 2023				June 30, 2023
(In thousands)	Fair Value Hierarchy		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value

Collateral dependent evaluated loans		3	$	5,772	$	3,774	$	7,578	$	5,565
Foreclosed real estate		3	$	302	$	302	$	302	$	302

~~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:~~

(Dollars in thousands) Fair Value Valuation Technique Unobservable 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 flow Discount 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 flow Discount 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 %

⁽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 ~~value~~values 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 rate~~long 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.

~~Index~~

~~The fair~~ Fair value ~~of commitments to extend credit~~for subordinated notes payable is estimated based on ~~an analysis~~a discounted cash flow methodology or observations of ~~the~~recent 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 from~~valued 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:

	December 31, 2023				Fair Value Measurements Using
(In thousands)	Carrying Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	176,080	$	176,080	$	176,080	$	-	$	-
Long term certificates of deposit		3,822		3,713		-		3,713		-
Securities available-for-sale		307,809		307,809		-		307,809		-
Securities held-to-maturity		700,853		651,213		-		651,213		-
Equity securities		325		325		325		-		-
Federal Home Loan Bank stock		7,654		7,654		-		7,654		-
Net loans receivable		1,436,866		1,337,650		-		-		1,337,650
Accrued interest receivable		14,499		14,499		-		14,499		-
Interest rate swaps asset		1,156		1,156		-		1,156		-
Deposits		2,334,837		2,334,088		-		2,334,088		-
Borrowings		129,374		129,697		-		129,697		-
Subordinated notes payable, net		49,588		46,982		-		46,982		-
Accrued interest payable		1,020		1,020		-		1,020		-
Interest rate swaps liability		1,156		1,156		-		1,156		-

(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 -

Index

	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		-

~~(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 December 31, 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	$	25,680		$	1,156		Other Liabilities	$	25,680		$	1,156
Less cash collateral							-		Other Liabilities					(1,160	)
Total after netting						$	1,156						$	(4	)

There were no interest rate swap agreements for the Company at June 30, 2023.

Index

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’s exposure was reduced due to participations-outs, at December 31, 2023 by $344,000, with a notional amount of $8.0 million. There were no participations-outs at June 30, 2023. RPAs in which the Company acts as the participating bank are referred to as “participations-in,” in reference to the credit risk associated with the counterparty’s derivatives being assumed by the Company. The Company’s maximum credit exposure is based on its proportionate share of the settlement amount of the referenced interest rate swap. Settlement amounts are generally calculated based on the fair value of the swap plus outstanding accrued interest receivables from the customer. The credit exposure associated with risk participations-ins was $1.0 million and zero as of December 31, 2023 and June 30, 2023, respectively. The RPAs participations-ins are spread out over four financial institution counterparties and terms range between 4 to 13 years. At December 31, 2023 and June 30, 2023, the Company held RPAs with a notional amount of $110.2 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, ~~2017~~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
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 December 31,				For the six months ended December 31,
	2023		2022		2023		2022

Net Income	$	5,707,000	$	7,198,000	$	12,176,000	$	16,234,000
Weighted Average Shares – Basic		17,026,828		17,026,828		17,026,828		17,026,828
Weighted Average Shares - Diluted		17,026,828		17,026,828		17,026,828		17,026,828

Earnings per share - Basic	$	0.34	$	0.42	$	0.72	$	0.95
Earnings per share - Diluted	$	0.34	$	0.42	$	0.72	$	0.95

~~(8)~~

(8) Dividends

On October ~~17, 2017,~~18, 2023, the Company announced that its Board of Directors ~~declared~~has approved a quarterly cash dividend ~~for the quarter ended September 30, 2017~~ of ~~$0.0975~~$0.08 per share on ~~Greene County Bancorp, Inc.’s~~the Company’s common stock. The dividend reflects an annual cash dividend rate of ~~$0.39~~$0.32 per share which ~~was~~is the same rate as the dividend declared during the previous quarter. The dividend was payable to stockholders of record as of November 15, ~~2017,~~2023, and was paid on November 30, ~~2017. The~~2023. Greene County Bancorp, MHC waived its right to receive ~~dividends declared on its shares of the Company’s common stock for the quarter ended September 30, 2017.~~this dividend.

~~(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.

Index

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.

~~Index~~

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.

~~Index~~

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~~2023 and ~~2016~~2022 were as follows:

	Three months ended December 31,						Six months ended December 31,
(In thousands)	2023			2022			2023			2022
Interest cost	$	52		$	50		$	104		$	100
Expected return on plan assets		(55	)		(55	)		(110	)		(110	)
Amortization of net loss		19			27			38			54
Net periodic pension cost	$	16		$	22		$	32		$	44

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

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, ~~2017~~2023 were ~~$107,000~~$494,000 and ~~$208,000,~~$964,000, respectively, included within salaries and ~~for~~benefits expense on the ~~three and six months ended December 31, 2016 were $81,000 and $158,000, respectively, consisting primarily~~consolidated statements of ~~service costs and interest costs.~~income. The total liability for the SERP ~~Plan~~ was ~~$3.3~~ $13.7million ~~and $2.9 million as of~~at December 31, ~~2017~~2023 and $12.3 million at 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.

~~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-Term~~Long-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 plan~~the Plan for the three and six months ended December 31, ~~2017~~2023 and ~~2016 is~~2022 were as follows:

	Three months ended December 31,						Six months ended December 31,
	2023			2022			2023			2022
Number of options outstanding, beginning of period		3,207,935			3,572,240			2,535,840			2,959,040
Options Granted		-			-			672,095			807,200
Options Paid in Cash		(890,400	)		(957,400	)		(890,400	)		(1,151,400	)
Number of options outstanding, end of period		2,317,535			2,614,840			2,317,535			2,614,840

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

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

Index

	Three months ended December 31,				Six months ended December 31,
(In thousands)	2023		2022		2023		2022
Cash paid out on options vested	$	4,051	$	3,594	$	4,051	$	4,104
Compensation costs recognized	$	762	$	1,026	$	1,394	$	1,994

The total liability for the ~~long-term incentive plan~~Plan was ~~$1.7~~$3.6 million and ~~$2.0~~$6.3 million at December 31, ~~2017~~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, ~~2017~~2023 and 2022 are presented as follows:

Activity for the three months ended December 31, 2023 and 2022

(In thousands)	Unrealized losses on securities available-for- sale			Pension benefits			Total
Balance – September 30, 2022	$	(23,886	)	$	(1,115	)	$	(25,001	)
Other comprehensive income before reclassification		1,791			-			1,791
Amounts reclassified to net loss on sale of available-for-sale securities non-interest income		251			-			251
Tax expense effect		67			-			67
Net of tax		184			-			184
Other comprehensive income for the three months ended December 31, 2022		1,975			-			1,975
Balance – December 31, 2022	$	(21,911	)	$	(1,115	)	$	(23,026	)

Balance – September 30, 2023	$	(24,243	)	$	(877	)	$	(25,120	)
Other comprehensive income before reclassification		6,050			-			6,050
Other comprehensive income for the three months ended December 31, 2023		6,050			-			6,050
Balance – December 31, 2023	$	(18,193	)	$	(877	)	$	(19,070	)

Activity for the six months ended December 31, 2023 and 2022

(In thousands)	Unrealized losses on securities available-for- sale			Pension benefits			Total
Balance – June 30, 2022	$	(17,268	)	$	(1,115	)	$	(18,383	)
Other comprehensive loss before reclassification		(4,827	)		-			(4,827	)
Amounts reclassified to net loss on sale of available-for-sale securities non-interest income		251			-			251
Tax expense effect		67			-			67
Net of tax		184			-			184
Other comprehensive loss for the six months ended December 31, 2022		(4,643	)		-			(4,643	)
Balance – December 31, 2022	$	(21,911	)	$	(1,115	)	$	(23,026	)

Balance – June 30, 2023	$	(20,531	)	$	(877	)	$	(21,408	)
Other comprehensive income before reclassification		2,338			-			2,338
Other comprehensive income for the six months ended December 31, 2023		2,338			-			2,338
Balance – December 31, 2023	$	(18,193	)	$	(877	)	$	(19,070	)

Index

(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.

The following includes quantitative data related to the Company’s operating leases as December 31, 2023 and June 30, ~~2017~~2023, and for the three and six months ended December 31, 2023 and 2022:

(In thousands, except weighted-average information)
Operating lease amounts:	December 31, 2023		June 30, 2023
Right-of-use assets	$	2,014	$	2,188
Lease liabilities	$	2,105	$	2,277

	For the three months ended December 31,
	2023			2022
(In thousands)
Other information:
Operating outgoing cash flows from operating leases		$	115		$	90
Right-of-use assets obtained in exchange for new operating lease liabilities		$	-		$	-

Lease costs:
Operating lease cost		$	106		$	82
Variable lease cost		$	11		$	10

	For the six months ended December 31,
	2023		2022
(In thousands)
Other information:
Operating outgoing cash flows from operating leases	$	228	$	179
Right-of-use assets obtained in exchange for new operating lease liabilities	$	561	$	-

Lease costs:
Operating lease cost	$	208	$	163
Variable lease cost	$	22	$	20

The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, as of December 31, 2023:

(in thousands)
Within the twelve months ended December 31,
2024	$	458
2025		453
2026		441
2027		349
2028		266
Thereafter		297
Total undiscounted cash flow		2,264
Less net present value adjustment		(159	)
Lease Liability	$	2,105

Weighted-average remaining lease term (Years)		5.39
Weighted-average discount rate		2.77	%

Right-of-use assets are ~~presented~~included 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.

Index

(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)	December 31, 2023		June 30, 2023
Unfunded loan commitments	$	127,098	$	124,498
Unused lines of credit		93,738		94,898
Standby letters of credit		179		179
Total credit-related financial instruments with off-balance sheet risk	$	221,015	$	219,575

The Company enters into contractual commitments to extend credit to its customers in the ~~following table:~~

(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 )

Asform of loan commitments and lines of credit, generally with fixed expiration dates and other termination clauses, and may require payment of a ~~result~~fee. Substantially all of the ~~enactment~~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 ~~Tax Cuts~~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 ~~Jobs Act~~equipment, and income producing commercial property.

Allowance for Credit Losses on Unfunded Commitments

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 ~~rate change~~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 ~~deferred taxes associated~~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 ~~accumulated~~Mr. Broockmann or with members of the putative class. On February 28, 2023, the parties entered into a settlement agreement which contemplates, among other ~~comprehensive loss where recognized as~~things, that the Bank will (a) pay a ~~tax benefit through income tax expense. This resulted~~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 ~~“stranded” credit~~settlement fund of $1.15 million during the quarter ended June 30, 2023, which had been accrued for in ~~accumulated other comprehensive loss representing~~ the ~~adjustment from 35%~~quarter ended December 31, 2022. The settlement fund has been substantially distributed to ~~21% tax rate~~class members. A final report of ~~$259,000.~~class-member payments must be filed with Court by May 13, 2024. Any residual amounts in the settlement fund not distributed will thereafter be paid to a local charity.

~~(14)~~

~~Subsequent events~~

Index

(14) Subsequent events

On January ~~16, 2018,~~17, 2024, the Board of Directors ~~declared~~announced a cash dividend for the quarter ended December 31, ~~2017~~2023 of ~~$0.0975~~$0.08 per share on ~~Greene County Bancorp, Inc.’s~~the 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 February 15, ~~2018,~~2024, and ~~will~~is expected to be paid on February 28, ~~2018. The~~2024. Greene County Bancorp, MHC intends to waive its receipt of this dividend.

29On January 18, 2024, the Company terminated its $7.5 million unsecured line of credit with Atlantic Community Bankers Bank.

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.’s~~The 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.’s~~the Company’s loan and securities portfolios and its cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by ~~Greene County Bancorp, Inc.’s~~the Company’s provision for ~~loan~~credit 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.’s~~The Company’s noninterest expense consists principally of compensation and employee benefits, occupancy, equipment and data processing, and other operating expenses. Results of operations are also significantly affected by general economic and competitive conditions, changes in interest rates, as well as government policies and actions of regulatory authorities. Additionally, future changes in applicable law, regulations or government policies may materially affect ~~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 including cybersecurity risks; 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.

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.

Index

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.

~~Index~~

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 ~~earning~~interest-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.

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 Annual Report on Form 10-K for the Fiscal Year Ended June 30, 2023. 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.

Index

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, ~~2017~~2023 and June 30, ~~2017~~2023

ASSETS

Total assets of the Company were ~~$1.1~~$2.74 billion at December 31, ~~2017 as compared to $982.3 million~~2023 and $2.70 billion at June 30, ~~2017,~~2023, an increase of ~~$78.5~~$38.4 million or ~~8.0%~~1.4%. Securities available-for-sale and held-to-maturity ~~amounted to $342.1 million,~~for the Company were $1.0 billion at December 31, ~~2017 as compared~~2023 and June 30, 2023. Net loans receivable for the Company increased $49.2 million, or 3.6%, to ~~$315.3 million,~~$1.44 billion at December 31, 2023 from $1.39 billion at June 30, ~~2017, an increase of $26.8 million, or 8.5%. Net loans grew by $39.7 million, or 6.4%, to $663.9 million at December 31, 2017 as compared to $624.2 million at June 30, 2017.~~2023.

CASH AND CASH EQUIVALENTS

Total cash and cash equivalents ~~increased $11.4 million to $27.7~~for the Company were $176.1 million at December 31, ~~2017 from $16.3~~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 has continued to maintain strong capital and liquidity positions as of December 31, 2023.

SECURITIES

Securities available-for-sale and held-to-maturity ~~increased $26.8 million, or 8.5%, to $342.1 million~~for the Company were $1.0 billion at December 31, ~~2017 as compared to $315.3 million at~~2023 and June 30, ~~2017.~~2023. Securities purchases totaled ~~$74.8~~$121.3 million during the six months ended December 31, ~~2017~~2023 and consisted primarily of ~~$62.1~~$119.7 million of state and political subdivision securities ~~$10.4~~and $1.6 million of ~~mortgage backed securities, and $2.3 million of U.S. government sponsored enterprises~~corporate debt securities. Principal pay-downs and maturities during the six months ended December 31, 2023 amounted to ~~$47.1~~$122.2 million, primarily consisting of ~~which $9.2~~$109.3 million ~~were mortgage-backed securities, $36.4 million were~~of state and political subdivision securities, $1.4 million of collateralized mortgage obligations, and ~~$1.5~~$11.5 million ~~were corporate debt~~of mortgage-backed securities. At December 31, ~~2017, 58.3%~~2023, 62.2% of our securities portfolio consisted of state and political subdivision securities to take advantage of tax savings and to promote ~~Greene County Bancorp, Inc.’s~~the Company’s participation in the communities in which it operates. ~~As a result~~Mortgage-backed securities, which represent 27.7% 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~~our 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 decreasedportfolio at December 31, ~~2017. Mortgage-backed securities and asset-backed securities held within the portfolio~~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.

Index

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 December 31, 2023 and June 30, 2023. Refer to financial statements Note 3 Securities for the complete fair value of securities.

	December 31, 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	$	11,059		1.1	%	$	10,823		1.1	%
U.S. Treasury securities		16,717		1.7			16,500		1.6
State and political subdivisions		163,834		16.2			138,011		13.7
Mortgage-backed securities-residential		24,385		2.4			25,601		2.5
Mortgage-backed securities-multifamily		73,248		7.3			72,086		7.2
Corporate debt securities		18,566		1.8			18,112		1.8
Total securities available-for-sale		307,809		30.5			281,133		27.9
Securities held-to-maturity (at amortized cost):
U.S. treasury securities		33,747		3.3			33,705		3.4
State and political subdivisions		463,469		45.9			478,756		47.5
Mortgage-backed securities-residential		34,912		3.5			37,186		3.7
Mortgage-backed securities-multifamily		145,915		14.5			155,046		15.4
Corporate debt securities		22,774		2.3			21,632		2.1
Other securities		36		0.0			38		0.0
Total securities held-to-maturity		700,853		69.5			726,363		72.1
Total securities	$	1,008,662		100.0	%	$	1,007,496		100.0	%

There 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 December 31, 2023, the ACL on held-to-maturity securities was $485,000.

LOANS

Net loans receivable increased ~~$39.7~~$49.2 million, or ~~6.4%~~3.6%, to ~~$663.9 million~~$1.44 billion at December 31, ~~2017~~2023 from ~~$624.2 million~~$1.39 billion at June 30, ~~2017.~~2023. The loan growth experienced during the six ~~month period~~months consisted primarily of ~~$14.3~~$29.3 million in commercial real estate loans, ~~$17.8 million in commercial loans, $4.5 million in multi-family real estate loans, and $6.7~~$10.7 million in residential real estate ~~loans. This growth was partially offset by a decrease of $3.5~~loans, $3.3 million in home equity loans and $4.9 million in commercial ~~construction~~ loans. ~~We believe that the~~The Company continues to experience loan growth as a result of continued ~~low interest rate environment~~growth in its customer base and ~~strong customer satisfaction from personal service continued to enhance~~its relationships with other financial institutions in originating loan ~~growth. If long term rates begin to rise, the~~participations. 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.

(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

Index

	December 31, 2023						June 30, 2023
(Dollars in thousands)	Balance			Percentage of Portfolio			Balance			Percentage of Portfolio
Residential real estate	$	401,656			27.6	%	$	390,944			27.8	%
Commercial real estate		911,731			62.6			882,388			62.6
Home equity		26,167			1.8			22,887			1.6
Consumer		4,691			0.3			4,646			0.3
Commercial loans		112,930			7.7			108,001			7.7
Total gross loans⁽¹⁾⁽²⁾		1,457,175			100.0	%		1,408,866			100.0	%
Allowance for credit losses on loans		(20,309	)					(21,212	)
Total net loans	$	1,436,866					$	1,387,654

(1)

Loan balances include net deferred fees/cost of $54,000 and $75,000 at December 31, 2023 and at June 30, 2023, respectively.

(2)

Loan balances exclude accrued interest receivable of $6.4 million and $5.5 million at December 31, 2023 and at June 30, 2023, respectively, which is included in accrued interest receivable in the consolidated statement of financial condition.

ALLOWANCE FOR ~~LOAN~~CREDIT LOSSES ON LOANS

The allowance for ~~loan~~credit 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 evaluation~~credit losses. This is necessary to maintain the ACL at a level which management believes is reasonably reflective of the ~~risk inherent in~~overall loss expected over the ~~loan portfolio, the composition~~contractual life of the loan ~~portfolio, specific impaired~~portfolio. 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 the~~is consistent with regulatory requirements. The fair value of ~~the underlying~~ collateral ~~economic conditions, payment status of~~for collateral dependent loans less selling expenses will be compared to the loan ~~historical loan~~balance 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 providing~~rates 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 losses~~ACL when it becomes evident that a loan cannot be collected within a reasonable amount of time or that it will cost the ~~Bank~~Company more than it will receive, and all possible avenues of repayment have been analyzed, including the potential of future cash flow, the value of the underlying collateral, and strength of any guarantors or co-borrowers. Generally, consumer loans and smaller business loans (not secured by real estate) in excess of 90 days are charged-off against the ~~allowance for loan losses,~~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 losses~~ACL is increased by a provision for ~~loan~~credit losses (which results in a charge to expense) and recoveries of loans previously charged off, and is reduced by charge-offs.

33Additional 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 $20.3 million at December 31, 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 1.39% at December 31, 2023 compared to 1.51% at June 30, 2023 and 1.42% at day-one CECL adoption (July 1, 2023). The ACL as of December 31, 2023 is consistent with the July 1, 2023 day-one ACL. The decrease in the ACL from June 30, 2023 to December 31, 2023 was primarily due to the CECL adoption.

The allowance for credit losses on unfunded commitments as of December 31, 2023 was $1.6 million.

Index

~~Analysis of allowance for loan losses activity~~

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 ~~reviewed~~generally placed on ~~a regular basis to assess collectability of all principal and interest payments due. Management determines that a loan is impaired or nonperforming~~nonaccrual when ~~it is probable at least a portion of the~~ principal or interest ~~will not be collected in accordance with contractual terms of the note. When a loan is determined to be impaired, the measurement of~~payments 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 ~~evaluating~~collection. A loan is not placed back on accrual status until the ~~adequacy of~~borrower has demonstrated the ~~allowance for loan losses among other factors. Based~~ability 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.

~~Index~~

Analysis of Nonaccrual Loans and Nonperforming Assets

(Dollars in thousands)	December 31, 2023			June 30, 2023
Nonaccrual loans:
Residential real estate	$	2,524		$	2,747
Commercial real estate		1,682			1,318
Home equity		50			54
Consumer installment		-			63
Commercial		1,392			1,276
Total nonaccrual loans	$	5,648		$	5,458
Foreclosed real estate:
Commercial		302			302
Total foreclosed real estate		302			302
Total nonperforming assets	$	5,950		$	5,760

Total nonperforming assets of total assets		0.22	%		0.21	%
Total nonperforming loans to net loans		0.39	%		0.39	%
Allowance for credit losses on loans to nonperforming loans		359.58	%		388.64	%
Allowance for credit losses on loans to total loans receivable		1.39	%		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 December 31, 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:~~

Nonperforming assets amounted to ~~$4.6~~$6.0 million and $5.8 million at December 31, ~~2017~~2023 and ~~$4.4 million at~~ June 30, ~~2017, an increase of $128,000 or 2.9%.~~2023, respectively. Loans on nonaccrual status totaled ~~$3.7~~$5.6 million at December 31, ~~2017~~2023, of which ~~$1.9~~there were two residential loans totaling $449,000 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 million of loans which were less than 90 days past due at December 31, ~~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 $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, ~~2017~~2023 of which ~~$1.6~~three 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.

35DEPOSITS

~~Index~~

~~Impaired Loans~~

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

~~The table below details additional information on impaired loans~~Deposits totaled $2.3 billion at December 31, ~~2017~~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~~

~~Total deposits increased to $920.8 million at December 31, 2017 from $859.5 million~~$2.4 billion at June 30, ~~2017, an increase~~2023, a decrease of ~~$61.3~~$102.3 million, or ~~7.1%~~4.2%. NOW deposits ~~increased $59.5~~decreased $42.6 million, or ~~15.2%~~2.5%, and noninterest-bearing deposits decreased $21.6 million, or 13.6%, money market deposits ~~increased $2.0~~decreased $23.3 million, or ~~1.7%~~20.2%, and savings deposits ~~increased $8.1~~decreased $32.6 million, or 4.1% and noninterest-bearing deposits increased $3.4 million, or 3.6% when comparing December 31, 2017 and June 30, 2017. These increases were partially offset by a decrease in certificates of deposit of $11.9 million, or 22.2%10.9%, when comparing December 31, ~~2017~~2023 and June 30, ~~2017. Included within~~2023. Certificates of deposits increased $17.7 million, or 13.8%, when comparing December 31, 2023 and June 30, 2023. As of December 31, 2023, the overall brokered deposit balance amounted to $64.1 million, which included $15.0 million of NOW deposits in the form of IntraFi Insured Network Deposits and $49.1 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.

Index

Major classifications of deposits at December 31, ~~2017~~2023 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)	December 31, 2023		Percentage of Portfolio			June 30, 2023		Percentage of Portfolio
Noninterest-bearing deposits	$	137,424		6.0	%	$	159,039		6.5	%
Certificates of deposit		145,792		6.2			128,077		5.3
Savings deposits		266,477		11.4			299,038		12.3
Money market deposits		91,744		3.9			115,029		4.7
NOW deposits		1,693,400		72.5			1,735,978		71.2
Total deposits	$	2,334,837		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, The~~2023, the Bank ~~of Greene County~~ had pledged approximately ~~$273.7~~$587.7 million of its residential and commercial mortgage portfolio as collateral for borrowing and irrevocable ~~stand-by~~municipal 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~~$359.8 million at December 31, ~~2017,~~2023, of which ~~$40.5~~there were $4.4 million interm fixed rate borrowings, ~~and $44.0~~$150.0 million in irrevocable ~~stand-by~~municipal letters of credit ~~were outstanding at December 31, 2017. There were $20.3~~and $125.0 million of ~~short-term or~~ overnight borrowings outstanding at December 31, ~~2017.~~2023. At June 30, 2023, the Bank had zero overnight borrowings outstanding and $110.0 million in irrevocable municipal letters of credit at the FHLB. Interest rates on overnight borrowings are determined at the time of borrowing. The ~~remaining $20.2 million consisted of long-term fixed rate advances with a weighted average rate of 1.62% and a weighted average maturity of 25 months. The $44.0 million of~~ irrevocable ~~stand-by~~municipal 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,~~2023, approximately ~~$1.3~~$24.3 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 June 30, 2017.~~2023.

~~Index~~

The Bank ~~of Greene County~~ has established unsecured lines of credit with Atlantic ~~Central~~Community 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~~Community 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 these~~The 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 December 31, 2023 and June 30, 2023.

~~Scheduled~~On September 17, 2020, the Company entered into Subordinated Note Purchase Agreements with 14 qualified institutional investors, issued at 4.75% Fixed-to-Floating Rate due September 17, 2030, in the aggregate principal amount of $20.0 million, carried net of issuance costs of $424,000 amortized over a period of 60 months. These notes are callable on September 15, 2025. At December 31, 2023, there were $19.9 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 December 31, 2023, there were $29.7 million of these Subordinated Note Purchases Agreements outstanding, net of issuance costs.

At December 31, 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

EQUITY

Shareholders’ equity increased to ~~$89.6~~$195.3 million at December 31, ~~2017~~2023 from ~~$83.5~~$183.3 million at June 30, ~~2017, as~~2023, resulting primarily from net income of ~~$7.1~~$12.2 million ~~was~~and a decrease in accumulated other comprehensive loss of $2.3 million, partially offset by dividends declared and paid of ~~$763,000,~~$2.0 million and the day-one CECL adoption impact of $510,000. Unrealized loss on available for sale securities decreased at December 31, 2023 compared to June 30, 2023, as the market yields on bonds decreased during the six months ended December 31, 2023.

Index

The Federal Reserve raised its 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 ~~$322,000~~significant increase in ~~accumulated other comprehensive loss.~~market rates between March 2022 and December 2023. If market interest rates 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 ~~changes~~Comprehensive 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 ~~increase~~unrealized 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, were~~Directors of the ~~result~~Company adopted a stock repurchase program. Under the repurchase program, the Company may repurchase up to 400,000 shares of ~~options exercised with~~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 ~~2008 Stock Option Plan.~~financial performance. For the three and six months ended December 31, 2023, the Company did not repurchase any shares.

Selected Equity Data:
	At December 31, 2023			At June 30, 2023
Shareholders’ equity to total assets, at end of period		7.14	%		6.79	%
Book value per share¹	$	11.47		$	10.76
Closing market price of common stock	$	28.20		$	29.80

	For the six months ended December 31,
	2023			2022
Average shareholders’ equity to average assets		7.07	%		6.35	%
Dividend payout ratio¹		22.22	%		14.74	%
Actual dividends paid to net income²		16.35	%		6.76	%

~~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.

²Dividends declared divided by net income. The MHC waived its right to receive dividends declared during the ~~six~~three months March 31, 2022, September 30, 2022, December 31, 2022, March 31, 2023, June 30, 2023 and December 31, 2023. Dividends declared during the three months ended ~~December 31, 2017~~June 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.

~~Index~~

Comparison of Operating Results for the Three and Six Months Ended December 31, ~~2017~~2023 and ~~2016~~2022

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, ~~2017~~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 %

Index

	Three months ended December 31,
	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	$	1,449,353		$	17,776		4.91	%	$	1,367,759		$	14,801		4.33	%
Securities non-taxable		625,264			4,334		2.77			683,294			3,504		2.05
Securitiestaxable		387,111			2,329		2.41			407,916			1,999		1.96
Interest-bearing bank balances and federal funds		87,307			1,105		5.06			21,195			169		3.19
FHLB stock		2,392			49		8.19			2,812			55		7.82
Total interest-earning assets		2,551,427			25,593		4.01	%		2,482,976			20,528		3.31	%
Cash and due from banks		11,417								11,790
Allowance for credit losses on loans		(20,229	)							(22,369	)
Allowance for credit losses on securities held-to-maturity		(498	)							-
Other noninterest-earning assets		100,785								95,110
Total assets	$	2,642,902							$	2,567,507

Interest-Bearing Liabilities:
Savings and money market deposits	$	366,236		$	296		0.32	%	$	477,179		$	207		0.17	%
NOW deposits		1,767,214			11,476		2.60			1,583,966			3,200		0.81
Certificates of deposit		85,874			786		3.66			62,273			331		2.13
Borrowings		63,601			647		4.07			82,058			867		4.23
Total interest-bearing liabilities		2,282,925			13,205		2.31	%		2,205,476			4,605		0.84	%
Noninterest-bearing deposits		144,396								175,391
Other noninterest-bearing liabilities		27,197								23,393
Shareholders' equity		188,384								163,247
Total liabilities and equity	$	2,642,902							$	2,567,507

Net interest income				$	12,388							$	15,923
Net interest rate spread							1.70	%							2.47	%
Net earnings assets	$	268,502							$	277,500
Net interest margin							1.94	%							2.57	%
Average interest-earning assets to average interest-bearing liabilities		111.76	%							112.58	%

¹Calculated net of deferred loan fees and costs, loan discounts, and loans in process.

²~~Includes tax-free securities, mortgage-backed securities, and asset-backed securities~~.

Taxable-equivalent net interest income and net interest margin	For the three months ended December 31,
(Dollars in thousands)	2023			2022
Net interest income (GAAP)	$	12,388		$	15,923
Tax-equivalent adjustment⁽¹⁾		1,591			1,283
Net interest income (fully taxable-equivalent)	$	13,979		$	17,206

Average interest-earning assets	$	2,551,427		$	2,482,976
Net interest margin (fully taxable-equivalent)		2.19	%		2.77	%

~~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 ~~period~~periods ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively.

Index

	Six months ended December 31,
	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	$	1,439,505			$	34,981		4.86	%	$	1,340,927			$	28,183		4.20	%
Securities non-taxable		631,871				8,624		2.73			690,716				6,581		1.91
Securitiestaxable		393,567				4,553		2.31			420,718				4,118		1.96
Interest-bearing bank balances and federal funds		76,013				2,021		5.32			13,333				196		2.94
FHLB stock		2,216				86		7.76			3,033				90		5.93
Total interest-earning assets		2,543,172				50,265		3.95	%		2,468,727				39,168		3.17	%
Cash and due from banks		11,868									12,348
Allowance for credit losses on loans		(20,115	)								(22,707	)
Allowance for credit losses on securities held-to-maturity		(495	)								-
Other noninterest-earning assets		99,286									92,906
Total assets	$	2,633,716								$	2,551,274

Interest-Bearing Liabilities:
Savings and money market deposits	$	382,933			$	582		0.30	%	$	488,173			$	410		0.17	%
NOW deposits		1,721,391				20,651		2.40			1,541,588				4,787		0.62
Certificates of deposit		101,812				1,932		3.80			66,030				551		1.67
Borrowings		61,299				1,273		4.15			88,094				1,663		3.78
Total interest-bearing liabilities		2,267,435				24,438		2.16	%		2,183,885				7,411		0.68	%
Noninterest-bearing deposits		151,337									179,803
Other noninterest-bearing liabilities		28,660									25,489
Shareholders' equity		186,284									162,097
Total liabilities and equity	$	2,633,716								$	2,551,274

Net interest income					$	25,827								$	31,757
Net interest rate spread								1.79	%								2.49	%
Net earnings assets	$	275,737								$	284,842
Net interest margin								2.03	%								2.57	%
Average interest-earning assets to average interest-bearing liabilities		112.16	%								113.04	%

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.

²~~Includes tax-free securities, mortgage-backed securities, and asset-backed securities~~.

Taxable-equivalent net interest income and net interest margin	For the six months ended December 31,
(Dollars in thousands)	2023			2022
Net interest income (GAAP)	$	25,827		$	31,757
Tax-equivalent adjustment⁽¹⁾		3,154			2,407
Net interest income (fully taxable-equivalent)	$	28,981		$	34,164

Average interest-earning assets	$	2,543,172		$	2,468,727
Net interest margin (fully taxable-equivalent)		2.28	%		2.77	%

~~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 %

Index

Rate / Volume Analysis

The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected ~~Greene County Bancorp, Inc.’s~~the 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 December 31,									Six Months Ended December 31,
	2023 versus 2022									2023 versus 2022
	Increase/(Decrease)						Total			Increase/(Decrease)						Total
	Due To						Increase/			Due To						Increase/
(Dollars in thousands)	Volume			Rate			(Decrease)			Volume			Rate			(Decrease)
Interest Earning Assets:
Loans receivable, net¹	$	917		$	2,058		$	2,975		$	2,167		$	4,631		$	6,798
Securities non-taxable		(317	)		1,147			830			(600	)		2,643			2,043
Securities taxable		(107	)		437			330			(275	)		710			435
Interest-bearing bank balances and federal funds		788			148			936			1,557			268			1,825
FHLB stock		(9	)		3			(6	)		(28	)		24			(4	)
Total interest-earning assets		1,272			3,793			5,065			2,821			8,276			11,097

Interest-Bearing Liabilities:
Savings and money market deposits		(56	)		145			89			(102	)		274			172
NOW deposits		412			7,864			8,276			619			15,245			15,864
Certificates of deposit		157			298			455			412			969			1,381
Borrowings		(188	)		(32	)		(220	)		(542	)		152			(390	)
Total interest-bearing liabilities		325			8,275			8,600			387			16,640			17,027
Net change in net interest income	$	947		$	(4,482	)	$	(3,535	)	$	2,434		$	(8,364	)	$	(5,930	)

(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 ~~increased~~decreased to ~~1.39%~~0.86% from 1.12% for the three months ended December 31, ~~2017 as compared~~2023 and 2022, respectively, and decreased to ~~1.30% for the three months ended December 31, 2016, and was 1.40% and 1.23%~~0.92% from 1.27% for the six months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively. Annualized return on average equity ~~increased~~decreased to ~~16.55%~~12.12% and 13.07% for the three ~~months~~ and ~~16.45% for the~~ six months ended December 31, ~~2017~~2023 as compared to ~~15.15%~~17.64% and 20.03% for the three ~~months~~ and ~~14.25% for the~~ six months ended December 31, ~~2016.~~2022. The ~~increase~~decrease in return on average assets and return on average equity for the three and six months ended December 31, 2023 was primarily the result of ~~growth in~~the balance sheet growing at a faster rate than net income ~~resulting from growth in earning assets.~~growth. Net income amounted to ~~$3.6~~$5.7 million and ~~$2.9~~$7.2 million for the three months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively, ~~an increase~~a decrease of ~~$714,000~~$1.5 million, or ~~24.4% and amounted~~20.8%, as compared to ~~$7.1~~$12.2 million and ~~$5.4~~$16.2 million for the six months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively, ~~an increase~~a decrease of ~~$1.7~~$4.0 million, or ~~30.9%~~25.0%. Average assets increased ~~$146.1~~$75.4 million, or ~~16.3%~~2.9%, to ~~$1.0~~$2.64 billion for the three months ended December 31, ~~2017~~2023 as compared to ~~$898.3~~$2.57 billion for the three months ended December 31, 2022. Average equity increased $25.1 million, or 15.4%, to $188.4 million for the three months ended December 31, ~~2016. Average equity increased $10.7 million, or 13.8%,~~2023 as compared to ~~$88.0~~$163.2 million for the three months ended December 31, ~~2017 as compared to $77.3 million for the three months ended December 31, 2016.~~2022. Average assets increased ~~$136.5~~$82.4 million, or ~~15.5%~~3.2%, to ~~$1.0~~$2.63 billion for the six months ended December 31, ~~2017~~2023 as compared to ~~$881.7~~$2.55 billion for the six months ended December 31, 2022. Average equity increased $24.1 million, or 14.9%, to $186.3 million for the six months ended December 31, ~~2016. Average equity increased $10.1 million, or 13.2%,~~2023 as compared to ~~$86.4~~$162.1 million for the six months ended December 31, ~~2017 as compared to $76.3 million for the six months ended December 31, 2016.~~2022.

~~Index~~

INTEREST INCOME

Interest income amounted to ~~$9.4~~$25.6 million for the three months ended December 31, ~~2017~~2023 as compared to ~~$8.5~~$20.5 million for the three months ended December 31, ~~2016,~~2022, an increase of ~~$936,000,~~$5.1 million, or ~~11.0%~~24.7%. Interest income amounted to ~~$18.5~~$50.3 million for the six months ended December 31, ~~2017~~2023 as compared to ~~$16.3~~$39.2 million for the six months ended December 31, ~~2016,~~2022, an increase of ~~$2.2~~$11.1 million, or ~~13.5%~~28.3%. The increase in ~~average loan~~yields earned on loans and securities ~~balances~~ had the greatest impact on interest ~~income when comparing~~income. The average balances of loans also increased during the ~~three~~comparative periods contributing to higher interest income.

Index

Average loan balances increased $81.6 million and ~~six months ended December 31, 2017~~$98.6 million and ~~2016, which were offset by a decrease in~~ the yield on loans increased 58 and ~~securities. Average loan balances increased $80.8 million and $88.7 million while the yield on loans remained unchanged and decreased two~~66 basis points when comparing the three and six months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively. Average securities ~~increased $42.3~~decreased $78.8 million and ~~$34.6~~$86.0 million and the yield on such securities ~~decreased 40 basis points~~increased 31 and 1464 basis points when comparing the three and six months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively. ~~The lower~~Average interest-bearing bank balances and federal funds increased $66.1 million and $62.7 million and the 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~~increased 187 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 expense increased $94,000 and $163,000238 basis points when comparing the three and six months ended December 31, ~~2017~~2023 and ~~2016, respectively, due~~2022, respectively.

INTEREST EXPENSE

Interest expense amounted to ~~a $124.7~~$13.2 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 comparingfor the three months ended December 31, ~~2017 and 2016, respectively, and increased~~2023 as compared to $4.6 million for the three ~~basis points~~months ended December 31, 2022, an increase of $8.6 million, or 186.8%. Interest expense amounted to ~~0.45% from 0.42% when comparing~~$24.4 million for the six month ended December 31, 2023 as compared to $7.4 million for the six months ended December 31, ~~2017 and 2016.~~

~~Average deposits increased $138.0~~2022, an increase of $17.0 million, ~~and $134.4 million for~~or 229.8%. The increase during the three and six months ended December 31, ~~2017 and 2016, respectively, as~~2023 was primarily due to a ~~result~~the increase in the cost of ~~continued growth across all three of our primary banking lines – retail, commercial and municipal. The average rate paid~~funds on NOW deposits ~~increased seven basis points~~and insured cash sweep (“ICS”) deposits which had the greatest impact on interest expense reflecting higher market interest rates when comparing the ~~three months ended December 31, 2017 and 2016, and the average balance~~periods.

The cost of ~~such accounts grew by $116.3 million when comparing these same periods. The average rate paid on~~ NOW deposits increased ~~seven~~179 and 178 basis points, ~~when comparing~~ the ~~six months ended December 31, 2017~~cost of certificates of deposit increased 153 and ~~2016,~~213 basis points, and the ~~average balance of such accounts increased $109.7 million when comparing these same periods. The average balance~~cost of savings and money market deposits increased ~~$25.3~~15 and 13 basis points when comparing the three and six months ended December 31, 2023 and 2022, respectively. The increase in the cost of interest-bearing liabilities was partly due to growth in the average balances of interest-bearing liabilities of $77.4 million and ~~$26.1~~$83.6 million when comparing the three and six months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively. ~~The rates paid on~~This was due to an increase in NOW deposits of $183.2 million and $179.8 million and an increase in average certificates of deposits of $23.6 million and $35.8 million, offset by a decrease in average 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~~$110.9 million and ~~$1.4~~$105.2 million and a decrease in average borrowings of $18.5 million and $26.8 million when comparing the three and six months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively. ~~The average rate paid~~Yields on ~~certificate~~interest-earning assets and costs of interest-bearing deposits increased ~~12 basis points when comparing~~for the three ~~months ended December 31, 2017~~ and ~~2016, and increased 11 basis points when comparing the~~ six months ended December 31, ~~2017~~2023, as the Federal Reserve Board raised interest rates throughout the calendar year 2022 and ~~2016. This increase in rate paid on certificates~~into the third quarter of ~~deposit for the six months is the result of the promotion of a five~~calendar year ~~certificate product.~~2023.

The average balance on borrowings decreased $13.3 million and the rate increased 47 basis points when comparing the three months ended December 31, 2017 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.

NET INTEREST INCOME

Net interest income ~~increased $729,000~~decreased $3.5 million to ~~$8.5~~$12.4 million for the three months ended December 31, ~~2017~~2023 from ~~$7.7~~$15.9 million for the three months ended December 31, ~~2016.~~2022. Net interest income ~~increased $1.8~~decreased $5.9 million to ~~$16.6~~$25.8 million for the six months ended December 31, ~~2017~~2023 from ~~$14.8~~$31.8 million for the six months ended December 31, ~~2016. These increases~~2022. The decrease in net interest income ~~were primarily~~was due to an increase in the ~~result~~average balance of interest-bearing liabilities, which increased $77.4 million and $83.6 million when comparing the ~~growth~~three and six months ended December 31, 2023 and 2022, respectively, and increases in rates paid on interest-bearing liabilities, which increased 147 and 148 basis points when comparing the three and six months ended December 31, 2023 and 2022, respectively. The decrease in net interest income was partially offset by increases in the average balance of interest-earning ~~assets.~~

~~Net interest spread decreased 23 basis points to 3.21% for~~assets, which increased $68.5 million and $74.4 million when comparing the three months ended December 31, 2017 compared to 3.44% for the three months ended December 31, 2016. Net interest margin decreased 21 basis points to 3.29% for the three months ended December 31, 2017 compared to 3.50% for the three months ended December 31, 2016. Net interest spread and ~~margin decreased 11 and 10 basis points to 3.24% and 3.32%, respectively, for the~~ six months ended December 31, ~~2017 compared to 3.35%~~2023 and ~~3.42%,~~2022, respectively, ~~for~~and increases in interest rates on interest-earning assets, which increased 70 and 78 basis points when comparing the three and six months ended December 31, ~~2016.~~2023 and 2022, respectively.

41Net interest rate spread and margin both decreased when comparing the three and six months ended December 31, 2023 and 2022. Net interest rate spread decreased 77 and 70 basis points to 1.70% and 1.79% for the three and six months ended December 31, 2023 compared to 2.47% and 2.49% for the three and six months ended December 31, 2022, respectively. Net interest margin decreased 63 and 54 basis points to 1.94% and 2.03% for the three and six months ended December 31, 2023 compared to 2.57% for both the three and six months ended December 31, 2022, respectively. The decrease was due to the higher interest rate environment and the pressure to match higher yields on deposits, which resulted in higher rates paid on deposits and therefore 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 period.

~~Index~~

Net interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if the Company’s investment in tax-exempt securities and loans had been subject to federal and New York State income taxes yielding the same after-tax income. Tax equivalent net interest margin was ~~3.50%~~2.19% and ~~3.75%~~2.77% for the three months ended December 31, ~~2017~~2023 and ~~2016, respectively. Tax equivalent net interest margin~~2022, respectively, and was ~~3.53%~~2.28% and ~~3.67%~~2.77% for the six months ended December 31, ~~2017~~2023 and ~~2016,~~2022, 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.

~~Due to the large portion of fixed-rate residential mortgages in the Company’s portfolio,~~

Index

The Company closely monitors its interest rate risk, ~~is a concern~~ and the Company will continue to monitor and ~~adjust~~prudently manage the asset and liability mix ~~as much as possible~~ to ~~take advantage of the benefits and reduce~~address 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 raised interest rates throughout the calendar year 2022 and into the third quarter of calendar year 2023. The rise in the federal funds rate had 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 ~~LOAN~~CREDIT LOSSES ON LOANS

~~Management continues to closely monitor asset quality and adjust the level of the allowance~~Provision 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~~$170,000 and ~~$586,000~~$244,000 for the three months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively, and amounted to a charge of $627,000 and a benefit of $255,000 for the six months ended December 31, 2023 and 2022, respectively. The loan provision for ~~loan~~the six months ended December 31, 2023 was primarily due to the growth in gross loans and increases in the qualitative factor adjustments, offset by improvements in the economic forecasts. The allowance for credit losses on loans to total loans receivable was 1.39% at December 31, 2023 compared to 1.51% at June 30, 2023 and 1.42% at day-one CECL adoption (July 1, 2023).

Loans classified as substandard and special mention totaled $55.0 million at December 31, 2023 and $41.9 million at June 30, 2023, an increase of $13.1 million. There were no loans classified as doubtful or loss at December 31, 2023 or June 30, 2023.

Net charge-offs amounted to ~~$699,000~~$123,000 and ~~$1.1~~$102,000 for the three months ended December 31, 2023 and 2022, respectively, an increase of $21,000. Net charge-offs totaled $216,000 and $217,000 for the six months ended December 31, 2023 and 2022, respectively. There were no significant charge offs in any loan segment during the three and six months ended December 31, 2023.

NONINTEREST INCOME

(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:	2023		2022			Amount			Percent			2023		2022			Amount			Percent
Service charges on deposit accounts	$	1,227	$	1,234		$	(7	)		(0.57	)%	$	2,457	$	2,451		$	6			0.24	%
Debit card fees		1,120		1,138			(18	)		(1.58	)		2,253		2,280			(27	)		(1.18	)
Investment services		206		198			8			4.04			449		378			71			18.78
E-commerce fees		30		29			1			3.45			59		55			4			7.27
Bank-owned life insurance		574		340			234			68.82			936		680			256			37.65
Net loss on available-for-sale securities		-		(251	)		251			(100.00	)		-		(251	)		251			(100.00	)
Other operating income		321		207			114			55.07			623		400			223			55.75
Total noninterest income	$	3,478	$	2,895		$	583			20.14	%	$	6,777	$	5,993		$	784			13.08	%

Noninterest income increased $583,000, or 20.1%, to $3.5 million for the three months ended December 31, 2023 compared to $2.9 million for the three months ended December 31, 2022. Noninterest income increased $784,000, or 13.1%, to $6.8 million for the six months ended December 31, 2017 and 2016, respectively. Net charge-offs amounted to $98,000 and $141,000 for the three months ended December 31, 2017 and 2016, respectively, and amounted to $369,000 and $193,000 for the six months ended December 31, 2017 and 2016, respectively.

~~Allowance for loan losses to total loans receivable decreased to 1.68% as of December 31, 2017 as~~2023 compared to 1.74% as of June 30, 2016, and 1.73% as of December 31, 2016. Nonperforming loans amounted to $3.7 million and $3.6 million at December 31, 2017 and June 30, 2017, respectively. At December 31, 2017 and June 30, 2017, respectively, nonperforming assets to total assets were 0.43% and 0.45% 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.

~~NONINTEREST INCOME~~

(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, or 17.1%, to $1.9 million for the three months ended December 31, 2017 as compared to $1.6 million for the three months ended December 31, 2016. Noninterest income increased $466,000, or 14.7%, to $3.6$6.0 million for the six months ended December 31, ~~2017 as compared to $3.2 million for~~2022. The increase during the three and six months ended December 31, ~~2016. These increases are~~2023 was primarily due to ~~increases~~an increase in ~~debit card fees~~fee income earned on customer interest rate swap contracts and ~~service charges on deposit accounts resulting~~income from ~~continued growth in the number of checking accounts with debit cards, as well as increased monthly or transactional service charges on deposit accounts.~~bank owned life insurance.

NONINTEREST EXPENSE

(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:	2023		2022		Amount			Percent			2023		2022		Amount			Percent
Salaries and employee benefits	$	5,654	$	5,449	$	205			3.76	%	$	11,145	$	10,877	$	268			2.46	%
Occupancy expense		593		513		80			15.59			1,130		1,037		93			8.97
Equipment and furniture expense		238		221		17			7.69			376		379		(3	)		(0.79	)
Service and data processing fees		614		664		(50	)		(7.53	)		1,205		1,366		(161	)		(11.79	)
Computer software, supplies and support		471		369		102			27.64			982		750		232			30.93
Advertising and promotion		102		145		(43	)		(29.66	)		199		221		(22	)		(9.95	)
FDIC insurance premiums		314		205		109			53.17			626		447		179			40.04
Legal and professional fees		417		1,697		(1,280	)		(75.43	)		800		2,148		(1,348	)		(62.76	)
Other		923		688		235			34.16			1,708		1,523		185			12.15
Total noninterest expense	$	9,326	$	9,951	$	(625	)		(6.28	)%	$	18,171	$	18,748	$	(577	)		(3.08	)%

(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 %

Index

Noninterest expense ~~increased $524,000,~~decreased $625,000, or ~~10.9%~~6.3%, to ~~$5.3~~$9.3 million for the three months ended December 31, ~~2017 as~~2023 compared to ~~$4.8~~$10.0 million for the three months ended December 31, ~~2016.~~2022. Noninterest expense ~~increased $663,000,~~decreased $577,000 or ~~7.0%~~3.1%, to ~~$10.2~~$18.2 million for the six months ended December 31, ~~2017 as~~2023, compared to ~~$9.5~~$18.7 million for the six months ended December 31, ~~2016. These increases~~2022. The decrease during the three and six months ended December 31, 2023 was primarily due to a decrease in ~~noninterest expense are primarily~~legal and professional fees and service and data processing fees paid as compared to the ~~result of~~three and six months ended December 31, 2022. This was partially offset by the increase in computer software and supplies due to the Company purchasing new equipment to upgrade our IT infrastructure, and an increase in salaries and ~~employee~~ benefits ~~expenses, resulting from additional staffing~~expense, as compared to ~~support~~ the ~~Bank’s growth. New positions were added within the Bank’s lending department, customer service center, investment center~~three and for the Bank’s new branch in Copake, New York. The increase is also due to higher service and data processing fees resulting from costs associated with offering more services to customers through online banking.six months ended December 31, 2022.

INCOME TAXES

~~The provision~~Provision for income taxes ~~directly~~ reflects the expected tax associated with the pre-tax income generated for the given ~~year~~period and certain regulatory requirements. The effective tax rate was ~~22.3%~~10.4% and ~~24.0%~~11.8% for the three and six months ended December 31, ~~2017, respectively compared to 26.3%~~2023 and ~~25.7%~~16.5% and 15.7% for the three and six months ended December 31, ~~2016.~~2022. The ~~decrease in the effective~~statutory 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% for the three months ended December 31, 2017 and decreased from 26.6% to 24.0% for the six months ended December 31, 2017 as a result of this adjustment.

The TCJA permanently reduces the maximum corporate income 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 as~~and income received on the ~~tax benefit derived from premiums paid to the Company’s pooled captive~~bank 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.

LIQUIDITY AND CAPITAL RESOURCES

Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates or prices such as interest rates, foreign currency exchange rates, commodity prices, and equity prices. ~~Greene County Bancorp, Inc.’s~~The Company’s most significant form of market risk is interest rate risk since the majority of ~~Greene County Bancorp, Inc.’s~~the Company’s assets and liabilities are sensitive to changes in interest rates. ~~Greene County Bancorp, Inc.’s~~The 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~~Community 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 December 31, 2023, the Company had $176.1 million in cash and cash equivalents, representing 6.4% of ~~Greene County’s unfunded loan commitments~~total assets, and had $175.4 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 December 31, 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 $233.5 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 $233.5 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 December 31, 2023, the overall brokered deposit balance amounted to $64.1 million, which included $15.0 million of NOW deposits in the form of IntraFi IND and $49.1 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 December 31, 2023, liquidity measures were as follows:

Cash equivalents/(deposits plus short term borrowings)	6.21	%
(Cash equivalents plus unpledged securities)/(deposits plus short term borrowings)	10.63	%
(Cash equivalents plus unpledged securities plus additional borrowing capacity)/(deposits plus short term borrowings)	17.82	%

Index

The Company’s off-balance sheet credit ~~are as follows~~exposures at December 31, ~~2017:~~2023:

(In thousands)
Unfunded loan commitments	$	127,098
Unused lines of credit		93,738
Standby letters of credit		179
Total commitments	$	221,015

(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.

~~Index~~

The Bank of Greene County and its wholly-owned subsidiary, Greene County Commercial Bank, met all applicable regulatory capital requirements at December 31, ~~2017~~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 December 31, 2023:

Total risk-based capital	$	267,630		16.9	%	$	126,940		8.0	%	$	158,675		10.0	%		8.87	%		2.50	%
Tier 1 risk-based capital		247,765		15.6			95,205		6.0			126,940		8.0			9.62			2.50
Common equity tier 1 capital		247,765		15.6			71,404		4.5			103,139		6.5			11.12			2.50
Tier 1 leverage ratio		247,765		9.3			107,023		4.0			133,779		5.0			5.26			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

Greene County Commercial Bank
As of December 31, 2023:

Total risk-based capital	$	106,922	47.2	%	$	18,124	8.0	%	$	22,655	10.0	%	39.20	%	2.50	%
Tier 1 risk-based capital		106,922	47.2			13,593	6.0			18,124	8.0		41.20		2.50
Common equity tier 1 capital		106,922	47.2			10,195	4.5			14,725	6.5		42.70		2.50
Tier 1 leverage ratio		106,922	8.9			48,003	4.0			60,004	5.0		4.91		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

(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

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable to smaller reporting companies.

Index

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.

~~Index~~

On July 1, 2023, the Company implemented the 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 been~~were 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.

Part II.

Other Information

Item 1.

Legal Proceedings

~~Greene County Bancorp, Inc.~~The Company and its subsidiaries are, ~~not engaged in any material~~from 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

Not applicable

~~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 December 31, 2023.

Item 3.

~~Item 3.~~

Defaults Upon Senior Securities

Not ~~applicable~~applicable.

Item 4.

~~Item 4.~~

Mine Safety Disclosures

Not ~~applicable~~applicable.

Item 5.

Other Information

During the quarter ended December 31, 2023, none of our directors or officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as that term is used in SEC regulations.

Index

Item 6.

Exhibits

~~Item 5.~~3.1

~~Other Information~~

~~Not applicable~~

~~There were no material changes~~Greene County Bancorp, Inc. Stock Holding Company Charter as amended on January 19, 2023 (filed as Exhibit 3.1 to ~~the procedures~~Registrant’s Form 10-Q, filed on February 10, 2023 and incorporated herein 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~~		reference).
31.1		Certification of Chief Executive Officer, adopted pursuant to Rule 13a-14(a)/15d-14(a)
31.2		Certification of Chief Financial Officer, adopted pursuant to Rule 13a-14(a)/15d-14(a)
32.1		Statement of Chief Executive Officer, furnished pursuant to U.S.C. Section 1350
32.2		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,~~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).
104	Cover Page Integrative Data File (formatted in iXBRL and included in exhibit 101).

Index

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: February 9, 2024

By: /s/ Donald E. Gibson

Donald E. Gibson

President and Chief Executive Officer

~~Date: February 14, 2018~~

~~By:~~ ~~/s/ Michelle M. Plummer~~

Date: February 9, 2024

By: /s/ Michelle M. Plummer

Michelle M. Plummer, CPA, CGMA

Senior Executive Vice President, Chief Financial Officer, and Chief Operating Officer

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

	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

(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

(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

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

(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

(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

	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

	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

	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

			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, 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	$	-

(Dollars in thousands)	Fair Value		Valuation Technique	Unobservable 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 flow	Discount 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 flow	Discount 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	%

	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

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

	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)
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	)

(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

	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	%

(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			Total Increase/ (Decrease)			Volume			Rate			Total Increase/ (Decrease)

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

(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	%

(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