Greene County Bancorp (GCBC) 10-Q 2025 Q2 Quarterly report

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, 2024

OR

☐ 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 of Registrant as Specified in its Charter)

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 telephone number, including area code: (518) 943-2600

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 every Interactive Data File required to be submitted 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 ☒

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 ☐ NO ☒

As of February 6, 2025, the registrant had 17,026,828 shares of common stock outstanding at $0.10 par value per share.

1

	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
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30-46
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	47
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits	48
	Signatures	49

2

Greene County Bancorp, Inc.

Consolidated Statements of Financial Condition

At December 31, 2024 and June 30, 2024

(Unaudited)

(In thousands, except share and per share amounts)

ASSETS	December 31, 2024			June 30, 2024
Cash and due from banks	$	9,218		$	13,897
Interest-bearing deposits		157,225			176,498
Total cash and cash equivalents		166,443			190,395
Long-term certificates of deposit		2,577			2,831
Securities available-for-sale, at fair value		374,453			350,001
Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $439 and $483 at December 31, 2024 and June 30, 2024		770,905			690,354
Equity securities, at fair value		371			328
Federal Home Loan Bank stock, at cost		10,669			7,296
Loans receivable		1,551,400			1,499,473
Allowance for credit losses on loans		(20,191	)		(19,244	)
Net loans receivable		1,531,209			1,480,229
Premises and equipment, net		15,416			15,606
Bank-owned life insurance		58,535			57,249
Accrued interest receivable		16,623			14,269
Prepaid expenses and other assets		18,570			17,230
Total assets	$	2,965,771		$	2,825,788
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits	$	112,470		$	125,442
Interest-bearing deposits		2,354,788			2,263,780
Total deposits		2,467,258			2,389,222
Borrowings, short-term		194,100			115,300
Borrowings, long-term		6,976			34,156
Subordinated notes payable, net		49,774			49,681
Accrued expenses and other liabilities		29,214			31,429
Total liabilities		2,747,322			2,619,788
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, 2024 and June 30, 2024; Outstanding – 17,026,828 shares at December 31, 2024, and June 30, 2024		1,722			1,722
Additional paid-in capital		10,156			10,156
Retained earnings		225,421			214,740
Accumulated other comprehensive loss		(17,942	)		(19,710	)
Treasury stock, at cost 195,852 shares at December 31, 2024 and June 30, 2024		(908	)		(908	)
Total shareholders’ equity		218,449			206,000
Total liabilities and shareholders’ equity	$	2,965,771		$	2,825,788

See notes to consolidated financial statements

3

Greene County Bancorp, Inc.

Consolidated Statements of Income

For the Three and Six Months Ended December 31, 2024 and 2023

(Unaudited)

(In thousands, except share and per share amounts)

	For the three months ended December 31,				For the six months ended December 31,
	2024		2023		2024		2023
Interest income:
Loans	$	19,480	$	17,776	$	38,723	$	34,981
Investment securities - tax exempt		4,943		4,334		9,411		8,624
Investment securities - taxable		3,598		2,378		6,967		4,639
Interest-bearing deposits and federal funds sold		1,397		1,105		2,086		2,021
Total interest income		29,418		25,593		57,187		50,265
Interest expense:
Interest on deposits		14,738		12,558		28,544		23,165
Interest on borrowings		612		647		1,439		1,273
Total interest expense		15,350		13,205		29,983		24,438
Net interest income		14,068		12,388		27,204		25,827
Provision for credit losses		478		170		1,112		627
Net interest income after provision for credit losses		13,590		12,218		26,092		25,200
Noninterest income:
Service charges on deposit accounts		1,273		1,227		2,499		2,457
Debit card fees		1,063		1,120		2,164		2,253
Investment services		252		206		500		449
E-commerce fees		34		30		71		59
Bank-owned life insurance		637		574		1,285		936
Other operating income		616		321		1,093		623
Total noninterest income		3,875		3,478		7,612		6,777
Noninterest expense:
Salaries and employee benefits		5,653		5,654		11,531		11,145
Occupancy expense		615		593		1,251		1,130
Equipment and furniture expense		193		238		343		376
Service and data processing fees		773		614		1,540		1,205
Computer software, supplies and support		404		471		759		982
Advertising and promotion		127		102		204		199
FDIC insurance premiums		347		314		669		626
Legal and professional fees		245		417		609		800
Other		1,029		923		2,030		1,708
Total noninterest expense		9,386		9,326		18,936		18,171
Income before provision for income taxes		8,079		6,370		14,768		13,806
Provision for income taxes		589		663		1,017		1,630
Net income	$	7,490	$	5,707	$	13,751	$	12,176
Basic and diluted earnings per share	$	0.44	$	0.34	$	0.81	$	0.72
Basic and diluted average shares outstanding		17,026,828		17,026,828		17,026,828		17,026,828

See notes to consolidated financial statements

4

Greene County Bancorp, Inc.

Consolidated Statements of Comprehensive Income

For the Three and Six Months Ended December 31, 2024 and 2023

(Unaudited)

(In thousands)

	For the three months ended December 31,					For the six months ended December 31,
	2024			2023		2024		2023
Net Income	$	7,490		$	5,707	$	13,751	$	12,176
Other comprehensive income:
Unrealized holding (losses) gains on securities available-for-sale, gross		(5,189	)		8,257		2,412		3,192
Tax effect		(1,387	)		2,207		644		854
Unrealized holding (losses) gains on securities available-for-sale, net		(3,802	)		6,050		1,768		2,338
Total other comprehensive (loss) income, net of taxes		(3,802	)		6,050		1,768		2,338
Comprehensive income	$	3,688		$	11,757	$	15,519	$	14,514

See notes to consolidated financial statements

5

Greene County Bancorp, Inc.

Consolidated Statements of Changes in Shareholders’ Equity

For the Three Months Ended December 31, 2024 and 2023

(Unaudited)

(In thousands)

	Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive loss			Treasury stock			Total shareholders' equity
Balance at September 30, 2024	$	1,722	$	10,156	$	219,468		$	(14,140	)	$	(908	)	$	216,298
Dividends declared						(1,537	)								(1,537	)
Net income						7,490									7,490
Other comprehensive loss, net of taxes									(3,802	)					(3,802	)
Balance at December 31, 2024	$	1,722	$	10,156	$	225,421		$	(17,942	)	$	(908	)	$	218,449

	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

Greene County Bancorp, Inc.

Consolidated Statements of Changes in Shareholders’ Equity

For the Six Months Ended December 31, 2024 and 2023

(Unaudited)

(In thousands)

	Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive  loss			Treasury stock			Total shareholders' equity
Balance at June 30, 2024	$	1,722	$	10,156	$	214,740		$	(19,710	)	$	(908	)	$	206,000
Dividends declared						(3,070	)								(3,070	)
Net income						13,751									13,751
Other comprehensive income, net of taxes									1,768						1,768
Balance at December 31, 2024	$	1,722	$	10,156	$	225,421		$	(17,942	)	$	(908	)	$	218,449

	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

See notes to consolidated financial statements

6

Greene County Bancorp, Inc.

Consolidated Statements of Cash Flows

For the Six Months Ended December 31, 2024 and 2023

(Unaudited)

(In thousands)

	2024			2023
Cash flows from operating activities:
Net Income	$	13,751		$	12,176
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		524			440
Deferred income tax benefit		(2,031	)		(48	)
Net (accretion) amortization of investment premiums and discounts		(329	)		657
Net amortization of deferred loan costs and fees		191			177
Amortization of subordinated debt issuance costs		93			93
Provision for credit losses		1,112			627
Bank-owned life insurance income		(1,285	)		(936	)
Net gain on equity securities		(43	)		(19	)
Net (decrease) increase in accrued income taxes		(140	)		678
Net increase in accrued interest receivable		(2,354	)		(2,250	)
Net decrease (increase) in prepaid expenses and other assets		186			(1,060	)
Net decrease in accrued expense and other liabilities		(2,215	)		(2,275	)
Net cash provided by operating activities		7,460			8,260
Cash flows from investing activities:
Securities available-for-sale:
Proceeds from maturities		88,417			82,091
Purchases of securities		(164,699	)		(107,484	)
Proceeds from principal payments on securities		54,751			1,757
Securities held-to-maturity:
Proceeds from maturities		19,598			27,168
Purchases of securities		(109,516	)		(13,824	)
Proceeds from principal payments on securities		9,235			11,185
Net purchase of Federal Home Loan Bank Stock		(3,373	)		(5,972	)
Maturity of long-term certificates of deposit		250			745
Surrender of bank owned life insurance		-			23,100
Purchase of bank owned life insurance		-			(23,104	)
Net increase in loans receivable		(52,327	)		(48,702	)
Purchases of premises and equipment		(334	)		(644	)
Net cash used in investing activities		(157,998	)		(53,684	)
Cash flows from financing activities:
Net increase in short-term advances		78,800			125,000
Proceeds from term advances		-			4,374
Repayment of long-term advances		(27,180	)		-
Payment of cash dividends		(3,070	)		(1,991	)
Net increase (decrease) in deposits		78,036			(102,324	)
Net cash provided by financing activities		126,586			25,059
Net decrease in cash and cash equivalents		(23,952	)		(20,365	)
Cash and cash equivalents at beginning of period		190,395			196,445
Cash and cash equivalents at end of period	$	166,443		$	176,080
Cash paid during period for:
Interest	$	30,399		$	24,354
Income taxes	$	664		$	1,000

See notes to consolidated financial statements

7

Greene County Bancorp, Inc.

Notes to Consolidated Financial Statements

At and for the Three and Six Months Ended December 31, 2024 and 2023

(1)      Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

Within the accompanying unaudited interim consolidated financial statements and related notes to the consolidated financial statements, the June 30, 2024 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 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, 2024 and 2023 are unaudited.  

The unaudited interim consolidated financial statements include the accounts of certain Variable Interest Entities (“VIE(s)”). In accordance with the applicable accounting guidance for consolidations, the Company consolidates a VIE if it has (i) a variable interest in the entity; (ii) the power to direct activities of the VIE that most significantly affect the entity’s economic performance; and (iii) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE (i.e., we are considered to be the primary beneficiary).

The Company uses the equity method to account for unconsolidated investments in VIEs if it has significant influence over the entity’s operating and financing decision.  Unconsolidated investments in VIEs in which the Company does not have significant influence, are carried at a cost measurement alternative. See Note 14, Variable Interest Entities for information on our involvement with VIEs.

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 year ended June 30, 2024, 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. Certain previous years’ amounts in the unaudited consolidated financial statements and notes thereto, have been reclassified to conform to the current year’s presentation.  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, 2024 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2025. These consolidated financial statements consider events that occurred through the date the consolidated financial statements were 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.

Nature of Operations

The Company’s primary business is the ownership and operation of its subsidiaries.  At December 31, 2024, the Bank has 18 full-service offices, lending centers, an operations center, customer call center, and wealth management center, located in its market area consisting of the Hudson Valley and Capital District Regions of New York State.  The Bank is primarily engaged in the business of attracting deposits from the general public in the Bank’s market area, and investing such deposits, together with other sources of funds, in loans and investment securities.  The Commercial Bank’s primary business is to attract deposits from, and provide banking services to, local municipalities.  Greene Property Holdings, Ltd. was formed as a New York corporation that has elected under the Internal Revenue Code to be a real estate investment trust.  Currently, certain mortgages and loan notes held by the Bank are transferred and beneficially owned by Greene Property Holdings, Ltd.  The Bank continues to service these loans.  

Use of Estimates

The preparation of 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 credit losses (“ACL”) on loans and on unfunded commitments.

8

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.

Income Taxes

The Company uses the proportional amortization method for solar tax credit investments, whereby the associated tax credits are recognized as a reduction to tax expense.  Certain federal tax credits that are non-refundable and transferable under applicable regulations are accounted for as government grants and recorded as a reduction to the amortized cost or net investment in the applicable asset generating the credit, generally within “other assets.” Amounts are amortized through depreciation or as an adjustment to yield over the estimated life of the asset.  Any gain or loss on the transfer of a tax credit is recorded within “other income.”

(2)      Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In March 2023, the FASB issued ASU 2023-02, Investments – Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Tax Credit Structures using the Proportional Amortization Method, which permits reporting entities to elect to account for their tax equity investments, regardless of their tax credit program from which the income tax credits are received.  The election can be made for each qualifying tax credit investment.  Under the proportional amortization method, the initial cost of an investment is amortized in proportion to the amount of tax credits and other tax benefits received, with the amortization and tax credits recognized as a component of income tax expense.  To qualify for the proportional amortization method, all of the following conditions must be met: (1) It is probable that the income tax credits allocated to the tax equity investor will be available; (2) The tax equity investor does not have the ability to excise significant influence over the operating and financial policies of the underlying project; (3) Substantially all of the projected benefits are from income tax credits and other income tax benefits; (4) The tax equity investor’s projected yield is based solely on the cash flows from the income tax credits and other income tax benefits is positive; and (5) The tax equity investor is a limited liability investor in the limited liability entity for legal and tax purposes, and the tax equity investor’s liability is limited to its capital investment.  

A reporting entity that applies the proportional amortization method to qualifying tax equity investments must account for the receipt of the investment tax credits using the flow-through method under Topic 740, Income Taxes.  The amendments also require the application of the delayed equity contribution guidance to all tax equity investments, and require specific disclosures that must be applied to all investments that generate income tax credits and other income tax benefits from a tax credit program for which the entity has elected to apply the proportional amortization method in accordance with Subtopic 323-740.

Under the proportional amortization method, the investment shall be tested for impairment when events or changes in circumstances indicate that is more likely than not that the carrying amount of the investment will not be realized.  An impairment loss shall be measured as the amount by which the carrying amount of the investment exceeds its fair value.  A previously recognized impairment loss shall not be reversed.  The Company adopted ASU 2023-02 during the quarter ended September 30, 2024.  The Company’s adoption of this standard did not have a material impact on the consolidated financial statements.

Accounting Standards Issued Not Yet Adopted

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements, which amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification.  The ASU was issued in response to the SEC’s August 2018 final rule that updated and simplified disclosure requirements that the SEC believed were redundant, duplicative, overlapping, outdated, or superseded.  The new guidance is intended to align GAAP requirements with those of the SEC.  The ASU will become effective on the earlier of the date on which the SEC removes its disclosure requirements for the related disclosure or June 30, 2027.  Early adoption is not permitted.  The Company’s adoption of this standard is not expected to have a material impact on the consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, to improve the reportable segment disclosures by requiring disclosure of incremental segment information on an annual and interim basis. In addition, the amendments will enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss provide new segment disclosure requirements for entities with a single reportable segment and contain other disclosure requirements.  The amendments in this ASU are effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s adoption of this standard is not expected to have a material impact on the consolidated financial statements.  

9

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures, which will require public entities to disclose annually a tabular rate reconciliation, including specific items such as state and local income tax, tax credits, nontaxable or nondeductible items, among others, and a separate disclosure requiring disaggregation of reconciling items as described above which equal or exceed 5% of the product of multiplying income from continuing operations by the applicable statutory income tax rate. The ASU is effective for annual periods beginning after December 31, 2024. The Company’s adoption of this standard is not expected to have a material impact on the consolidated financial statements.

(3)        Securities

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

	At December 31, 2024
(In thousands)	Amortized cost (1)		Unrealized gains		Unrealized losses		Fair value
U.S. Treasury securities	$	18,177	$	-	$	1,250	$	16,927
U.S. government sponsored enterprises		13,036		-		1,846		11,190
State and political subdivisions		221,696		1,122		1		222,817
Mortgage-backed securities-residential		36,853		43		3,815		33,081
Mortgage-backed securities-multi-family		89,071		-		17,116		71,955
Corporate debt securities		19,386		56		959		18,483
Total securities available-for-sale	$	398,219	$	1,221	$	24,987	$	374,453

	At June 30, 2024
(In thousands)	Amortized cost (1)		Unrealized gains		Unrealized losses		Fair value
U.S. Treasury securities	$	43,024	$	-	$	1,829	$	41,195
U.S. government sponsored enterprises		13,042		-		2,068		10,974
State and political subdivisions		169,842		828		1		170,669
Mortgage-backed securities-residential		40,402		67		3,894		36,575
Mortgage-backed securities-multi-family		90,261		-		17,961		72,300
Corporate debt securities		19,608		15		1,335		18,288
Total securities available-for-sale	$	376,179	$	910	$	27,088	$	350,001

(1)

Amortized cost excludes accrued interest receivable of $4.5 million and $4.0 million at December 31, 2024 and June 30, 2024, 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 as of quarter ended December 31, 2024 and June 30, 2024.

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, 2024
(In thousands)	Amortized cost (1)		Unrealized gains		Unrealized losses		Fair value		Allowance		Net carrying value
U.S. Treasury securities	$	23,820	$	-	$	1,335	$	22,485	$	-	$	23,820
State and political subdivisions		458,289		6,480		35,267		429,502		42		458,247
Mortgage-backed securities-residential		123,544		72		4,165		119,451		-		123,544
Mortgage-backed securities-multi-family		140,306		-		15,777		124,529		-		140,306
Corporate debt securities		25,355		28		1,857		23,526		396		24,959
Other securities		30		-		-		30		1		29
Total securities held-to-maturity	$	771,344	$	6,580	$	58,401	$	719,523	$	439	$	770,905

10

	At June 30, 2024
(In thousands)	Amortized cost (1)		Unrealized gains		Unrealized losses		Fair value		Allowance		Net carrying value
U.S. Treasury securities	$	23,785	$	-	$	1,749	$	22,036	$	-	$	23,785
State and political subdivisions		450,343		4,541		40,235		414,649		44		450,299
Mortgage-backed securities-residential		48,033		51		3,314		44,770		-		48,033
Mortgage-backed securities-multi-family		143,363		-		17,397		125,966		-		143,363
Corporate debt securities		25,282		12		2,505		22,789		438		24,844
Other securities		31		-		-		31		1		30
Total securities held-to-maturity	$	690,837	$	4,604	$	65,200	$	630,241	$	483	$	690,354

(1)

Amortized cost excludes accrued interest receivable of $5.2 million and $4.1 million at December 31, 2024 and June 30, 2024, respectively, which is included in accrued interest receivable in the consolidated statements of financial condition.

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 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.  As of December 31, 2024, 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 balance sheet derivative or hedging investment transactions, such as balance sheet interest rate swaps or caps.

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

(In thousands)	Three months ended December 31, 2024			Six months ended December 31, 2024
Balance at beginning of period	$	466		$	483
Benefit for credit losses		(27	)		(44	)
Balance at end of period	$	439		$	439

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

11

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, 2024.  

	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. Treasury securities	$	236	$	2		1	$	16,691	$	1,248		7	$	16,927	$	1,250		8
U.S. government sponsored enterprises		-		-		-		11,190		1,846		5		11,190		1,846		5
State and political subdivisions		-		-		-		63		1		1		63		1		1
Mortgage-backed securities-residential		4,685		23		2		21,360		3,792		23		26,045		3,815		25
Mortgage-backed securities-multi-family		-		-		-		71,955		17,116		30		71,955		17,116		30
Corporate debt securities		-		-		-		16,503		959		14		16,503		959		14
Total securities available-for-sale		4,921		25		3		137,762		24,962		80		142,683		24,987		83
Securities held-to-maturity:
U.S. Treasury securities		-		-		-		22,485		1,335		7		22,485		1,335		7
State and political subdivisions		48,382		777		415		245,698		34,490		1,671		294,080		35,267		2,086
Mortgage-backed securities-residential		77,859		1,178		12		27,747		2,987		27		105,606		4,165		39
Mortgage-backed securities-multi-family		-		-		-		124,529		15,777		49		124,529		15,777		49
Corporate debt securities		-		-		-		20,999		1,857		18		20,999		1,857		18
Total securities held-to-maturity		126,241		1,955		427		441,458		56,446		1,772		567,699		58,401		2,199
Total securities	$	131,162	$	1,980		430	$	579,220	$	81,408		1,852	$	710,382	$	83,388		2,282

The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2024.  

	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. Treasury securities	$	24,574	$	215		1	$	16,621	$	1,614		8	$	41,195	$	1,829		9
U.S. government sponsored enterprises		-		-		-		10,974		2,068		5		10,974		2,068		5
State and political subdivisions		-		-		-		62		1		1		62		1		1
Mortgage-backed securities-residential		1,913		8		2		22,700		3,886		23		24,613		3,894		25
Mortgage-backed securities-multi-family		-		-		-		72,300		17,961		31		72,300		17,961		31
Corporate debt securities		-		-		-		16,360		1,335		16		16,360		1,335		16
Total securities available-for-sale		26,487		223		3		139,017		26,865		84		165,504		27,088		87
Securities held-to-maturity:
U.S. Treasury securities		-		-		-		22,036		1,749		7		22,036		1,749		7
State and political subdivisions		32,215		474		294		278,521		39,761		2,025		310,736		40,235		2,319
Mortgage-backed securities-residential		-		-		-		29,510		3,314		28		29,510		3,314		28
Mortgage-backed securities-multi-family		-		-		-		125,966		17,397		47		125,966		17,397		47
Corporate debt securities		-		-		-		20,276		2,505		41		20,276		2,505		41
Total securities held-to-maturity		32,215		474		294		476,309		64,726		2,148		508,524		65,200		2,442
Total securities	$	58,702	$	697		297	$	615,326	$	91,591		2,232	$	674,028	$	92,288		2,529

There were no transfers of securities available-for-sale to held-to-maturity during the three and six months ended December 31, 2024 and 2023. During the three and six months ended December 31, 2024 and 2023, there were no sales of securities and no gains or losses were recognized.

12

The estimated fair values of debt securities at December 31, 2024, 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	$	221,897	$	223,014
After one year through five years		39,978		37,718
After five years through ten years		10,420		8,685
After ten years		-		-
Total securities available-for-sale		272,295		269,417
Mortgage-backed securities		125,924		105,036
Total securities available-for-sale		398,219		374,453
Securities held-to-maturity
Within one year		57,659		57,233
After one year through five years		164,880		161,660
After five years through ten years		181,286		164,244
After ten years		103,669		92,406
Total securities held-to-maturity		507,494		475,543
Mortgage-backed securities		263,850		243,980
Total securities held-to-maturity		771,344		719,523
Total securities	$	1,169,563	$	1,093,976

At December 31, 2024 and June 30, 2024, securities with an aggregate fair value of $1.0 billion and $894.5 million, respectively, were pledged as collateral for deposits in excess of FDIC insurance limits for various municipalities placing deposits with the Commercial Bank. At December 31, 2024 and June 30, 2024, securities with an aggregate fair value of $19.4 million and $40.0 million, respectively, were pledged as collateral for potential borrowings at the Federal Reserve Bank discount window. The Company did not participate in any securities lending programs during the three and six months ended December 31, 2024 or 2023.

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.  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, the Company concluded that the par value of its investment in FHLB stock will be recovered and, therefore, no credit loss was recorded during the three and six months ended December 31, 2024 or 2023.

13

(4)       Loans and Allowance for Credit Losses on Loans

Loan segments at December 31, 2024 and June 30, 2024 are summarized as follows:

(In thousands)	December 31, 2024			June 30, 2024
Residential real estate	$	418,968		$	417,589
Commercial real estate		983,072			936,640
Home equity		31,780			29,166
Consumer		4,672			4,771
Commercial		112,908			111,307
Total gross loans(1)(2)		1,551,400			1,499,473
Allowance for credit losses on loans		(20,191	)		(19,244	)
Loans receivable, net	$	1,531,209		$	1,480,229

(1)

Loan balances include net deferred fees/costs of ($188,000) and ($42,000) at December 31, 2024 and June 30, 2024, respectively.

(2)

Loan balances exclude accrued interest receivable of $6.9 million and $6.2 million at December 31, 2024 and June 30, 2024, respectively, which is included in accrued interest receivable in the consolidated statement of financial condition.

Non-accrual Loans

Management places loans on non-accrual status once the loans have become 90 days or more delinquent. A non-accrual 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 non-accrual. Loans on non-accrual status totaled $4.1 million at December 31, 2024, of which there were three residential real estate loans totaling $478,000 and three commercial real estate loans totaling $1.1 million that were in the process of foreclosure. Included in non-accrual loans were $1.3 million of loans which were less than 90 days past due at December 31, 2024, 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 non-accrual status totaled $3.7 million at June 30, 2024, of which four residential real estate loans totaling $686,000 and three commercial real estate loans totaling $1.6 million were in the process of foreclosure. Included in non-accrual loans were $1.5 million of loans which were less than 90 days past due at June 30, 2024, but have a recent history of delinquency greater than 90 days past due. The activity in non-performing loans during the period included $723,000 in loan repayments, $30,000 in charge-offs or transfers to foreclosure, and $1.2 million of loans placed into non-performing status.

The following table sets forth information regarding delinquent and/or non-accrual loans at December 31, 2024:

(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	$	2,289	$	983	$	1,920	$	5,192	$	413,776	$	418,968	$	2,937
Commercial real estate		110		-		658		768		982,304		983,072		936
Home equity		51		-		33		84		31,696		31,780		34
Consumer		1		26		-		27		4,645		4,672		-
Commercial loans		32		68		148		248		112,660		112,908		148
Total gross loans	$	2,483	$	1,077	$	2,759	$	6,319	$	1,545,081	$	1,551,400	$	4,055

The following table sets forth information regarding delinquent and/or non-accrual loans at June 30, 2024:

(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	$	-	$	838	$	1,414	$	2,252	$	415,337	$	417,589	$	2,518
Commercial real estate		-		-		806		806		935,834		936,640		1,163
Home equity		14		-		47		61		29,105		29,166		47
Consumer		47		6		-		53		4,718		4,771		-
Commercial		-		-		-		-		111,307		111,307		-
Total gross loans	$	61	$	844	$	2,267	$	3,172	$	1,496,301	$	1,499,473	$	3,728

At December 31, 2024 and June 30, 2024, the Company had no accruing loans delinquent 90 days or more.   

14

Allowance for Credit Losses on Loans

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 current 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 collateral dependent loans that are on non-accrual 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 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.

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, 2024
(In thousands)	Residential real estate		Commercial real estate		Home equity		Consumer			Commercial			Total
Balance at September 30, 2024	$	4,475	$	12,648	$	232	$	454		$	1,972		$	19,781
Charge-offs		-		-		-		(123	)		(7	)		(130	)
Recoveries		-		1		-		25			9			35
Provision		56		284		2		58			105			505
Balance at December 31, 2024	$	4,531	$	12,933	$	234	$	414		$	2,079		$	20,191

	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, 2024
(In thousands)	Residential Real Estate			Commercial Real Estate			Home Equity			Consumer			Commercial			Total
Balance at June 30, 2024	$	4,237		$	12,218		$	212		$	500		$	2,077		$	19,244
Charge-offs		(44	)		(5	)		(13	)		(200	)		(13	)		(275	)
Recoveries		2			2			-			44			18			66
Provision		336			718			35			70			(3	)		1,156
Balance at December 31, 2024	$	4,531		$	12,933		$	234		$	414		$	2,079		$	20,191

15

	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

Credit monitoring process

Management closely monitors the quality of the loan portfolio and has established a loan review process designed to help monitor any change in borrower risk during the life cycle of their loan. The Company utilizes a credit quality grading system that is used at loan inception and updated as appropriate based on an annual review process. The credit quality grade helps management make a consistent assessment of each loan relationship’s credit risk and identify any portfolio trends that could impact profitability. Consistent with regulatory guidelines, the Company provides for the classification of loans, such as “Pass,” “Special Mention,” “Substandard,” “Doubtful” and “Loss” classifications.

Commercial grading system

Loss

Loss ratings are loans that are considered uncollectible and of such little value that their continuance as active assets of the Company is not warranted.  Loss rating does not necessarily mean that the loan has no recovery or salvage value, however, it is not practical or desirable to defer charging off the loan.

Doubtful

Doubtful ratings are loans that have all the weakness inherent in loans classified as 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.  Doubtful ratings generally are non-performing and considered to have a high risk of default.

Substandard

Substandard ratings are loans that possess well-defined weaknesses that jeopardize the orderly liquidation of debt, and are characterized by the distinct possibility that the Company will sustain some loss, if the deficiencies are not corrected. Substandard ratings are inadequately protected by the current sound worth and paying capacity of the borrower or the collateral pledged, if any.

Special mention

Special mention ratings are loans that have potential weaknesses or emerging problems, which require close attention.  These weaknesses, if left uncorrected, could lead to deterioration in the repayment prospects for the loan or the Company’s collateral position in the future.  Special mention loans are less risky than substandard assets as no loss of principal or interest is anticipated unless, the potential problems continue for a prolonged basis.

Pass

Pass ratings are loans that do not encompass loans graded as Loss, Doubtful, Substandard, or Special mention.  Pass loans range from Pass/Watch, Acceptable, Average, Satisfactory, Good and Excellent. Pass loans demonstrate sufficient cash flow to ensure full repayment of the loan with Pass ratings being determined by the quality of the collateral and equity position, stability of operations or management, and the guarantors.

Residential and consumer grading system

Residential real estate, home equity and consumer loans are graded as either non-performing or performing.

16

Non-performing

Non-performing loans are loans in which the borrower has not made the scheduled payments of principal or interest, and are generally loans over 90 days past due and still accruing interest, and loans on non-accrual status.

Performing

Performing loans are those loans in which the borrower is making timely payments of both principal and interest as upon the agreed loan terms.

The following tables present the amortized cost basis of the Company’s loans by class and vintage and includes gross charge-offs by loan class and vintage as of the six months ended December 31, 2024:

	At December 31, 2024
	Term loans amortized cost basis by origination year												Revolving loans amortized cost basis		Revolving loans converted to term		Total
(In thousands)	2025		2024		2023		2022		2021		Prior
Residential real estate
By payment activity status:
Performing	$	20,573	$	56,299	$	61,329	$	88,973	$	75,098	$	113,759	$	-	$	-	$	416,031
Non-performing		-		-		-		60		-		2,877		-		-		2,937
Total residential real estate		20,573		56,299		61,329		89,033		75,098		116,636		-		-		418,968
Current period gross charge-offs		-		-		-		-		44		-		-		-		44
Commercial real estate
By internally assigned grade:
Pass		76,133		116,089		188,886		238,533		122,362		196,346		3,675		2,464		944,488
Special mention		-		-		7,985		667		279		5,947		-		-		14,878
Substandard		-		325		2,654		3,450		158		17,119		-		-		23,706
Total commercial real estate		76,133		116,414		199,525		242,650		122,799		219,412		3,675		2,464		983,072
Current period gross charge-offs		-		-		-		-		-		5		-		-		5
Home equity
By payment activity status:
Performing		1,649		5,394		2,652		282		376		1,013		20,380		-		31,746
Non-performing		-		-		-		-		-		2		32		-		34
Total home equity		1,649		5,394		2,652		282		376		1,015		20,412		-		31,780
Current period gross charge-offs		-		-		-		-		-		-		13		-		13
Consumer
By payment activity status:
Performing		1,139		1,697		947		503		215		83		88		-		4,672
Non-performing		-		-		-		-		-		-		-		-		-
Total Consumer		1,139		1,697		947		503		215		83		88		-		4,672
Current period gross charge-offs		158		36		-		5		1		-		-		-		200
Commercial
By internally assigned grade:
Pass		6,059		11,766		8,921		5,995		13,607		17,314		39,596		-		103,258
Special mention		-		-		-		5,504		-		147		421		192		6,264
Substandard		-		-		-		1,687		32		649		1,018		-		3,386
Total Commercial	$	6,059	$	11,766	$	8,921	$	13,186	$	13,639	$	18,110	$	41,035	$	192	$	112,908
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	13	$	-	$	13

17

The following tables present the amortized cost basis of the Company’s loans by class and vintage and includes gross charge-offs by loan class and vintage as of the twelve months ended June 30, 2024:

	At June 30, 2024
	Term loans amortized cost basis by origination year												Revolving loans amortized cost basis		Revolving loans converted to term		Total
(In thousands)	2024		2023		2022		2021		2020		Prior
Residential real estate
By payment activity status:
Performing	$	55,070	$	62,643	$	92,995	$	79,815	$	32,588	$	91,936	$	-	$	24	$	415,071
Non-performing		-		-		-		185		169		2,164		-		-		2,518
Total residential real estate		55,070		62,643		92,995		80,000		32,757		94,100		-		24		417,589
Current period gross charge-offs		-		-		-		-		-		-		-		-		-
Commercial real estate
By internally assigned grade:
Pass		103,537		210,652		242,917		126,135		79,431		135,928		4,716		363		903,679
Special mention		-		1,188		2,468		295		430		4,102		-		-		8,483
Substandard		329		1,680		3,493		158		4,046		14,772		-		-		24,478
Total commercial real estate		103,866		213,520		248,878		126,588		83,907		154,802		4,716		363		936,640
Current period gross charge-offs		-		-		-		-		-		-		-		-		-
Home equity
By payment activity status:
Performing		5,929		2,888		336		429		266		1,128		18,143		-		29,119
Non-performing		-		-		-		-		-		-		47		-		47
Total home equity		5,929		2,888		336		429		266		1,128		18,190		-		29,166
Current period gross charge-offs		-		-		-		-		-		-		-		-		-
Consumer
By payment activity status:
Performing		2,363		1,217		689		277		83		65		77		-		4,771
Non-performing		-		-		-		-		-		-		-		-		-
Total Consumer		2,363		1,217		689		277		83		65		77		-		4,771
Current period gross charge-offs		393		22		49		7		1		-		9		-		481
Commercial
By internally assigned grade:
Pass		12,761		8,919		12,845		14,587		4,934		15,280		32,001		636		101,963
Special mention		-		-		78		-		35		834		3,893		-		4,840
Substandard		-		-		1,765		34		165		265		2,275		-		4,504
Total Commercial	$	12,761	$	8,919	$	14,688	$	14,621	$	5,134	$	16,379	$	38,169	$	636	$	111,307
Current period gross charge-offs	$	-	$	-	$	-	$	989	$	-	$	137	$	26	$	-	$	1,152

No loans were classified as doubtful or loss at December 31, 2024 or June 30, 2024. Management continues to monitor classified loan relationships closely.

Allowance for Credit Losses on Unfunded Commitments

The allowance for credit losses on unfunded commitments at December 31, 2024 was $1.7 million as compared to $1.3 million at June 30, 2024.

18

Individually Evaluated Loans

As of December 31, 2024, loans evaluated individually had an amortized cost basis of $1.6 million, with an allowance for credit losses on loans of $548,000, as compared to $1.4 million, with an allowance for credit losses on loans of $662,000 at June 30, 2024. At December 31, 2024, the amortized cost basis of collateral dependent loans was $343,000 and $1.3 million for commercial and residential real estate loans, respectively. At June 30, 2024, the amortized cost basis of collateral dependent loans was $631,000 and $774,000 for commercial and residential real estate loans, respectively. The allowance for credit loss for collateral dependent loans is individually assessed based on the fair value of the collateral less costs to sell at the reporting date. The collateral value associated with collateral dependent loans was $1.1 million and $662,000 at December 31, 2024 and June 30, 2024, respectively.

Loan Modifications to Borrowers Experiencing Financial Difficulties

The following tables present the amortized cost basis of the loans modified to borrowers experiencing financial difficulty by type of concession granted:

	For the three and six months ended December 31, 2024
	Interest rate reduction
(Dollars in thousands)	Amortized cost		Percentage of total class
Commercial real estate	$	2,569		0.26	%
Total	$	2,569

The following table presents the financial effect of the modifications made to borrowers experiencing financial difficulty:

	For the three and six months ended December 31, 2024
Loan type		Interest rate reduction
Commercial real estate		Interest rates were reduced by an average of 1.45%

For the three and six months ended December 31, 2023, there were no loans modified to borrowers experiencing financial difficulty.

The Company closely monitors the performance of loans that have been modified in accordance with ASU 2022-02. There was one consumer loan of $18,000, which was modified during the prior twelve months ended December 31, 2024 and was in payment default. There were three commercial real estate loans of $6.6 million, that were modified during the prior twelve months ended December 31, 2024 and are performing within their modified terms with no payment defaults.

The following table depicts the performance of loans that have been modified to borrowers experiencing financial difficulty that were modified in the prior twelve months at amortized cost basis:

	At December 31, 2024
(In thousands)	Current		30-59 days past due		60-89 days past due		90 days or more past due		Total
Commercial real estate	$	6,645	$	-	$	-	$	-	$	6,645
Consumer		-		-		18		-		18
Total	$	6,645	$	-	$	18	$	-	$	6,663

The Company adopted ASU 2022-02 on July 1, 2023 and as of the six months ended December 31, 2023, there were no loans modified to borrowers experiencing financial difficulty.

Foreclosed real estate

Foreclosed real estate (“FRE”) consists of properties acquired through mortgage loan foreclosure proceedings, deed in lieu of foreclosure or in full or partial satisfaction of loans. At December 31, 2024 and June 30, 2024, the Company had no foreclosed real estate.

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(5)       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 as of December 31, 2024 and June 30, 2024 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 from the amounts reported at each period-end.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.  

The FASB ASC Topic 820 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.

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, 2024		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Treasury securities	$	16,927	$	-	$	16,927	$	-
U.S. government sponsored enterprises		11,190		-		11,190		-
State and political subdivisions		222,817		-		222,817		-
Mortgage-backed securities-residential		33,081		-		33,081		-
Mortgage-backed securities-multi-family		71,955		-		71,955		-
Corporate debt securities		18,483		-		18,483		-
Securities available-for-sale		374,453		-		374,453		-
Equity securities		371		371		-		-
Interest rate swaps		757				757
Total	$	375,581	$	371	$	375,210	$	-
Liabilities:
Interest rate swaps	$	757	$	-	$	757	$	-
Total	$	757	$	-	$	757	$	-

20

			Fair Value Measurements Using
			Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(In thousands)	June 30, 2024		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Treasury securities	$	41,195	$	-	$	41,195	$	-
U.S. government sponsored enterprises		10,974		-		10,974		-
State and political subdivisions		170,669		-		170,669		-
Mortgage-backed securities-residential		36,575		-		36,575		-
Mortgage-backed securities-multi-family		72,300		-		72,300		-
Corporate debt securities		18,288		-		18,288		-
Securities available-for-sale		350,001		-		350,001		-
Equity securities		328		328		-		-
Interest rate swaps		585		-		585		-
Total	$	350,914	$	328	$	350,586	$	-
Liabilities:
Interest rate swaps	$	585	$	-	$	585	$	-
Total	$	585	$	-	$	585	$	-

Certain investments that are actively traded and have quoted market prices have been classified as Level 1 valuations.  Other investment securities available-for-sale 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 820 on “Fair Value Measurement” requires disclosures for assets and liabilities measured at fair value on a nonrecurring basis, such as loans evaluated individually for expected credit losses in the period in which a re-measurement at fair value is performed. The Company uses the fair value of underlying collateral, less costs to sell, to estimate the allowance for credit losses for individually evaluated loans. Management may modify the appraised values, for qualitative factors such as economic conditions and estimated liquidation expenses ranging from 8% to 45%. Such modifications to the appraised values could result in lower valuations of such collateral. Based on the valuation techniques used, the fair value measurements for loans evaluated individually are classified as Level 3. 

Fair values for foreclosed real estate are initially recorded at the estimated fair value of the property less estimated costs to dispose at the time of acquisition to establish a new carrying value. Values are derived from appraisals, similar to loans evaluated individually for expected credit loss, of underlying collateral. Any write-downs from the carrying value of the loan to estimated fair value, which are required at the time of foreclosure, are charged to the allowance for credit losses. Subsequent adjustments to the carrying value of such properties resulting from declines in fair value result in the establishment of a valuation allowance and are charged to operations in the period in which the declines occur. In the determination of fair value subsequent to foreclosure, management may modify the appraised values, for qualitative factors such as economic conditions and estimated liquidation expenses ranging from 10% to 60%. Such modifications to the appraised values could result in lower valuations of such collateral. Based on the valuation techniques used, the fair value measurements for foreclosed real estate are classified as Level 3.

			December 31, 2024				June 30, 2024
(In thousands)	Fair value hierarchy		Carrying amount		Estimated fair value		Carrying amount		Estimated fair value
Loans evaluated individually		3	$	1,611		1,063	$	1,405	$	662

No other financial assets or liabilities were re-measured during the three and six month period on a nonrecurring basis.

21

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 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 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. Fair value for subordinated notes payable is estimated based on a discounted cash flow methodology or observations of recent highly similar transactions. Fair value for interest rate swaps include any accrued interest and are valued using the present value of cash flows discounted using observable forward rate assumptions. The Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy.

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

	December 31, 2024				Fair value measurements using
(In thousands)	Carrying amount		Fair value		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	166,443	$	166,443	$	166,443	$	-	$	-
Long-term certificates of deposit		2,577		2,563		-		2,563		-
Securities available-for-sale		374,453		374,453		-		374,453		-
Securities held-to-maturity		770,905		719,523		-		719,523		-
Equity securities		371		371		371		-		-
Federal Home Loan Bank stock		10,669		10,669		-		10,669		-
Net loans receivable		1,531,209		1,452,668		-		-		1,452,668
Accrued interest receivable		16,623		16,623		-		16,623		-
Interest rate swaps asset		757		757		-		757		-
Deposits		2,467,258		2,466,667		-		2,466,667		-
Borrowings		201,076		201,387		-		201,387		-
Subordinated notes payable, net		49,774		47,738		-		47,738		-
Accrued interest payable		1,135		1,135		-		1,135		-
Interest rate swaps liability		757		757		-		757		-

	June 30, 2024				Fair value measurements using
(In thousands)	Carrying amount		Fair value		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	190,395	$	190,395	$	190,395	$	-	$	-
Long-term certificate of deposit		2,831		2,760		-		2,760		-
Securities available-for-sale		350,001		350,001		-		350,001		-
Securities held-to-maturity		690,354		630,241		-		630,241		-
Equity securities		328		328		328		-		-
Federal Home Loan Bank stock		7,296		7,296		-		7,296		-
Net loans receivable		1,480,229		1,387,325		-		-		1,387,325
Accrued interest receivable		14,269		14,269		-		14,269		-
Interest rate swap asset		585		585		-		585		-
Deposits		2,389,222		2,388,305		-		2,388,305		-
Borrowings		149,456		149,438		-		149,438		-
Subordinated notes payable, net		49,681		46,114		-		46,114		-
Accrued interest payable		1,551		1,551		-		1,551		-
Interest rate swap liability		585		585		-		585		-

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(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 on 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, 2024
	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	$	98,569	$	757	Other Liabilities	$	98,569	$	757
Less cash collateral					-	Other Liabilities				-
Total after netting				$	757				$	757

	At June 30, 2024
	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	$	50,707	$	585	Other Liabilities	$	50,707	$	585
Less cash collateral					-	Other Liabilities				(410	)
Total after netting				$	585				$	175

23

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 RPAs participations-out are spread out over three financial institution counterparties and terms range between four to eight years. The Company’s credit exposure transferred out was zero and $105,000 as of December 31, 2024 and June 30, 2024, respectively. The Company transferred out RPAs with a notional amount of $16.6 million and $8.0 million as of December 31, 2024 and June 30, 2024, respectively.

RPAs where the Company acts as the participating bank are referred to as “participations-in,” in reference to the credit risk associated with the counterparty’s derivatives being assumed by the Company. The Company’s maximum credit exposure is based on its proportionate share of the settlement amount of the referenced interest rate swap. Settlement amounts are generally calculated based on the fair value of the swap plus outstanding accrued interest receivables from the customer. The RPAs participations-ins are spread out over five financial institution counterparties and terms range between two to twelve years. The credit exposure associated with risk participations-ins was $137,000 and $276,000 as of December 31, 2024 and June 30, 2024, respectively. The Company held RPAs with a notional amount of $120.5 million and $112.3 million as of December 31, 2024 and June 30, 2024, respectively.

(7)       Earnings Per Share

Basic earnings per share (“EPS”) 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. Unallocated common shares held by the ESOP are not included in the weighted-average number of common shares outstanding for either the basic or diluted EPS calculations.  There were no dilutive or anti-dilutive securities or contracts outstanding during the three and six months ended December 31, 2024 and 2023.  

	For the three months ended December 31,				For the six months ended December 31,
	2024		2023		2024		2023
Net Income	$	7,490,000	$	5,707,000	$	13,751,000	$	12,176,000
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	$	0.44	$	0.34	$	0.81	$	0.72
Earnings per share - diluted	$	0.44	$	0.34	$	0.81	$	0.72

(8)       Dividends

On October 16, 2024, the Company announced that its Board of Directors has approved a quarterly cash dividend of $0.09 per share on the Company’s common stock. The dividend reflects an annual cash dividend rate of $0.36 per share, which is the same rate as the dividend declared during the previous quarter. The dividend was payable to stockholders of record as of November 15, 2024, and was paid on November 29, 2024. Greene County Bancorp, MHC did not waive its right to receive this dividend.

24

(9)      Employee Benefit Plans

Defined Benefit Plan

The components of net periodic pension cost related to the defined benefit pension plan were as follows:

	Three months ended December 31,						Six months ended December 31,
(In thousands)	2024			2023			2024			2023
Interest cost	$	53		$	52		$	106		$	104
Expected return on plan assets		(57	)		(55	)		(114	)		(110	)
Amortization of net loss		8			19			16			38
Net periodic pension expense	$	4		$	16		$	8		$	32

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 2025.

SERP

The Board of Directors of The Bank of Greene County adopted The Bank of Greene County Supplemental Executive Retirement Plan (the “SERP”), effective as of July 1, 2010. The SERP benefits certain key senior executives of the Bank who have been selected by the Board to participate. The SERP 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 is more fully described in Note 9, Employee Benefits Plans of the consolidated financial statements presented in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

The net periodic pension costs related to the SERP for the three and six months ended December 31, 2024 were $536,000 and $1.0 million, respectively, included within salaries and benefits expense on the consolidated statements of income. The total liability for the SERP was $16.5 million at December 31, 2024 and $15.2 million at June 30, 2024, and is included in accrued expenses and other liabilities. The total liability for the SERP includes both accumulated net periodic pension costs and participant contributions.

(10)      Stock-Based Compensation

Phantom Stock Option Plan and Long-term Incentive Plan

The Greene County Bancorp, Inc. 2011 Phantom Stock Option and 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. 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, Stock-Based Compensation of the consolidated financial statements presented in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

A summary of the Company’s phantom stock option activity and related information for the Plan for the three and six months ended December 31, 2024 and 2023 were as follows:

	Three months ended December 31,						Six months ended December 31,
	2024			2023			2024			2023
Number of options outstanding, beginning of period		2,656,630			3,207,935			2,253,535			2,535,840
Options granted		-			-			651,595			672,095
Options forfeited		(12,000	)		-			(12,000	)		-
Options paid in cash upon vesting		(771,040	)		(890,400	)		(1,019,540	)		(890,400	)
Number of options outstanding, end of period		1,873,590			2,317,535			1,873,590			2,317,535

25

	Three months ended December 31,				Six months ended December 31,
(In thousands)	2024		2023		2024		2023
Cash paid out on options vested	$	3,312	$	4,051	$	4,249	$	4,051
Compensation expense recognized	$	633	$	762	$	1,244	$	1,394

The total liability for the Plan was $2.5 million and $5.5 million at December 31, 2024 and June 30, 2024, respectively, and is included in accrued expenses and other liabilities on the consolidated statements of financial condition.

(11)      Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are presented as follows:

Activity for the three months ended December 31, 2024 and 2023

(In thousands)	Unrealized losses on securities available-for- sale			Pension benefits			Total
Balance – September 30, 2024	$	(13,612	)	$	(528	)	$	(14,140	)
Other comprehensive loss before reclassification		(3,802	)		-			(3,802	)
Other comprehensive loss for the three months ended December 31, 2024		(3,802	)		-			(3,802	)
Balance – December 31, 2024	$	(17,414	)	$	(528	)	$	(17,942	)
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, 2024 and 2023

(In thousands)	Unrealized losses on securities available-for- sale			Pension benefits			Total
Balance – June 30, 2024	$	(19,182	)	$	(528	)	$	(19,710	)
Other comprehensive income before reclassification		1,768			-			1,768
Other comprehensive income for the six months ended December 31, 2024		1,768			-			1,768
Balance – December 31, 2024	$	(17,414	)	$	(528	)	$	(17,942	)
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	)

(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.

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The following includes quantitative data related to the Company’s operating leases at December 31, 2024 and June 30, 2024, and for the three and six months ended December 31, 2024 and 2023:

(In thousands)
Operating lease amounts:	December 31, 2024		June 30, 2024
Right-of-use assets	$	1,972	$	2,071
Lease liabilities	$	2,057	$	2,159

	For the three months ended December 31,
(In thousands)	2024		2023
Other information:
Operating outgoing cash flows from operating leases	$	125	$	115
Lease costs:
Operating lease cost	$	114	$	106
Variable lease cost	$	11	$	11

	For the six months ended December 31,
(In thousands)	2024		2023
Other information:
Operating outgoing cash flows from operating leases	$	250	$	228
Right-of-use assets obtained in exchange for new operating lease liabilities	$	117	$	561
Lease costs:
Operating lease cost	$	227	$	208
Variable lease cost	$	22	$	22

The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, as of December 31, 2024:

(In thousands, except weighted-average information)
Within the twelve months ended December 31,
2025	$	507
2026		510
2027		418
2028		335
2029		232
Thereafter		226
Total undiscounted cash flow		2,228
Less net present value adjustment		(171	)
Lease liability	$	2,057
Weighted-average remaining lease term (years)		4.87
Weighted-average discount rate		3.16	%

Right-of-use assets are 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.

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(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, 2024		June 30, 2024
Unfunded loan commitments	$	141,903	$	107,966
Unused lines of credit		103,481		99,176
Standby letters of credit		779		754
Total credit-related financial instruments with off-balance sheet risk	$	246,163	$	207,896

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

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

Allowance for Credit Losses on Unfunded Commitments

The Company estimates expected credit losses over the contractual period in which the Company has exposure to a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on unfunded commitments exposure is recognized in other liabilities and is adjusted as an expense in other noninterest expense. At December 31, 2024, the allowance for credit losses on unfunded commitments totaled $1.7 million as compared to $1.3 million at June 30, 2024.

(14)      Variable Interest Entities

Solar Tax Credit Investments

The Company makes non-marketable equity investments in entities that sponsor solar development projects that qualify for the Solar Tax Credit Program.  The purpose of these investments is to assist the Company in meeting its responsibilities under the Community Reinvestment Act (“CRA”), and to provide a return, primarily through the realization of tax benefits. The Company does not have controlling interest and is not the primary beneficiary for the solar tax credit investments, therefore the entity is not consolidated. The Company has determined that it is not the primary beneficiary due to its inability to direct activities that most significantly impact economic performance. The Company applies the proportional amortization method to subsequently measure its investment in solar tax credit projects.

The following table summarizes the Company’s solar tax credit investments and related unfunded commitments:

(In thousands)	December 31, 2024
Gross investment in solar tax credit investments	$	2,586
Accumulated amortization		(2,524	)
Net investment in solar tax credit investments	$	62
Unfunded commitments for solar tax credit investments	$	414

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The aggregate carrying value of the Company’s solar tax credit investments is included in accrued interest receivable and other assets within the Company’s consolidated statements of financial condition, and represents the Company’s maximum exposure to loss.

There were no solar tax credit investments at June 30, 2024.

(15)      Subsequent events

On January 22, 2025, the Board of Directors announced a cash dividend for the quarter ended December 31, 2024 of $0.09 per share on the Company’s common stock.  The dividend reflects an annual cash dividend rate of $0.36 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 14, 2025, and is expected to be paid on February 28, 2025.  Greene County Bancorp, MHC intends to waive its receipt of this dividend.

Management has reviewed events from the date of the unaudited consolidated financial statements, and accompanying notes thereto, through the date of issuance, and determined that no subsequent events occurred requiring adjustment to or disclosure in these unaudited consolidated financial statements.

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

Overview of the Company’s Activities and Risks

The Company’s results of operations depend primarily on its net interest income, which is the difference between the income earned on the Company’s loan and securities portfolios and its cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by the Company’s provision for credit losses, noninterest income and noninterest expense.  Noninterest income consists primarily of fees and service charges.  The Company’s noninterest expense consists principally of compensation and employee benefits, occupancy, equipment and data processing, and other operating expenses. Results of operations are also significantly affected by general economic and competitive conditions, changes in interest rates, as well as government policies and actions of regulatory authorities. Additionally, future changes in applicable law, regulations or government policies may materially affect the Company.

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.

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. 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 refinancing, and the flow and mix of deposits.

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

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

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

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,” “may,” “will,” “intend,” “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)

changes in general economic conditions,

(c)

credit risk,

(d)

continued period of high inflation could adversely impact customers,

(e)

cybersecurity risks,

(f)

changes in general business and economic trends,

(g)

legislative and regulatory changes,

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(h)

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

(i)

changes in the quality or composition of Greene County Bancorp, Inc.’s loan and investment portfolios,

(j)

deposit flows,

(k)

competition, and

(l)

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

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

Non-GAAP Financial Measures

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

Tax-Equivalent Net Interest Income and Net Interest Margin: Net interest income, as a component of the tabular presentation by financial institutions of Selected Financial Information regarding their recently completed operations, as well as disclosures based on that tabular presentation, is commonly presented on a tax-equivalent basis. That is, to the extent that some component of the institution's net interest income, which is presented on a before-tax basis, is exempt from taxation (e.g., is received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added to the actual before-tax net interest income total. This adjustment is considered helpful in comparing one financial institution's net interest income to that of another institution or in analyzing any institution’s net interest income trend line over time, to correct any analytical distortion that might otherwise arise from the fact that financial institutions vary widely in the proportions of their portfolios that are invested in tax-exempt securities, and that even a single institution may significantly alter over time the proportion of its own portfolio that is invested in tax-exempt obligations. Moreover, net interest income is itself a component of a second financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average 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, Summary of significant accounting policies to the consolidated financial statements presented in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.  Refer to Note 2, Recent Accounting Pronouncements 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.

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

Management of the Company considers the accounting policy relating to the allowance for credit losses to be a critical accounting estimate given the uncertainty in evaluating the level of the allowance required to cover management’s estimate of all expected credit losses over the expected contractual life of our loan portfolios. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolios, in light of the factors then prevailing, may result in significant changes in the allowance for credit losses in those future periods. While management’s current evaluation of the allowance for credit losses indicates that the allowance is appropriate, the allowance may need to be increased under adversely different conditions or assumptions. The allowance for credit losses is 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 volatility to the allowance for credit losses, and therefore, 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, Summary of significant accounting policies with the audited consolidated financial statements and notes presented in the Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

Comparison of Financial Condition at December 31, 2024 and June 30, 2024

ASSETS

Total assets of the Company were $2.97 billion at December 31, 2024 and $2.83 billion at June 30, 2024, an increase of $140.0 million, or 5.0%. Securities available-for-sale and held-to-maturity increased $105.0 million, or 10.1%, to $1.1 billion at December 31, 2024 as compared to $1.0 billion at June 30, 2024. Net loans receivable increased $51.0 million, or 3.4%, to $1.53 billion at December 31, 2024 as compared to $1.48 billion at June 30, 2024.

CASH AND CASH EQUIVALENTS  

Total cash and cash equivalents for the Company were $166.4 million at December 31, 2024 and $190.4 million at June 30, 2024, a decrease of $24.0 million, or 12.6%. The level of cash and cash equivalents is a function of the daily account clearing needs and deposit levels as well as activities associated with securities transactions and loan funding. All of these items can cause cash levels to fluctuate significantly on a daily basis. The Company held excess cash balances for both quarter ends in response to the recent industry turmoil and has continued to maintain strong capital and liquidity positions as of December 31, 2024.

SECURITIES

Securities available-for-sale and held-to-maturity increased $105.0 million, or 10.1%, to $1.1 billion at December 31, 2024 as compared to $1.0 billion at June 30, 2024. Securities purchases totaled $274.2 million during the six months ended December 31, 2024, and consisted primarily of $167.9 million of state and political subdivision securities, $72.4 million of mortgage-backed securities, $24.7 million of U.S. Treasury securities, and $9.2 million of collateralized mortgage obligations. Principal pay-downs and maturities during the six months ended December 31, 2024 amounted to $172.0 million, primarily consisting of $107.8 million of state and political subdivision securities, $50.0 million of U.S. Treasury securities, $12.6 million of mortgage-backed securities, $1.4 million of collateralized mortgage obligations and $250,000 of corporate debt securities. At December 31, 2024, 59.4% of our securities portfolio consisted of state and political subdivision securities to take advantage of tax savings and to promote the Company’s participation in the communities in which it operates. Mortgage-backed securities, which represent 32.2% of our securities portfolio at December 31, 2024, do not contain sub-prime loans and are not exposed to the credit risk associated with such lending.  

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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, 2024 and June 30, 2024. Refer to financial statements Note 3, Securities for the complete fair value of securities.

	December 31, 2024					June 30, 2024
(Dollars in thousands)	Balance		Percentage of portfolio			Balance		Percentage of portfolio
Securities available-for-sale:
U.S. Treasury securities	$	16,927		1.5	%	$	41,195		4.0	%
U.S. government sponsored enterprises		11,190		1.0			10,974		1.0
State and political subdivisions		222,817		19.4			170,669		16.4
Mortgage-backed securities-residential		33,081		2.9			36,575		3.5
Mortgage-backed securities-multifamily		71,955		6.3			72,300		6.9
Corporate debt securities		18,483		1.6			18,288		1.8
Total securities available-for-sale		374,453		32.7			350,001		33.6
Securities held-to-maturity:
U.S. Treasury securities		23,820		2.1			23,785		2.3
State and political subdivisions		458,247		40.0			450,299		43.3
Mortgage-backed securities-residential		123,544		10.8			48,033		4.6
Mortgage-backed securities-multifamily		140,306		12.2			143,363		13.8
Corporate debt securities		24,959		2.2			24,844		2.4
Other securities		29		0.0			30		0.0
Total securities held-to-maturity		770,905		67.3			690,354		66.4
Total securities (at carrying value)	$	1,145,358		100.0	%	$	1,040,355		100.0	%

There was no ACL recorded on securities available-for-sale 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.

Securities held-to-maturity are evaluated for credit losses on a quarterly basis under the CECL methodology. At December 31, 2024, the ACL on securities held-to-maturity was $439,000 as compared to $483,000 at June 30, 2024.

LOANS

Net loans receivable increased $51.0 million, or 3.4%, to $1.53 billion at December 31, 2024 as compared to $1.48 billion at June 30, 2024. Loan growth experienced during the six months ended December 31, 2024 consisted primarily of $46.4 million in commercial real estate loans, $2.6 million in home equity loans, $1.6 million in commercial loans, and $1.4 million in residential real estate loans. The Company continues to experience loan growth as a result of the continued growth in its customer base and its relationships with other financial institutions in originating loan participations. The Company continues to use a conservative underwriting policy in regards to all loan originations, and does not engage in sub-prime lending or other exotic loan products. Updated appraisals are obtained on loans when there is a reason to believe that there has been a change in the borrower’s ability to repay the loan principal and interest, generally, when a loan is in a delinquent status. Additionally, if an existing loan is to be modified or refinanced, generally, an appraisal is ordered to ensure continued collateral adequacy.

33

The following tables present the composition of the Company’s loan portfolio in dollar amounts and percentages as of the dates indicated.  

	December 31, 2024						June 30, 2024
(Dollars in thousands)	Balance			Percentage of portfolio			Balance			Percentage of portfolio
Residential real estate	$	418,968			27.0	%	$	417,589			27.8	%
Commercial real estate		983,072			63.4			936,640			62.5
Home equity		31,780			2.0			29,166			2.0
Consumer		4,672			0.3			4,771			0.3
Commercial loans		112,908			7.3			111,307			7.4
Total gross loans(1)(2)		1,551,400			100.0	%		1,499,473			100.0	%
Allowance for credit losses on loans		(20,191	)					(19,244	)
Total net loans	$	1,531,209					$	1,480,229

(1)

Loan balances include net deferred fees/cost of ($188,000) and ($42,000) at December 31, 2024 and at June 30, 2024, respectively.

(2)

Loan balances exclude accrued interest receivable of $6.9 million and $6.2 million at December 31, 2024 and at June 30, 2024, respectively, which is included in accrued interest receivable in the consolidated statement of financial condition.

The following table presents commercial real estate loans by concentrations:

	At December 31, 2024
(Dollars in thousands)	Balance		Percentage of total
Owner occupied:
Warehouse	$	30,310		3.1	%
Mixed use real estate		30,155		3.1
Office building		25,062		2.5
Retail		18,426		1.9
Firehouse		10,733		1.1
Other		53,497		5.4
Total owner occupied		168,183		17.1
Non-owner occupied:
Multi-family		261,858		26.6
Retail plaza		104,237		10.6
Mixed use real estate		97,699		9.9
Construction		73,266		7.5
Office building		67,867		6.9
Motel/hotel		64,550		6.6
Warehouse		56,409		5.7
Other		89,003		9.1
Total non-owner occupied		814,889		82.9
Total commercial real estate	$	983,072		100.0	%

Commercial real estate loans are the largest segment of the Company’s loan portfolio and are comprised of 82.9% in non-owner occupied loans and 17.1% in owner occupied loans. These loans are generally secured by commercial, residential investment or industrial property types. The Company’s commercial real estate loan portfolio generally consists of standalone loans supported by both sufficient cash flows and collateral. On a portfolio basis, the Company’s non-owner occupied commercial real estate loans have a weighted average LTV of approximately 49.8%, and the Company’s owner occupied commercial real estate loans have a weighted average LTV of approximately 39.2%, as of December 31, 2024.  The Company’s commercial real estate loans are primarily made within our market area in Greene, Columbia, Albany, Ulster and Rensselaer Counties of New York State. The Company actively monitors the economic and credit trends for borrower industries and manages our commercial real estate portfolio concentrations to mitigate its credit risk exposure.

As of December 31, 2024, the Company’s largest commercial real estate concentration was non-owner occupied multi-family loans at $261.9 million, or 26.6% of total commercial real estate loans. Non-owner occupied multi-family loans provide much needed housing for the residents located in our market area and have historically performed well with strong credit metrics. As of December 31, 2024, the weighted average LTV was approximately 49.5% for the non-owner occupied multi-family loan segment.

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As of December 31, 2024, non-owner occupied construction loans were $73.3 million, or 7.5% of total commercial real estate loans. Construction loans are typically 12 to 24 months in duration with active monitoring, which may include pre-engineering review and third party site inspections for more complex projects.  High volatility commercial real estate loan exposure totaled $381,000 of the Company’s construction exposure. Construction loans are primarily comprised of approximately 31.2% mixed use real estate, 13.4% multi-family buildings, 13.2% pre-construction and land loans, and 13.1% retail plaza.

The Company’s outstanding balance of non-owner occupied commercial real estate office loans were $67.9 million, or 6.9% of total commercial real estate loans as of December 31, 2024. The office loans are primarily low-rise, non-metropolitan buildings, located within our geographic footprint. As of December 31, 2024, the weighted average LTV was approximately 53.3% for the non-owner occupied office loan segment.

ALLOWANCE FOR CREDIT LOSSES ON LOANS

The allowance for credit losses on loans (the “ACL”) is established through a provision made periodically by charges or benefits to the provision for credit losses. This is necessary to maintain the ACL at a level which management believes is reasonably reflective of the overall loss expected over the contractual life of the loan 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 current 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 non-accrual status with a balance of $250,000 or greater, which is consistent with regulatory requirements. The fair value of collateral for collateral dependent loans less selling expenses will be compared to the loan balance to determine if a CECL reserve is required. 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 charges loans off against the ACL 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 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 ACL 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.

Additional information about the ACL is included in Note 4, Loans and Allowance for Credit Losses on Loans, of the Company’s 2024 Annual Report on Form 10-K for the fiscal year ended June 30, 2024. Management considers the ACL to be appropriate based on evaluation and analysis of the loan portfolio.

The ACL totaled $20.2 million at December 31, 2024, compared to $19.2 million at June 30, 2024. The ACL to total loans receivable was 1.30% at December 31, 2024 compared to 1.28% at June 30, 2024. The increase in the ACL from December 31, 2024 to June 30, 2024 was primarily attributable to unfavorable changes in the economic forecasts used in the Company’s CECL modeling.

The allowance for credit losses on unfunded commitments as of December 31, 2024 was $1.7 million as compared to $1.3 million at June 30, 2024, an increase of $425,000. The increase in the reserve was primarily due to an increase in the contractual obligations to extend credit.

35

Non-accrual Loans and Non-performing Assets

Non-performing assets consist of non-accrual loans, loans over 90 days past due and still accruing, other real estate owned that has been acquired in partial or full satisfaction of the loan obligation or upon foreclosure, and non-performing securities.

Generally, management places loans on non-accrual status once the loans have become 90 days or more delinquent. A non-accrual 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 non-performing and may be placed on non-accrual when circumstances indicate that the borrower may be unable to meet the contractual principal or interest payments. The threshold for evaluating classified and non-performing loans specifically evaluated for individual credit loss is $250,000. Foreclosed real estate represents property acquired through foreclosure and is valued at the lower of the carrying amount or fair value, less any estimated disposal costs. The Company monitors loan modifications made to borrowers experiencing financial difficulty. As of December 31, 2024, there were four loans being monitored in the prior twelve months, under ASU-2022-02 with a total amortized basis of $6.7 million. As of December 31, 2023 there were no loans being monitored in the prior twelve months, under ASU-2022-02.

Analysis of Non-accrual Loans and Non-performing Assets

(Dollars in thousands)	December 31, 2024			June 30, 2024
Non-accrual loans:
Residential real estate	$	2,937			$	2,518
Commercial real estate		936				1,163
Home equity		34				47
Commercial		148				-
Total non-accrual loans	$	4,055			$	3,728
Total non-performing assets	$	4,055			$	3,728
Non-accrual loans to total loans		0.26	%			0.25	%
Non-performing loans to total loans		0.26	%			0.25	%
Non-performing assets to total assets		0.14	%			0.13	%
Allowance for credit losses on loans to non-performing loans		497.93	%			516.20	%
Allowance for credit losses on loans to non-accrual loans		497.93	%			516.20	%

At December 31, 2024 and June 30, 2024, there were no loans delinquent greater than 90 days and accruing. 

Non-performing assets amounted to $4.1 million and $3.7 million at December 31, 2024 and June 30, 2024, respectively.  Loans on non-accrual status totaled $4.1 million at December 31, 2024, of which there were three residential real estate loans totaling $478,000 and three commercial real estate loans totaling $1.1 million that were in process of foreclosure. Included in non-accrual loans were $1.3 million of loans which were less than 90 days past due at December 31, 2024, 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 non-accrual status totaled $3.7 million at June 30, 2024, of which there were four residential real estate loans totaling $686,000 and three commercial real estate loans totaling $1.6 million in the process of foreclosure. Included in non-accrual loans were $1.5 million of loans which were less than 90 days past due at June 30, 2024, but have a recent history of delinquency greater than 90 days past due.

DEPOSITS

Deposit flow is influenced by general economic conditions, changes in prevailing interest rates and competition. The diversity of deposit accounts offered allows the Company to be competitive in obtaining funds and responding to changes in consumer demand. The Company’s emphasis is placed on acquiring locally, stable, low-cost deposits to fund high-quality loans without taking on unnecessary interest rate risk. The ability to attract and maintain deposits and the rates paid on these deposits are and will continue to be affected by market conditions.

Deposits totaled $2.5 billion at December 31, 2024 and $2.4 billion at June 30, 2024, an increase of $78.0 million, or 3.3%. The Company had zero brokered deposits at December 31, 2024 and June 30, 2024, respectively. NOW deposits increased $75.7 million, or 4.3%, and certificates of deposits increased $38.3 million, or 27.7%, when comparing December 31, 2024 and June 30, 2024. Money market deposits decreased $18.8 million, or 16.6%, noninterest bearing deposits decreased $13.0 million, or 10.3%, and savings deposits decreased $4.2 million, or 1.7%, when comparing December 31, 2024 and June 30, 2024.  

36

Major classifications of deposits at December 31, 2024 and June 30, 2024 are summarized as follows:

(In thousands)	December 31, 2024		Percentage of portfolio			June 30, 2024		Percentage of portfolio
Noninterest-bearing deposits	$	112,470		4.5	%	$	125,442		5.3	%
Certificates of deposit		176,841		7.2			138,493		5.8
Savings deposits		248,081		10.1			252,362		10.6
Money market deposits		94,513		3.8			113,266		4.7
NOW deposits		1,835,353		74.4			1,759,659		73.6
Total deposits	$	2,467,258		100.0	%	$	2,389,222		100.0	%

The following table summarizes deposits by depositor type:

(Dollars in thousands)	December 31, 2024		Percentage of portfolio			June 30, 2024		Percentage of portfolio
Business deposits	$	454,154		18.4	%	$	462,716		19.4	%
Retail deposits		892,429		36.2			882,170		36.9
Municipal deposits		1,120,675		45.4			1,044,336		43.7
Total deposits	$	2,467,258		100.0	%	$	2,389,222		100.0	%

The Company’s deposit base and liquidity position continues to be strong, and the deposit base is well diversified across segments to meet the transactional and investment needs of our customers. Municipal deposits are primarily from local New York State government entities, such as counties, cities, villages and towns, as well as school districts and fire departments. There is a seasonal component to municipal deposits levels associated with annual tax collections and fiscal spending patterns. In general, municipal balances increase at the end of the first and third quarters of our fiscal year. Municipal deposits above the FDIC insured limit are required to be collateralized by irrevocable municipal letters of credits issued by the Federal Home Loan Bank, municipal bonds, US Treasuries or government agency securities. Additionally, the Company offers large retail, business and municipal customers the ability to enhance FDIC insurance coverage, by electing to participate their deposit balance into a national deposit network.

The Company has many long-standing relationships with municipal entities throughout its market areas and their deposits have provided a stable funding source for the Company. The Company has a separate municipal department for the retention, management, and monitoring of municipal relationships.

Uninsured deposits represents the portion of deposit accounts that exceed the FDIC insurance limit. The Company calculates its uninsured deposit balances based on the methodologies and assumptions used for regulatory reporting requirements, which includes affiliate deposits and collateralized deposits.

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

(Dollars in thousands)	At December 31, 2024
Uninsured deposits, per regulatory requirements	$	1,332,270
Less: Affiliate deposits		(42,982	)
Collateralized deposits		(989,598	)
Uninsured deposits, after exclusions	$	299,691
Immediately available liquidity(1)	$	329,409
Uninsured deposits coverage		109.9	%

(1)

Reflects $166.4 million of cash and cash equivalents, and $143.5 million and $19.4 million of remaining borrowing capacity from the Federal Home Loan Bank and the Federal Reserve Bank, as of December 31, 2024.

Uninsured deposits after exclusions, represents 12.2% of total deposits as of December 31, 2024. The Company believes that this presentation provides a more accurate view of deposits at risk, given that affiliate deposits are not customer facing and therefore are eliminated upon consolidation, and collateralized deposits are fully secured by investments and municipal letters of credit. The Company continually monitors the level and composition of uninsured deposits.

37

BORROWINGS  

At December 31, 2024, the Bank had pledged approximately $616.6 million of its residential and commercial mortgage portfolio as collateral for borrowing and irrevocable municipal letters of credit at the Federal Home Loan Bank of New York (“FHLB”). The maximum amount of funding available from the FHLB was $374.6 million at December 31, 2024, of which there were $7.0 million term fixed rate borrowings, $30.0 million irrevocable municipal letters of credit and $194.1 million of overnight borrowings outstanding at December 31, 2024.  At June 30, 2024, the Bank had $115.3 million in overnight borrowings, and $9.2 million of long-term borrowings with the FHLB. Interest rates on overnight borrowings are determined at the time of borrowing.  The irrevocable 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 borrowings include long-term fixed rate borrowings from the “FHLB 0% Development Advance (ZDA) Program.” The Company receives a corresponding credit related to the FHLB term fixed rate borrowings, which effectively reduces the interest rate paid to zero percent. At December 31, 2024, the Bank had a FHLB long-term fixed rate borrowing of $4.8 million at a stated rate of 5.2%, maturing March 2025 and $2.2 million at a stated rate of 3.8%, maturing October 2027.

The Bank pledges securities and certificates of deposit as collateral at the Federal Reserve Bank discount window for overnight borrowings. At December 31, 2024, approximately $19.4 million of collateral was available to be pledged against potential borrowings at the Federal Reserve Bank discount window of which there were zero overnight borrowings outstanding. The Bank participated in the “Bank Term Funding Program” (“BTFP”) that was established by the Federal Reserve Bank to provide additional funding to eligible depository institutions to meet the needs of their depositors. The BTFP ended new borrowings on March 11, 2024 and during the quarter ended December 31, 2024, the Bank paid off $25.0 million of long-term borrowings with the BTFP. At December 31, 2024, there were zero borrowings with the BTFP.

At June 30, 2024, there were zero overnight borrowings outstanding with the Federal Reserve Bank discount window and $25.0 million outstanding with the BTFP.

The Bank has established unsecured lines of credit with Atlantic Community Bankers Bank for $15.0 million and three other financial institutions for $75.0 million. 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 the Bank at December 31, 2024 and June 30, 2024.

On September 17, 2020, the Company entered into Subordinated Note Purchase Agreements (“SNPA”) 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, 2024, 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, 2024, there were $29.8 million of these Subordinated Note Purchases Agreements outstanding, net of issuance costs.

The sales of the SNPAs were made in a private placement to accredited investors under the exemption from registration provided under Securities and Exchange Commission Rule 506. The Notes are not registered under the Securities Act of 1933, as amended ("Securities Act"), and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

For regulatory purposes, the Company allocated the SNPAs to The Bank of Greene County to qualify as Tier 1 capital subject to a 25% of capital limitation under risk-based capital guidelines. The portion that exceeds the 25% of capital limitation qualifies as Tier 2 capital.

At December 31, 2024, there were no other long-term borrowings and therefore no scheduled maturities of long-term borrowings.

38

EQUITY

Shareholders’ equity increased to $218.4 million at December 31, 2024 compared to $206.0 million at June 30, 2024, resulting primarily from net income of $13.8 million and a decrease in accumulated other comprehensive loss of $1.8 million, partially offset by dividends declared and paid of $3.1 million.

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 significant increase in market rates between March 2022 and December 2023. Starting in September 2024 the Federal Reserve started reducing its target benchmark interest rate by 50 basis points, an additional 25 basis points in November 2024 and another 25 basis points in December 2024.

When 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 Comprehensive Income, a component of Shareholders' Equity. A significant increase in 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 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.

As of the quarter ended December 31, 2024, market rates increased as compared to June 30, 2024, as long-term Treasury rates increased due to market conditions and investor demand. This resulted in the fair value of the fixed income bond portfolio to decrease. The unrealized loss position as of December 31, 2024 increased as compared to June 30, 2024, as the Company continued to purchase investment securities in the higher interest rate environment.

On September 17, 2019, the Board of Directors of the Company adopted a stock repurchase program. Under the repurchase program, the Company may repurchase up to 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.  For the three and six months ended December 31, 2024, the Company did not repurchase any shares.

Selected Equity Data:
	At December 31, 2024			At June 30, 2024
Shareholders’ equity to total assets, at end of period		7.37	%		7.29	%
Book value per share(1)	$	12.83		$	12.10
Closing market price of common stock	$	27.72		$	33.71

	For the six months ended December 31,
		2024		2023
Average shareholders’ equity to average assets		7.71	%	7.07	%
Dividend payout ratio(2)		22.22	%	22.22	%
Actual dividends paid to net income(3)		22.33	%	16.35	%

⁽¹⁾ Shareholders’ equity divided by outstanding shares.

⁽²⁾ The dividend payout ratio has been calculated based on the dividends declared per share divided by basic earnings per share.  No adjustments have been made for dividends waived by Greene County Bancorp, MHC (“MHC”), the owner of 54.1% of the Company’s shares outstanding.  

⁽³⁾ Dividends declared divided by net income. The MHC waived its right to receive dividends declared during the three months ended December 31, 2022, March 31, 2023, June 30, 2023, December 31, 2023, March 31, 2024 and June 30, 2024. Dividends declared during the three months ended September 30, 2023, September 30, 2024, and December 31, 2024 were paid to the MHC. The MHC’s ability to waive the receipt of dividends is dependent upon annual approval of its members as well as receiving the non-objection of the Federal Reserve Board.  

Comparison of Operating Results for the Three and Six Months Ended December 31, 2024 and 2023

Average Balance Sheet

The following table sets forth certain information relating to the Company for the three and six months ended December 31, 2024 and 2023. 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 in both dollars and rates.  There were no tax equivalent adjustments made. Average balances were based on daily averages. Average loan balances include non-performing loans. The loan yields include net amortization of certain deferred fees and costs that are considered adjustments to yields.

39

	Three months ended December 31,
	2024									2023
(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, net(1)	$	1,517,478			$	19,480		5.13	%	$	1,449,353			$	17,776		4.91	%
Securities non-taxable		657,173				4,943		3.01			625,264				4,334		2.77
Securities taxable		467,014				3,550		3.04			387,111				2,329		2.41
Interest-bearing bank balances and federal funds		112,245				1,397		4.98			87,307				1,105		5.06
FHLB stock		2,353				48		8.16			2,392				49		8.19
Total interest-earning assets		2,756,263				29,418		4.27	%		2,551,427				25,593		4.01	%
Cash and due from banks		12,124									11,417
Allowance for credit losses on loans		(19,861	)								(20,229	)
Allowance for credit losses on securities held-to-maturity		(465	)								(498	)
Other noninterest-earning assets		102,531									100,785
Total assets	$	2,850,592								$	2,642,902
Interest-Bearing Liabilities:
Savings and money market deposits	$	344,438			$	368		0.43	%	$	366,236			$	296		0.32	%
NOW deposits		1,903,899				12,637		2.65			1,767,214				11,476		2.60
Certificates of deposit		172,089				1,733		4.03			85,874				786		3.66
Borrowings		65,348				612		3.75			63,601				647		4.07
Total interest-bearing liabilities		2,485,774				15,350		2.47	%		2,282,925				13,205		2.31	%
Noninterest-bearing deposits		117,809									144,396
Other noninterest-bearing liabilities		30,597									27,197
Shareholders' equity		216,412									188,384
Total liabilities and equity	$	2,850,592								$	2,642,902
Net interest income					$	14,068								$	12,388
Net interest rate spread								1.80	%								1.70	%
Net earnings assets	$	270,489								$	268,502
Net interest margin								2.04	%								1.94	%
Average interest-earning assets to average interest-bearing liabilities		110.88	%								111.76	%

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

Taxable-equivalent net interest income and net interest margin	For the three months ended December 31,
(Dollars in thousands)	2024			2023
Net interest income (GAAP)	$	14,068		$	12,388
Tax-equivalent adjustment(1)		1,867			1,591
Net interest income fully taxable-equivalent basis (non-GAAP)	$	15,935		$	13,979
Average interest-earning assets (GAAP)	$	2,756,263		$	2,551,427
Net interest margin fully taxable-equivalent basis (non-GAAP)		2.31	%		2.19	%

⁽¹⁾ Interest income calculated on a taxable-equivalent basis (non-GAAP) includes the additional amount of interest income that would have been earned if the Company’s investment in tax-exempt securities and loans had been subject to federal and New York State income taxes yielding the same after-tax income. The rate used for this adjustment was 21% for federal income taxes and 4.44% for New York State income taxes for the periods ended December 31, 2024 and 2023, respectively.

40

	Six months ended December 31,
	2024									2023
(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, net(1)	$	1,503,778			$	38,723		5.15	%	$	1,439,505			$	34,981		4.86	%
Securities non-taxable		633,256				9,411		2.97			631,871				8,624		2.73
Securities taxable		454,929				6,864		3.02			393,567				4,553		2.31
Interest-bearing bank balances and federal funds		78,760				2,086		5.30			76,013				2,021		5.32
FHLB stock		2,199				103		9.37			2,216				86		7.76
Total interest-earning assets		2,672,922				57,187		4.28	%		2,543,172				50,265		3.95	%
Cash and due from banks		12,223									11,868
Allowance for credit losses on loans		(19,504	)								(20,115	)
Allowance for credit losses on securities held-to-maturity		(474	)								(495	)
Other noninterest-earning assets		101,469									99,286
Total assets	$	2,766,636								$	2,633,716
Interest-Bearing Liabilities:
Savings and money market deposits	$	352,392			$	799		0.45	%	$	382,933			$	582		0.30	%
NOW deposits		1,813,606				24,379		2.69			1,721,391				20,651		2.40
Certificates of deposit		160,417				3,366		4.20			101,812				1,932		3.80
Borrowings		74,504				1,439		3.86			61,299				1,273		4.15
Total interest-bearing liabilities		2,400,919				29,983		2.50	%		2,267,435				24,438		2.16	%
Noninterest-bearing deposits		121,551									151,337
Other noninterest-bearing liabilities		30,752									28,660
Shareholders' equity		213,414									186,284
Total liabilities and equity	$	2,766,636								$	2,633,716
Net interest income					$	27,204								$	25,827
Net interest rate spread								1.78	%								1.79	%
Net earnings assets	$	272,003								$	275,737
Net interest margin								2.04	%								2.03	%
Average interest-earning assets to average interest-bearing liabilities		111.33	%								112.16	%

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

Taxable-equivalent net interest income and net interest margin	For the six months ended December 31,
(Dollars in thousands)	2024			2023
Net interest income (GAAP)	$	27,204		$	25,827
Tax-equivalent adjustment(1)		3,579			3,154
Net interest income fully taxable-equivalent basis (non-GAAP)	$	30,783		$	28,981
Average interest-earning assets (GAAP)	$	2,672,922		$	2,543,172
Net interest margin fully taxable-equivalent basis (non-GAAP)		2.30	%		2.28	%

⁽¹⁾ Interest income calculated on a taxable-equivalent basis (non-GAAP) includes the additional amount of interest income that would have been earned if the Company’s investment in tax-exempt securities and loans had been subject to federal and New York State income taxes yielding the same after-tax income. The rate used for this adjustment was 21% for federal income taxes and 4.44% for New York State income taxes for the periods ended December 31, 2024 and 2023, respectively.

41

Rate / Volume Analysis

The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected the Company’s interest income and interest expense during the periods indicated.  Information is provided in each category with respect to:

(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,
	2024 versus 2023									2024 versus 2023
	Increase/(decrease)						Total			Increase/(decrease)						Total
	Due to						increase/			Due to						increase/
(In thousands)	Volume			Rate			(decrease)			Volume			Rate			(decrease)
Interest-earning assets:
Loans receivable, net(1)	$	872		$	832		$	1,704		$	1,602		$	2,140		$	3,742
Securities non-taxable		226			383			609			19			768			787
Securities taxable		539			682			1,221			778			1,533			2,311
Interest-bearing bank balances and federal funds		310			(18	)		292			73			(8	)		65
FHLB stock		(1	)		-			(1	)		(1	)		18			17
Total interest-earning assets		1,946			1,879			3,825			2,471			4,451			6,922
Interest-bearing liabilities:
Savings and money market deposits		(19	)		91			72			(49	)		266			217
NOW deposits		930			231			1,161			1,145			2,583			3,728
Certificates of deposit		860			87			947			1,212			222			1,434
Borrowings		17			(52	)		(35	)		260			(94	)		166
Total interest-bearing liabilities		1,788			357			2,145			2,568			2,977			5,545
Net change in net interest income	$	158		$	1,522		$	1,680		$	(97	)	$	1,474		$	1,377

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

GENERAL

Return on average assets and return on average equity are common methods of measuring operating results. Annualized return on average assets increased to 1.05% for the three months ended December 31, 2024 as compared to 0.86% for the three months ended December 31, 2023. Annualized return on average equity increased to 13.84% for the three months ended December 31, 2024 as compared to 12.12% for the three months ended December 31, 2023. Annualized return on average assets increased to 0.99% for the six months ended December 31, 2024 as compared to 0.92% for the six months ended December 31, 2023. Annualized return on average equity decreased to 12.89% for the six months ended December 31, 2024 as compared to 13.07% for the six months ended December 31, 2023. The increase in return on average assets and average equity for the three months ended December 31, 2024 was primarily the result of net income outpacing growth in the balance sheet.

Net income amounted to $7.5 million for the three months ended December 31, 2024 as compared to $5.7 million for the three months ended December 31, 2023, an increase of $1.8 million. Net income amounted to $13.8 million for the six months ended December 31, 2024 as compared to $12.2 million for the six months ended December 31, 2023, an increase of $1.6 million.

Average assets increased $207.7 million, or 7.9%, to $2.9 billion for the three months ended December 31, 2024 as compared to $2.6 billion for the three months ended December 31, 2023. Average equity increased $28.0 million, or 14.9%, to $216.4 million for the three months ended December 31, 2024 as compared to $188.4 million for the three months ended December 31, 2023. Average assets increased $132.9 million, or 5.0%, to $2.8 billion for the six months ended December 31, 2024 as compared to $2.6 billion for the six months ended December 31, 2023. Average equity increased $27.1 million, or 14.6%, to $213.4 million for the six months ended December 31, 2024 as compared to $186.3 million for the six months ended December 31, 2023.

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INTEREST INCOME

Interest income amounted to $29.4 million for the three months ended December 31, 2024 as compared to $25.6 million for the three months ended December 31, 2023, an increase of $3.8 million, or 14.9%.  Interest income amounted to $57.2 million for the six months ended December 31, 2024 as compared to $50.3 million for the six months ended December 31, 2023, an increase of $6.9 million, or 13.8%. The increase in yields earned on loans and securities had the greatest impact on interest income when comparing the 2024 and 2023 periods. The average balances of loans also increased during the comparative periods contributing to higher interest income.  

Average loan balances increased $68.1 million and $64.3 million and the yield on loans increased 22 basis points and 29 basis points when comparing the three and six months ended December 31, 2024 and 2023, respectively. The average balance of securities increased $111.8 million and $62.7 million and the yield on such securities increased 19 basis points and 42 basis points when comparing the three and six months ended December 31, 2024 and 2023, respectively. Average interest-bearing bank balances and federal funds increased $24.9 million and $2.7 million and the yield on interest-bearing bank balances and federal funds decreased 8 basis points and 2 basis points when comparing the three and six months ended December 31, 2024 and 2023, respectively.

INTEREST EXPENSE

Interest expense amounted to $15.4 million for the three months ended December 31, 2024 as compared to $13.2 million for the three months ended December 31, 2023, an increase of $2.1 million, or 16.2%. Interest expense amounted to $30.0 million for the six months ended December 31, 2024 as compared to $24.4 million for the six months ended December 31, 2023, an increase of $5.5 million, or 22.7%. The increase during the three and six months ended December 31, 2024 was primarily due to the increase of $202.8 million and $133.5 million in the average balances of interest-bearing liabilities and the increase in the average cost of funds. Increase in the cost of NOW deposits, certificates of deposits and insured cash sweep (“ICS”) deposits had the greatest impact on interest expense reflecting higher market interest rates when comparing the three and six months ended December 31, 2024 and 2023.

The cost of NOW deposits increased 5 basis points and 29 basis points, the cost of certificates of deposit increased 37 basis points and 40 basis points, and the cost of savings and money market deposits increased 11 basis points and 15 basis points when comparing the three and six months ended December 31, 2024 and 2023, respectively.

The average balance of NOW deposits increased $136.7 million and $92.2 million, average certificates of deposits increased $86.2 million and $58.6 million, and average borrowings increased $1.7 million and $13.2 million, partially offset by a decrease in average savings and money market deposits of $21.8 million and $30.5 million when comparing the three and six months ended December 31, 2024 and 2023, respectively. Yields on interest-earning assets and costs of interest-bearing deposits increased when comparing the three and six months ended December 31, 2024 and 2023, as the Company continued to reprice assets and deposits into the higher interest rate environment.  During the six months ended December 31, 2024, the Company implemented a strategic reduction in deposit rates that aligns with the Federal Reserve’s rate cuts, while providing competitive financial solutions to the Company’s customers that reflect the prevailing economic conditions, while growing new relationships.

NET INTEREST INCOME

Net interest income increased $1.7 million to $14.1 million for the three months ended December 31, 2024 from $12.4 million for the three months ended December 31, 2023. Net interest income increased $1.4 million to $27.2 million for the six months ended December 31, 2024 from $25.8 million for the six months ended December 31, 2023. The increase in net interest income was due to an increase in the average balance of interest-earning assets which increased $204.8 million and $129.8 million when comparing the three and six months ended December 31, 2024 and 2023, respectively, and increases in interest rates on interest-earning assets, which increased 26 and 33 basis points when comparing the three and six months ended December 31, 2024 and 2023, respectively. The increase in net interest income was offset by increases in the average balance of interest-bearing liabilities, which increased $202.8 million and $133.5 million when comparing the three and six months ended December 31, 2024 and 2023, respectively, and increases in rates paid on interest-bearing liabilities, which increased 16 and 34 basis points when comparing the three and six months ended December 31, 2024 and 2023, respectively.

Net interest rate spread increased 10 basis points to 1.80% for the three months ended December 31, 2024 compared to 1.70% for the three months ended December 31, 2023. Net interest rate spread decreased one basis point to 1.78% for the six months ended December 31, 2024, compared to 1.79% for the six months ended December 31, 2023.

Net interest margin increased 10 basis points to 2.04% for the three months ended December 31, 2024, compared to 1.94% for the three months ended December 31, 2023. Net interest margin increased one basis point to 2.04% for the six months ended December 31, 2024, compared to 2.03% for the six months ended December 31, 2023. The increase in net interest rate spread and margin during the three months ended December 31, 2024, was due to increases in interest income on loans and securities, as they continue to reprice at higher yields and the interest rates earned on new balances were higher than the historic low levels from the prior periods. This was partially offset by the increase in rates paid on deposits as compared to the prior period.

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Net interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if the Company’s investment in tax-exempt securities and loans had been subject to federal and New York State income taxes yielding the same after-tax income. Tax equivalent net interest margin was 2.31% and 2.19% for the three months ended December 31, 2024 and 2023, respectively, and was 2.30% and 2.28% for the six months ended December 31, 2024 and 2023, respectively.

The Company closely monitors its interest rate risk, and the Company will continue to monitor and prudently manage the asset and liability mix to address the risks or potential negative effects of 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.

PROVISION FOR CREDIT LOSSES ON LOANS

Provision for credit losses on loans amounted to $505,000 and $183,000 for the three months ended December 31, 2024 and 2023, respectively, and $1.2 million and $645,000 for the six months ended December 31, 2024 and 2023, respectively. The loan provision for the six months ended December 31, 2024 was primarily attributable to the increase in loan volume and updated economic forecasts used in the quantitative modeling as of December 31, 2024. The allowance for credit losses on loans to total loans receivable was 1.30% at December 31, 2024 compared to 1.28% at June 30, 2024.

Loans classified as substandard and special mention totaled $54.2 million at December 31, 2024 and $48.6 million at June 30, 2024, an increase of $5.6 million. The increase in loans classified during the period ended December 31, 2024 was primarily due to a downgrade of one commercial loan relationship that was considered to be performing and paying in accordance with the terms of their loan agreements. Of the loans classified as substandard or special mention, $49.8 million were performing at December 31, 2024. There were no loans classified as doubtful or loss at December 31, 2024 or June 30, 2024.

Net charge-offs on loans amounted to $95,000 and $123,000 for the three months ended December 31, 2024 and 2023, respectively, a decrease of $28,000. Net charge-offs totaled $209,000 and $216,000 for the six months ended December 31, 2024 and 2023, respectively. There were no material charge-offs in any loan segment during the three and six months ended December 31, 2024.

NONINTEREST INCOME

(Dollars 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:	2024		2023		Amount			Percent			2024		2023		Amount			Percent
Service charges on deposit accounts	$	1,273	$	1,227	$	46			3.7	%	$	2,499	$	2,457	$	42			1.7	%
Debit card fees		1,063		1,120		(57	)		(5.1	)		2,164		2,253		(89	)		(4.0	)
Investment services		252		206		46			22.3			500		449		51			11.4
E-commerce fees		34		30		4			13.3			71		59		12			20.3
Bank-owned life insurance		637		574		63			11.0			1,285		936		349			37.3
Other operating income		616		321		295			91.9			1,093		623		470			75.4
Total noninterest income	$	3,875	$	3,478	$	397			11.4	%	$	7,612	$	6,777	$	835			12.3	%

Noninterest income increased $397,000, or 11.4%, to $3.9 million for the three months ended December 31, 2024 compared to $3.5 million for the three months ended December 31, 2023. The increase during the three months ended December 31, 2024 was primarily due to an increase in fee income earned on customer interest rate swap contracts of $153,000 and loan fees of $115,000. Noninterest income increased $835,000, or 12.3%, to $7.6 million for the six months ended December 31, 2024 compared to $6.8 million for the six months ended December 31, 2023. The increase during the six months ended December 31, 2024 was primarily due to an increase in fee income earned on customer interest rate swap contracts of $211,000, loan fees of $174,000 and income from bank owned life insurance (“BOLI”) of $349,000. During the quarter ended December 31, 2023, the Company restructured $23.0 million of BOLI contracts, by surrendering and simultaneously purchasing new higher-yielding policies.

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NONINTEREST EXPENSE

(Dollars 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:	2024		2023		Amount			Percent			2024		2023		Amount			Percent
Salaries and employee benefits	$	5,653	$	5,654	$	(1	)		(0.0	)%	$	11,531	$	11,145	$	386			3.5	%
Occupancy expense		615		593		22			3.7			1,251		1,130		121			10.7
Equipment and furniture expense		193		238		(45	)		(18.9	)		343		376		(33	)		(8.8	)
Service and data processing fees		773		614		159			25.9			1,540		1,205		335			27.8
Computer software, supplies and support		404		471		(67	)		(14.2	)		759		982		(223	)		(22.7	)
Advertising and promotion		127		102		25			24.5			204		199		5			2.5
FDIC insurance premiums		347		314		33			10.5			669		626		43			6.9
Legal and professional fees		245		417		(172	)		(41.2	)		609		800		(191	)		(23.9	)
Other		1,029		923		106			11.5			2,030		1,708		322			18.9
Total noninterest expense	$	9,386	$	9,326	$	60			0.6	%	$	18,936	$	18,171	$	765			4.2	%

Noninterest expense increased $60,000, or 0.6%, to $9.4 million for the three months ended December 31, 2024 compared to $9.3 million for the three months ended December 31, 2023. Noninterest expense increased $765,000 or 4.2%, to $18.9 million for the six months ended December 31, 2024 as compared to $18.2 million for the six months ended December 31, 2023. The increase during the six months ended December 31, 2024 was primarily due to an increase of $386,000 in salaries and employee benefit costs, as new positions were created during the period to support the Company’s continued growth, an increase of $335,000 in service and data processing fees and an increase of $392,000 in the allowance for credit losses on unfunded commitments, due to the Company’s increased contractual obligations to extend credit. This was partially offset by a decrease of $223,000 in computer software and support fees due to vendor price negotiations, and a decrease of $191,000 in legal expenses during the six months ended December 31, 2024.

INCOME TAXES

Provision for income taxes reflects the expected tax associated with the pre-tax income generated for the given period and certain regulatory requirements. The effective tax rate was 7.3% and 6.9% for the three and six months ended December 31, 2024, and 10.4% and 11.8% for the three and six months ended December 31, 2023, respectively. The statutory tax rate is impacted by the benefits derived from tax-exempt bond and loan income, the Company’s real estate investment trust subsidiary income, and income received on the bank owned life insurance, to arrive at the effective tax rate. The decrease in the effective tax rate during the three and six months ended December 31, 2024 primarily reflects a higher mix of tax-exempt income from municipal bonds, tax advantage loans, and bank owned life insurance in proportion to pre-tax income, and solar investment tax credits earned.

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. The Company’s most significant form of market risk is interest rate risk since the majority of the Company’s assets and liabilities are sensitive to changes in interest rates.  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, Atlantic Community Bankers Bank and three 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. At December 31, 2024, the Company had $166.4 million in cash and cash equivalents, representing 5.6% of total assets, and had $305.6 million available in unused lines of credit.

As needed, to enhance strong levels of liquidity and to fund loan demand, the Bank and Commercial Bank (the “Banks”) may accept brokered deposits, generally in denominations of less than $250,000, from national brokerage networks, custodial deposit networks or through IntraFi’s one-way CDARS and ICS products, including IntraFi’s Insured Network Deposits (“IND”). The Banks combined can place and obtain brokered deposits up to 30% of total deposits, in the amount of $740.2 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.

The Company had zero brokered deposits as of December 31, 2024 and June 30, 2024, respectively.

Ensuring adequate liquidity to meet the Company’s cash and collateral obligations and due to the speed at which the movement of deposits may exit the bank, the Company’s primary liquidity measurement is focused on forward cash flows and the time sequence of available liquidity. This liquidity time sequence is determined by when cash becomes available in the Bank's Federal Reserve Account and then analyzed in time intervals of Minute 1, Day 1, Week 1 and Month 1.

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The Company’s secondary liquidity measurement is On-Balance Sheet liquidity, which utilizes cash and cash equivalents, the market value of unpledged securities and the market value of pledged but unencumbered securities.

At December 31, 2024, liquidity measures were as follows:

Primary:

Minute 1: (Cash and cash equivalents / non-contractual deposits)	11.33	%
Day 1: (Minute 1 liquidity plus same day borrowing capacity / non-contractual deposits)	28.55	%
Week 1: (Day 1 liquidity plus unpledged marketable investments and one-third brokered deposit capacity / non-contractual deposits)	47.80	%
Month 1: (Week 1 liquidity plus remaining borrowing capacity / non-contractual deposits)	101.76	%
Secondary:
On-Balance Sheet: (Cash plus unpledged and unencumbered securities / non-contractual deposits )	15.34	%

The Company’s off-balance sheet credit exposures at December 31, 2024:

(In thousands)
Unfunded loan commitments	$	141,903
Unused lines of credit		103,481
Standby letters of credit		779
Total commitments	$	246,163

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

The Bank of Greene County and its wholly owned subsidiary, Greene County Commercial Bank, met all applicable regulatory capital requirements at December 31, 2024 and June 30, 2024.

											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, 2024:
Total risk-based capital	$	289,337		17.3	%	$	134,033		8.0	%	$	167,542		10.0	%		9.27	%		2.50	%
Tier 1 risk-based capital		268,378		16.0			100,525		6.0			134,033		8.0			10.02			2.50
Common equity tier 1 capital		268,378		16.0			75,394		4.5			108,902		6.5			11.52			2.50
Tier 1 leverage ratio		268,378		9.3			114,896		4.0			143,620		5.0			5.34			2.50
As of June 30, 2024:
Total risk-based capital	$	273,460		17.1	%	$	127,873		8.0	%	$	159,841		10.0	%		9.11	%		2.50	%
Tier 1 risk-based capital		253,468		15.9			95,905		6.0			127,873		8.0			9.86			2.50
Common equity tier 1 capital		253,468		15.9			71,929		4.5			103,897		6.5			11.36			2.50
Tier 1 leverage ratio		253,468		9.3			109,102		4.0			136,378		5.0			5.29			2.50

Greene County Commercial Bank

As of December 31, 2024:
Total risk-based capital	$	117,039	47.7	%	$	19,624	8.0	%	$	24,530	10.0	%	39.71	%	2.50	%
Tier 1 risk-based capital		117,039	47.7			14,718	6.0			19,624	8.0		41.71		2.50
Common equity tier 1 capital		117,039	47.7			11,039	4.5			15,945	6.5		43.21		2.50
Tier 1 leverage ratio		117,039	9.0			52,206	4.0			65,257	5.0		4.97		2.50
As of June 30, 2024:
Total risk-based capital	$	110,319	49.5	%	$	17,830	8.0	%	$	22,288	10.0	%	41.50	%	2.50	%
Tier 1 risk-based capital		110,319	49.5			13,373	6.0			17,830	8.0		43.50		2.50
Common equity tier 1 capital		110,319	49.5			10,029	4.5			14,487	6.5		45.00		2.50
Tier 1 leverage ratio		110,319	9.1			48,385	4.0			60,481	5.0		5.12		2.50

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Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable to smaller reporting companies.

Item 4.

Controls and Procedures

Our management, under the supervision and with the participation of the Chief Executive Officer (who is our principal executive officer) and Chief Financial Officer (who is our principal financial and accounting officer), 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”), at 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. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Because of its inherent limitations, management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, is based upon assumptions and can provide only reasonable, not absolute, assurance that its objective will be met. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No evaluation of control can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, with the Company have been detected.

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Part II.    Other Information

       Item 1.   Legal Proceedings

The Company, including its subsidiaries, are not currently the subject of any material pending legal proceedings, other than ordinary routine litigation occurring in the normal course of their business. On an ongoing basis, the Company is often the subject of, or a party to, various legal claims by other parties against the Company, by the Company against other parties, or involving the Company, which arise in the normal course of business.

       Item 1A.  Risk Factors

                        Not applicable to smaller reporting companies.

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

a)

Not applicable.

b)

Not applicable.

c)

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, 2024.

       Item 3. Defaults Upon Senior Securities

                    Not applicable.

       Item 4.  Mine Safety Disclosures

                Not applicable.

       Item 5.  Other Information

No director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non- Rule 10b5-1 trading arrangement, as each term is defined in Item 408 of regulation S-K, during the quarter ended December 31, 2024.

Item 6.     Exhibits

Exhibits
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, 2024, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows and (iv) Notes to Consolidated Financial Statements, (detail tagged).
104	Cover Page Integrative Data File (formatted in iXBRL and included in exhibit 101).

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SIGNATURES

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

Greene County Bancorp, Inc.

Date:  February 7, 2025

By: /s/ Donald E. Gibson

Donald E. Gibson

President and Chief Executive Officer

(Principal Executive Officer)

Date:  February 7, 2025

By: /s/ Nick Barzee

Nick Barzee

Senior Vice President,

Chief Financial Officer

(Principal Financial and Accounting Officer)

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