GREENE COUNTY BANCORP INC Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

Overview of the Company’s Activities and Risks

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

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

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

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," "expect," "anticipate," "project," and similar expressions
identify forward-looking statements. Greene County Bancorp, Inc.'s ability to
predict results or the effect of future plans or strategies or qualitative or
quantitative changes based on market risk exposure is inherently uncertain.
Factors that could affect actual results include but are not limited to:

(a) changes in general market interest rates,

(b) general economic conditions,

(c) legislative and regulatory developments,

(d) the monetary and fiscal policies of the WE Treasury and the Federal Reserve,

e) changes in the quality or composition of Greene County Bancorp, Inc. ready

and investment portfolios,

 (f) deposit flows,


 (g) competition, and

(h) the demand for financial services in Greene County Bancorp, Inc. 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.

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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

The Company's critical accounting policies relate to the allowance for loan
losses.  The allowance for loan losses is based on management's estimation of an
amount that is intended to absorb losses in the existing portfolio.  The
allowance for loan losses is established through a provision for loan losses
based on management's evaluation of the risk inherent in the loan portfolio, the
composition of the portfolio, specific impaired loans and current economic
conditions.  Such evaluation, which includes a review of all loans for which
full collectability may not be reasonably assured, considers among other
matters, the estimated net realizable value or the fair value of the underlying
collateral, economic conditions, historical loan loss experience, management's
estimate of probable credit losses and other factors that warrant recognition in
providing for the allowance of loan losses.  However, this evaluation involves a
high degree of complexity and requires management to make subjective judgments
that often require assumptions or estimates about highly uncertain matters.
This critical accounting policy and its application are periodically reviewed
with the Audit Committee and the Board of Directors.

Comparison of the financial situation at September 30, 2022 and June 30, 2022

ASSETS

Total assets of the Company were $2.6 billion at September 30, 2022 and $2.6
billion at June 30, 2022, an increase of $12.5 million, or 0.49%. Securities
available-for-sale and held-to-maturity decreased $83.4 million, or 7.1%, to
$1.1 billion at September 30, 2022 as compared to $1.2 billion at June 30, 2022.
Net loans receivable increased $98.5 million, or 8.0%, to $1.3 billion at
September 30, 2022 from $1.2 billion at June 30, 2022.

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CASH AND CASH EQUIVALENTS

Total cash and cash equivalents decreased $2.1 million to $66.9 million at
September 30, 2022 from $69.0 million at June 30, 2022. The level of cash and
cash equivalents is a function of the daily account clearing needs and deposit
levels as well as activities associated with securities transactions and loan
funding. All of these items can cause cash levels to fluctuate significantly on
a daily basis.

SECURITIES

Securities available-for-sale and held-to-maturity decreased $83.4 million, or
7.1%, to $1.1 billion at September 30, 2022 as compared to $1.2 billion at June
30, 2022. The decrease was the result of utilizing maturing investments to fund
loan growth during the quarter and an increase in unrealized loss on securities
of $9.0 million. Securities purchases totaled $43.5 million during the three
months ended September 30, 2022 and consisted of state and political subdivision
securities. Principal pay-downs and maturities during the three months ended
September 30, 2022 amounted to $117.2 million, primarily consisting of $14.4
million of mortgage-backed securities, $102.0 million of state and political
subdivision securities, and $810,000 of collateralized mortgage obligations. At
September 30, 2022, 62.8% of our securities portfolio consisted of state and
political subdivision securities to take advantage of tax savings and to promote
Company's participation in the communities in which it operates. Mortgage-backed
securities and asset-backed securities, which represent 28.2% of our securities
portfolio at September 30, 2022, do not contain sub-prime loans and are not
exposed to the credit risk associated with such lending.

                                                 September 30, 2022         

June 30, 2022

                                                            Percentage of                      Percentage of
(Dollars in thousands)                         Balance          portfolio         Balance          portfolio
Securities available-for-sale:
U.S. Government sponsored enterprises      $    10,664                1.0 %   $    11,319                0.9 %
U.S. Treasury securities                        17,626                1.6          18,427                1.6
State and political subdivisions               188,904               17.4         248,076               21.2
Mortgage-backed securities-residential          27,168                2.5          29,897                2.6
Mortgage-backed securities-multifamily          73,236                6.7          83,709                7.2
Corporate debt securities                       16,005                1.5          16,634                1.4
Total securities available-for-sale            333,603               30.7         408,062               34.9
Securities held-to-maturity:
U.S. treasury securities                        33,644                3.1          33,623                2.9
State and political subdivisions               493,463               45.4         493,897               42.2
Mortgage-backed securities-residential          40,901                3.8          42,461                3.6
Mortgage-backed securities-multifamily         164,925               15.2         171,921               14.7
Corporate debt securities                       19,895                1.8          19,900                1.7
Other securities                                    41                0.0              50                0.0
Total securities held-to-maturity              752,869               69.3         761,852               65.1
Total securities                           $ 1,086,472              100.0 %   $ 1,169,914              100.0 %



LOANS

Net loans receivable increased $98.5 million, or 8.0%, to $1.3 billion at
September 30, 2022 from $1.2 billion at June 30, 2022.  The loan growth
experienced during the quarter consisted primarily of $82.0 million in
commercial real estate loans, $7.3 million in residential real estate loans,
$2.9 million in commercial loans, $3.3 million in multi-family loans, $1.6
million in home equity loans, and $2.9 million in residential construction and
land loans. This growth was partially offset by a $2.1 million decrease in
commercial construction loans.  The Company continues to experience loan growth
as a result of continued growth in its customer base and its relationships with
other financial institutions in originating loan participations.  The Company
continues to use a conservative underwriting policy in regard to all loan
originations, and does not engage in sub-prime lending or other exotic loan
products.  Updated appraisals are obtained on loans when there is a reason to
believe that there has been a change in the borrower's ability to repay the loan
principal and interest, generally, when a loan is in a delinquent status.
Additionally, if an existing loan is to be modified or refinanced, generally, an
appraisal is ordered to ensure continued collateral adequacy.

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  Index

                                                    September 30, 2022                   June 30, 2022
(Dollars in thousands)                                         Percentage of                      Percentage of
                                                  Balance          Portfolio         Balance          Portfolio
Residential real estate                       $   368,142               27.3 %   $   360,824               28.8 %
Residential construction and land                  18,226                1.4          15,298                1.2
Multi-family                                       67,088                5.0          63,822                5.1
Commercial real estate                            677,622               50.2         595,635               47.6
Commercial construction                            81,599                6.0          83,748                6.7
Home equity                                        19,520                1.4          17,877                1.4
Consumer installment                                4,546                0.3           4,512                0.4
Commercial loans                                  113,186                8.4         110,271                8.8
Total gross loans                               1,349,929              100.0 %     1,251,987              100.0 %
Allowance for loan losses                         (22,147 )                          (22,761 )
Deferred fees and costs, net                           69                                129
Total net loans                               $ 1,327,851                        $ 1,229,355



ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is established through a provision for loan losses
based on management's evaluation of the risk inherent in the loan portfolio, the
composition of the loan portfolio, specific impaired loans and current economic
conditions.  Such evaluation, which includes a review of certain identified
loans on which full collectability may not be reasonably assured, considers
among other matters, the estimated net realizable value or the fair value of the
underlying collateral, economic conditions, payment status of the loan,
historical loan loss experience and other factors that warrant recognition in
providing for an allowance for loan loss.  In addition, various regulatory
agencies, as an integral part of their examination process, periodically review
the Company's allowance for loan losses.  Such agencies may require the Company
to recognize additions to the allowance based on their judgment about
information available to them at the time of their examination.  The Company
disaggregates its loan portfolio as noted in the below allocation of allowance
for loan losses table to evaluate for impairment collectively based on
historical loss experience.  The Company evaluates nonaccrual loans that are
over $250 thousand and all trouble debt restructured loans individually for
impairment, if it is probable that the Company will not be able to collect
scheduled payments of principal and interest when due, according to the
contractual terms of the loan agreements.  The measurement of impaired loans is
generally based on the fair value of the underlying collateral. The Company
charges loans off against the allowance for loan losses when it becomes evident
that a loan cannot be collected within a reasonable amount of time or that it
will cost the Company more than it will receive, and all possible avenues of
repayment have been analyzed, including the potential of future cash flow, the
value of the underlying collateral, and strength of any guarantors or
co-borrowers.  Generally, consumer loans and smaller business loans (not secured
by real estate) in excess of 90 days are charged-off against the allowance for
loan losses, unless equitable arrangements are made.  For loans secured by real
estate, a charge-off is recorded when it is determined that the collection of
all or a portion of a loan may not be collected and the amount of that loss can
be reasonably estimated. The allowance for loan losses is increased by a
provision for loan losses (which results in a charge to expense) and recoveries
of loans previously charged-off and is reduced by charge-offs.

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Analysis of Loan Loss Provision Activity

                                                               At or for the three months ended
                                                                        September 30,
(Dollars in thousands)                                                    2022             2021
Balance at the beginning of the period                         $        22,761       $   19,668
Charge-offs:
Consumer installment                                                       167              104
Commercial loans                                                             4               97
Total loans charged off                                                    171              201

Recoveries:
Residential real estate                                                      3                -
Consumer installment                                                        46               37
Commercial loans                                                             7                1
Total recoveries                                                            56               38

Net charge-offs                                                            115              163

Provisions (benefit) charged to operations                                (499 )            988
Balance at the end of the period                               $        

22,147 $20,493

Net charge-offs to average loans outstanding (annualized)                 0.04 %           0.06 %
Net charge-offs to nonperforming assets (annualized)                      8.47 %          33.20 %
Allowance for loan losses to nonperforming loans                        407.79 %        1078.58 %
Allowance for loan losses to total loans receivable                       1.64 %           1.83 %



Non-accumulated loans and non-performing assets

Loans are reviewed on a regular basis to assess collectability of all principal
and interest payments due.  Management determines that a loan is impaired or
nonperforming when it is probable at least a portion of the principal or
interest will not be collected in accordance with contractual terms of the
note.  When a loan is determined to be impaired, the measurement of the loan is
based on present value of estimated future cash flows, except that all
collateral-dependent loans are measured for impairment based on the fair value
of the collateral.

Generally, management places loans on nonaccrual status once the loans have
become 90 days or more delinquent or sooner if there is a significant reason for
management to believe the collectability is questionable and, therefore,
interest on the loan will no longer be recognized on an accrual basis.  The
Company identifies impaired loans and measures the impairment in accordance with
FASB ASC subtopic "Receivables - Loan Impairment."  Management may consider a
loan impaired once it is classified as nonaccrual and when it is probable that
the borrower will be unable to repay the loan according to the original
contractual terms of the loan agreement or the loan is restructured in a
troubled debt restructuring. A loan does not have to be 90 days delinquent in
order to be classified as nonperforming.  Foreclosed real estate is considered
to be a nonperforming asset. For further discussion and detail regarding
impaired loans please refer to Part I, Financial Statements (unaudited), Note 5
Loans and Allowance for Loan Losses of this Report.

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Analysis of non-current loans and non-performing assets

(Dollars in thousands)                                        September 30, 2022        June 30, 2022
Nonaccruing loans:
Residential real estate                                      $             2,733         $      2,948
Residential construction and land                                              -                    1
Commercial real estate                                                       796                1,269
Home equity                                                                  187                  188
Consumer installment                                                           -                    7
Commercial                                                                 1,715                1,904
Total nonaccruing loans                                      $             5,431         $      6,317
Foreclosed real estate:
Residential real estate                                                        -                   68
Total foreclosed real estate                                                   -                   68
Total nonperforming assets                                   $             

5,431 $6,385

Troubled debt restructuring:
Nonperforming (included above)                               $             3,187         $      2,707
Performing (accruing and excluded above)                                   2,296                2,336

Total nonperforming assets as a percentage of total assets                  0.21   %             0.25 %
Total nonperforming loans to net loans                                      0.41   %             0.50 %



To September 30, 2022 and June 30, 2022there were no outstanding loans older than 90 days.

Nonperforming assets amounted to $5.4 million and $6.4 million at September 30,
2022 and June 30, 2022, respectively.  Loans on nonaccrual status totaled $5.4
million at September 30, 2022 of which $480,000 were in the process of
foreclosure. At September 30, 2022, there were four residential loans totaling
$378,000 and one commercial real estate loan for $102,000 in the process of
foreclosure. Included in nonaccrual loans were $4.7 million of loans which were
less than 90 days past due at September 30, 2022, but have a recent history of
delinquency greater than 90 days past due. These loans will be returned to
accrual status once they have demonstrated a history of timely payments.
Included in total loans past due were $1.2 million of loans which were making
payments pursuant to forbearance agreements. Under the forbearance agreements,
the customers have made arrangements with the Bank to bring the loans current
over a specified period of time (resulting in an insignificant delay in
repayment).  During this term of the forbearance agreement, the Bank has agreed
not to continue foreclosure proceedings. Loans on nonaccrual status totaled $6.3
million at June 30, 2022 of which $528,000 were in the process of foreclosure.
At June 30, 2022, there were three residential loans in the process of
foreclosure totaling $426,000 and one commercial real estate loan totaling
$102,000 in the process of foreclosure. Included in nonaccrual loans were $4.4
million of loans which were less than 90 days past due at June 30, 2022, but
have a recent history of delinquency greater than 90 days past due.

Bad loans

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

The table below details additional information on impaired loans at September
30, 2022 and June 30, 2022:

(In thousands)                                                                      September 30, 2022       June 30, 2022
Balance of impaired loans, with a valuation allowance                             $              8,494     $         9,235

Allowances for impaired loans included in allowance for loan losses

                      2,647               2,347
Balance of impaired loans, without a valuation allowance                                         1,540               1,536
Total impaired loans                                                                            10,034              10,771



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                                                                  For the three months ended
                                                                         September 30,
(In thousands)                                                           2022               2021

Average impaired loan balance for periods ended $10,124 $6,041
Interest income recognized on impaired loans during the periods ended

                                                             130                 61



Residential real estate average balance of impaired loans with a valuation
allowance amounted to $1.9 million for the three months ended September 30,
2022, as compared to $2.0 million for the three months ended June 30, 2022, a
decrease of $100,000.  The decrease in residential real estate impaired loans
was the result of continued pay downs by the borrowers with no significant
changes in relationships moving in or out of impairment status.  Commercial real
estate average balance of impaired loans with a valuation allowance amounted to
$3.2 million for the three months ended September 30, 2022, as compared to $3.7
million for the three months ended June 30, 2022, a decrease of $500,000.  The
decrease was primarily the result of one loan paying off during the quarter end
September 30, 2022.

DEPOSITS

Deposits totaled $2.3 billion at September 30, 2022 and $2.2 billion at June 30,
2022, an increase of $114.3 million, or 5.2%. NOW deposits increased $108.6
million, or 7.3%, and certificates of deposits increased $31.1 million, or
76.2%, when comparing September 30, 2022 and June 30, 2022. Included within
certificates of deposits at September 30, 2022 were $40.0 million in brokered
certificates of deposit. Money market deposits decreased $14.4 million, or 9.1%,
savings deposits decreased $6.5 million, or 1.9%, and noninterest-bearing
deposits decreased $4.5 million, or 2.4% when comparing September 30, 2022 and
June 30, 2022. Deposits increased during the three months ended September 30,
2022 as a result of an increase in municipal deposits at Greene County
Commercial Bank, primarily from tax collection, and new account relationships.

Major classifications of deposits at September 30, 2022 and June 30, 2022 are
summarized as follows:

                                                                     Percentage of                          Percentage of
(In thousands)                               September 30, 2022          Portfolio       June 30, 2022          Portfolio
Noninterest-bearing deposits               $            183,186                7.9 %   $       187,697                8.5 %
Certificates of deposit                                  71,882                3.1              40,801                1.9
Savings deposits                                        337,234               14.5             343,731               15.5
Money market deposits                                   143,217                6.1             157,623                7.1
NOW deposits                                          1,591,344               68.4           1,482,752               67.0
Total deposits                             $          2,326,863              100.0 %   $     2,212,604              100.0 %



BORROWINGS

At September 30, 2022, the Bank had pledged approximately $509.3 million of its
residential and commercial mortgage portfolio as collateral for borrowing and
irrevocable stand-by letters of credit at the Federal Home Loan Bank of New York
("FHLB"). The maximum amount of funding available from the FHLB was $358.4
million at September 30, 2022, of which there were no borrowings and 125.0
million irrevocable stand-by letters of credit outstanding at September 30,
2022. There were $23.4 million and $123.7 million in short-term overnight
borrowings at September 30, 2022 and June 30, 2022, respectively. Interest rates
on short term borrowings are determined at the time of borrowing. There were no
long-term fixed rate, fixed term advances at September 30, 2022 and June 30,
2022. The $125.0 million of irrevocable stand-by letters of credit with the FHLB
have been issued to secure municipal transactional deposit accounts, on behalf
of Greene County Commercial Bank.

The Bank also pledges securities and certificates of deposit as collateral at
the Federal Reserve Bank discount window for overnight borrowings. At September
30, 2022, approximately $16.7 million of collateral was available to be pledged
against potential borrowings at the Federal Reserve Bank discount window. There
were no balances outstanding with the Federal Reserve Bank at September 30,
2022.

The Bank has established unsecured lines of credit with Atlantic Central Bankers
Bank for $15.0 million and two other financial institutions for $50.0 million.
The Company has also established an unsecured line of credit with Atlantic
Central Bankers Bank for $7.5 million. The lines of credit provide for overnight
borrowing and the interest rate is determined at the time of the borrowing.
There were no borrowings outstanding with these lines of credit for both the
Company and the Bank at September 30, 2022 and June 30, 2022.

On September 17, 2020, the Company entered into Subordinated Note Purchase
Agreements with 14 qualified institutional investors, issued at 4.75%
Fixed-to-Floating Rate due September 17, 2030, in the aggregate principal amount
of $20.0 million, carried net of issuance costs of $424,000 amortized over a
period of 60 months.  These notes are callable on September 15, 2025.  At
September 30, 2022, there were $19.8 million of these Subordinated Note
Purchases Agreements outstanding, net of issuance costs.

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Index

On September 15, 2021, the Company entered into Subordinated Note Purchase
Agreements with 18 qualified institutional investors, issued at 3.00%
Fixed-to-Floating Rate due September 15, 2031, in the aggregate principal amount
of $30.0 million, carried net of issuance costs of $499,000 amortized over a
period of 60 months.  These notes are callable on September 15, 2026. At
September 30, 2022, there were $29.6 million of these Subordinated Note
Purchases Agreements outstanding, net of issuance costs.

To September 30, 2022there were no long-term borrowings and therefore no scheduled maturities for the long-term borrowings.

EQUITY

Shareholders' equity increased to $159.6 million at September 30, 2022 from
$157.7 million at June 30, 2022, resulting primarily from net income of $9.0
million, partially offset by dividends declared and paid of $546,000 and an
increase in other accumulated comprehensive loss of $6.6 million as unrealized
loss on available for sale securities increased during the current quarter.

On September 17, 2019, the Board of Directors of the Company adopted a stock
repurchase program. Under the repurchase program, the Company may repurchase up
to 200,000 shares of its common stock. Repurchases 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 months
ending September 30, 2022, the Company did not repurchase any shares.

Data on selected stocks:

                                                                September 30, 2022       June 30, 2022
Shareholders' equity to total assets, at end of period                        6.18 %              6.13 %
Book value per share                                           $             18.75     $         18.53
Closing market price of common stock                           $             57.27     $         45.29



                                                    For the three months ended
                                                           September 30,
                                                          2022                2021
Average shareholders' equity to average assets            6.32 %              6.88 %
Dividend payout ratio1                                   13.21 %             15.48 %
Actual dividends paid to net income2                      6.04 %            

7.14%



1The dividend payout ratio has been calculated based on the dividends declared
per share divided by basic earnings per share.  No adjustments have been made
for dividends waived by Greene County Bancorp, MHC ("MHC"), the owner of 54.1%
of the Company's shares outstanding.
2 Dividends declared divided by net income. The MHC waived its right to receive
dividends declared during the three months ended September 30, 2021; December
31, 2021, March 31, 2022 and September 30, 2022. Dividends declared during the
three months ended March 31, 2021 and June 30, 2022 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 months ended September 30, 2022
and 2021

Average Balance Sheet

The following table sets forth certain information relating to the Company for
the three months ended September 30, 2022 and 2021. For the periods indicated,
the total dollar amount of interest income from average interest-earning assets
and the resultant yields, as well as the interest expense on average
interest-bearing liabilities, are expressed both in dollars and rates.  No tax
equivalent adjustments were made.  Average balances were based on daily
averages. Average loan balances include nonperforming loans. The loan yields
include net amortization of certain deferred fees and costs that are considered
adjustments to yields.

                                       36

————————————————– ——————————

  Index

                                                                                       Three months ended September 30,
                                                                         2022                                                  2021
                                                         Average         Interest           Average           Average         Interest
                                                     Outstanding         Earned /           Yield /       Outstanding         Earned /      Average Yield /
(Dollars in thousands)                                   Balance             Paid              Rate           Balance             Paid                 Rate
Interest-earning Assets:
Loans receivable, net1                             $   1,314,095     $     13,382              4.07 %   $   1,104,588     $     12,067                 4.37 %
Securities non-taxable                                   698,137            3,077              1.76           579,382            2,091                 1.44
Securities taxable                                       433,522            2,120              1.96           367,704            1,401                 1.52
Interest-bearing bank balances and federal funds           5,471               27              1.97           103,211               42                 0.16
FHLB stock                                                 3,254               34              4.18             1,091               12                 4.40
Total interest-earning assets                          2,454,479           18,640              3.04 %       2,155,976           15,613                 2.90 %
Cash and due from banks                                   12,907                                               12,160
Allowance for loan losses                                (23,046 )                                            (19,725 )
Other noninterest-earning assets                          90,701                                               74,896
Total assets                                       $   2,535,041                                        $   2,223,307

Interest-Bearing Liabilities:
Savings and money market deposits                  $     499,168     $        203              0.16 %   $     447,543     $        206                 0.18 %
NOW deposits                                           1,499,209            1,586              0.42         1,355,499              565                 0.17
Certificates of deposit                                   69,788              221              1.27            34,738               77                 0.89
Borrowings                                                94,129              796              3.38            27,526              366                 5.32
Total interest-bearing liabilities                     2,162,294            2,806              0.52 %       1,865,306            1,214                 0.26 %
Noninterest-bearing deposits                             184,216                                              181,990
Other noninterest-bearing liabilities                     28,213                                               23,027
Shareholders' equity                                     160,318                                              152,984
Total liabilities and equity                       $   2,535,041                                        $   2,223,307

Net interest income                                                  $     15,834                                         $     14,399
Net interest rate spread                                                                       2.52 %                                                  2.64 %
Net earnings assets                                $     292,185                                        $     290,670
Net interest margin                                                                            2.58 %                                                  2.67 %
Average interest-earning assets to average
interest-bearing liabilities                              113.51 %                                             115.58 %



————————————————– ——————————

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

                                                                      For the three months ended
Taxable-equivalent net interest income and net interest margin               September 30,
(Dollars in thousands)                                                        2022             2021
Net interest income (GAAP)                                          $       15,834      $    14,399
Tax-equivalent adjustment(1)                                                 1,125              766
Net interest income (fully taxable-equivalent)                      $       

16,959 $15,165

Average interest-earning assets                                     $    2,454,479      $ 2,155,976
Net interest margin (fully taxable-equivalent)                                2.76 %           2.81 %



1Net interest income on a taxable-equivalent basis includes the additional
amount of interest income that would have been earned if the Company's
investment in tax-exempt securities and loans had been subject to federal and
New York State income taxes yielding the same after-tax income. The rate used
for this adjustment was 21% for federal income taxes and 4.44% for New York
State income taxes for the periods ended September 30, 2022 and 2021,
respectively.

                                       37

————————————————– ——————————

Index

Rate/volume analysis

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

(i) Variation attributable to variations in volume (variations in volume multiplied by

previous rate);

(ii) Change attributable to rate changes (rate changes multiplied by

      volume); and


 (iii) The net change.



The changes attributable to the combined impact of volume and rate have been
allocated proportionately to the changes due to volume and the changes due to
rate.

                                                           Three months ended September 30,
                                                                   2022 versus 2021
                                                         Increase/(Decrease)              Total
                                                                Due To                  Increase/
(Dollars in thousands)                                 Volume             Rate         (Decrease)
Interest-earning Assets:
Loans receivable, net1                               $     2,182       $     (867 )    $     1,315
Securities non-taxable                                       473              513              986
Securities taxable                                           275              444              719
Interest-bearing bank balances and federal funds             (73 )             58              (15 )
FHLB stock                                                    23               (1 )             22
Total interest-earning assets                              2,880              147            3,027

Interest-Bearing Liabilities:
Savings and money market deposits                             21              (24 )             (3 )
NOW deposits                                                  69              952            1,021
Certificates of deposit                                      101               43              144
Borrowings                                                   606             (176 )            430
Total interest-bearing liabilities                           797              795            1,592
Net change in net interest income                    $     2,083       $    

(648 ) $1,435

————————————————– ——————————

1 Calculated net of deferred loan fees, loan discounts and outstanding loans.

GENERAL

Return on average assets and return on average equity are common methods of
measuring operating results. Annualized return on average assets increased to
1.43% from 1.28% for the three months ended September 30, 2022 and 2021,
respectively. Annualized return on average equity increased to 22.55% for the
three months ended September 30, 2022 as compared to 18.60% for the three months
ended September 30, 2021.  The increase in average assets and average equity was
primarily the result of net income outpacing growth in the balance sheet. Net
income amounted to $9.0 million and $7.1 million for the three months ended
September 30, 2022 and 2021, respectively.  Average assets increased $311.7
million, or 14.0%, to $2.5 billion for the three months ended September 30, 2022
as compared to $2.2 billion for the three months ended September 30, 2021.
Average equity increased $7.3 million, or 4.8%, to $160.3 million for the three
months ended September 30, 2022 as compared to $153.0 million for the three
months ended September 30, 2021.

INTEREST INCOME

Interest income amounted to $18.6 million for the three months ended September
30, 2022 as compared to $15.6 million for the three months ended September 30,
2021, an increase of $3.0 million, or 19.4%.  The increase in average balances
on loans and securities had the greatest impact on interest income. The rates on
securities also increased during the quarter contributing to higher interest
income.  Average loan balances increased $209.5 million offset by the decrease
in the average yield on loans of 30 basis points when comparing the three months
ended September 30, 2022 and 2021.  Average security balances increased $184.6
million, and the average yield on such securities increased 37 basis points when
comparing the three months ended September 30, 2022 and 2021.

                                       38

————————————————– ——————————

Index

INTEREST EXPENSES

Interest expense amounted to $2.8 million for the three months ended September
30, 2022 as compared to $1.2 million for the three months ended September 30,
2021, an increase of $1.6 million or 131.1%.  The increase in average balances
on interest bearing NOW deposits and borrowings had the greatest impact on
expense. The average cost of NOW deposits, certificates of deposit and
borrowings also increased during the quarter contributing to higher interest
expense.

Cost of interest-bearing liabilities increased 26 basis points when comparing
the three months ended September 30, 2022 and 2021. The cost of NOW deposits
increased 25 basis points, the cost of certificates of deposit increased 38
basis points, and the cost of savings and money market deposits decreased 2
basis points when comparing the three months ended September 30, 2022 and 2021.
The increase in the cost of interest-bearing liabilities was also due to growth
in the average balance of interest-bearing liabilities of $297.0 million, most
notably due to an increase in NOW deposits of $143.7 million, an increase in
average savings and money market deposits of $51.6 million, an increase in
average borrowings of $66.6 million, and an increase in average certificates of
deposits of $35.1 million, when comparing the three months ended September 30,
2022 and 2021. Yields on interest-earning assets and costs of interest-bearing
deposits increased for the quarter ended September 30, 2022, as the Federal
Reserve Board raised interest rates during the first three quarters of calendar
year 2022.

NET INTEREST INCOME

Net interest income increased $1.4 million to $15.8 million for the three months
ended September 30, 2022 from $14.4 million for the three months ended September
30, 2021. The increase in net interest income was the result of growth in the
average balance of interest-earning assets, which increased $298.5 million when
comparing the three months ended September 30, 2022 and 2021, and increases in
interest rates on interest-earning assets, which increased 14 basis points when
comparing the three months ended September 30, 2022 and 2021.

Net interest rate spread and net interest margin both decreased when comparing
the three months ended September 30, 2022 and 2021. Net interest rate spread
decreased 12 basis points to 2.52% for the three months ended September 30, 2022
compared to 2.64% for the three months ended September 30, 2021. Net interest
margin decreased 9 basis points to 2.58% for the three months ended September
30, 2022 compared to 2.67% for the three months ended September 30, 2021. When
comparing the three months ended September 30, 2022 to the three months ended
June 30, 2022, net interest rate spread increased 5 basis points and net
interest margin increased 8 basis points. The net interest rate spread and net
interest margin decreased when compared to the prior year quarter ended
September 30, 2021, but improved compared to the most recent quarter ended June
30, 2022. During the current quarter, certain loans and securities repriced at
higher yields reflecting the higher rate environment, as the interest rates
earned on new balances have increased from the historic low levels. The
additional income earned on these assets was partially offset by higher rates
paid on deposits.

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 2.76% and 2.81% for the three months ended September 30, 2022 and
2021, respectively.

Due to the large portion of fixed-rate residential mortgages in the Company's
portfolio, the Company closely monitors its interest rate risk, and the Company
will continue to monitor and adjust the asset and liability mix as much as
possible to take advantage of the benefits and reduce 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.

The Federal Reserve Board has taken a number of measures in an attempt to slow
inflation. The Federal Reserve Board changed their Monetary Policy to raise
rates in the recent three quarters. The rise in the federal funds rate will have
a positive impact to the Company's interest spread and margin as the rates on
new loans and securities purchased are at a higher rate than in the prior year.

PROVISION FOR LOAN LOSSES

Provision for loan losses amounted to a benefit of $499,000 and a charge of
$988,000 for the three months ended September 30, 2022 and 2021, respectively.
The benefit for the three months ended September 30, 2022 was due to a decrease
in the balance and reserve percentage on loans adversely classified, partially
offset by the growth in gross loans. The Company instituted a loan deferral
program in response to the COVID-19 pandemic whereby deferral of principal
and/or interest payments have been provided and correspond to the length of the
National Emergency as defined under the CARES Act and extended under the
Consolidated Appropriations Act which was signed into law on December 27, 2020.
The program ended during the quarter ended March 31, 2022 and therefore the
Company has zero loans on payment deferral as of September 30, 2022, compared to
$7.1 million, related to six loans, at September 30, 2021.  Loans classified as
substandard or special mention totaled $45.5 million at September 30, 2022 and
$52.1 million at June 30, 2022, a decrease of $6.6 million.  Reserves on loans
classified as substandard or special mention totaled $7.0 million at September
30, 2022 compared to $9.6 million at June 30, 2022, a decrease of $2.6 million.
There were no loans classified as doubtful or loss at September 30, 2022 or June
30, 2022. Allowance for loan losses to total loans receivable was 1.64% at
September 30, 2022 compared to 1.82% at June 30, 2022.

                                       39

————————————————– ——————————

Index

Net charge-offs amounted to $115,000 and $163,000 for the three months ended
September 30, 2022 and 2021, respectively, a decrease of $48,000. There were no
significant charge offs in each loan segment during the quarter ended September
30, 2022.

Nonperforming loans amounted to $5.4 million and $6.3 million at September 30,
2022 and June 30, 2022, respectively. The decrease in nonperforming loans during
the period was primarily due to $543,000 in loan repayments, $134,000 in loans
returning to performing status, $7,000 in charge-offs, and $286,000 in principal
payments received, partially offset by $83,000 of loans placed into
nonperforming status. At September 30, 2022 nonperforming assets were 0.21% of
total assets compared to 0.25% at June 30, 2022. Nonperforming loans were 0.41%
and 0.50% of net loans at September 30, 2022 and June 30, 2022, respectively.

NONINTEREST INCOME

                                         For the three months ended                   Change from
(Dollars in thousands)                          September 30,                          Prior Year
Noninterest income:                            2022                2021       Amount      Percent
Service charges on deposit accounts   $       1,217       $       1,069     $    148         13.8 %
Debit card fees                               1,142               1,083           59          5.4
Investment services                             180                 213          (33 )      (15.5 )
E-commerce fees                                  26                  33           (7 )      (21.2 )
Bank owned life insurance                       340                 301           39         13.0
Other operating income                          193                 230          (37 )      (16.1 )
Total noninterest income              $       3,098       $       2,929     $    169          5.8 %



Noninterest income increased $169,000, or 5.8%, to $3.1 million for the three
months ended September 30, 2022 compared to $2.9 million for the three months
ended September 30, 2021. The increase was primarily due to an increase in debit
card fees and service charges on deposit accounts resulting from continued
growth in the number of checking accounts with debit cards, the number of
deposit accounts, and the income from bank owned life insurance.

NONINTEREST EXPENSE

                                             For the three months ended                   Change from
(Dollars in thousands)                              September 30,                          Prior Year
Noninterest expense:                               2022                2021       Amount      Percent
Salaries and employee benefits            $       5,428       $       4,737     $    691         14.6 %
Occupancy expense                                   524                 505           19          3.8
Equipment and furniture expense                     158                 156            2          1.3
Service and data processing fees                    702                 638           64         10.0
Computer software, supplies and support             381                 378            3          0.8
Advertising and promotion                            76                 101          (25 )      (24.8 )
FDIC insurance premiums                             242                 220           22         10.0
Legal and professional fees                         451                 396           55         13.9
Other                                               835                 830            5          0.6
Total noninterest expense                 $       8,797       $       7,961 

$836 10.5%



Noninterest expense increased $836,000 or 10.5%, to $8.8 million for the three
months ended September 30, 2022 compared to $8.0 million for the three months
ended September 30, 2021. The increase in noninterest expense during the three
months ended September 30, 2022 was primarily due to an increase in salaries and
employee benefits expense due to new positions created during the year to
support the bank's growth.

INCOME TAXES

Provision for income taxes reflects the expected tax associated with the pre-tax
income generated for the given year and certain regulatory requirements.  The
effective tax rate was 15.0% for the three months ended September 30, 2022 and
15.1% for the three months ended September 30, 2021. The statutory tax rate is
impacted by the benefits derived from tax-exempt bond and loan income, the
Company's real estate investment trust subsidiary income, income received on the
bank owned life insurance, as well as the tax benefits derived from premiums
paid to the Company's pooled captive insurance subsidiary to arrive at the
effective tax rate.

                                       40

————————————————– ——————————

Index

CASH 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
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 and Atlantic
Central Bankers Bank 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 September 30, 2022, the
Company had $66.9 million in cash and cash equivalents, representing 2.6% of
total assets, and had $299.2 million available in unused lines of credit.

To September 30, 2022the liquidity measures were as follows:

Cash equivalents/(deposits plus short term borrowings)                      

2.85% (cash equivalents plus unsecured securities)/(deposits plus short-term borrowings)

8.63% (Cash equivalents plus unsecured securities plus additional borrowing capacity)/(deposits plus short-term borrowings)

21.36%

The Company’s unfunded loan commitments and undrawn lines of credit are as follows at September 30, 2022:

(In thousands)
Unfunded loan commitments   $ 147,171
Unused lines of credit         90,083
Standby letters of credit         889
Total commitments           $ 238,143



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

Risk participation agreements

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

RPAs in which the Company acts as the lead bank are referred to as
"participations-out," in reference to the credit risk associated with the
customer derivatives being transferred out of the Company.  Participations-out
generally occur concurrently with the sale of new customer derivatives.  The
Company had no participations-out at September 30, 2022 or June 30, 2022.  RPAs
where the Company acts as the participating bank are referred to as
"participations-in," in reference to the credit risk associated with the
counterparty's derivatives being assumed by the Company. The Company's maximum
credit exposure is based on its proportionate share of the settlement amount of
the referenced interest rate swap. Settlement amounts are generally calculated
based on the fair value of the swap plus outstanding accrued interest
receivables from the customer. There was no credit exposure associated with risk
participations-in as of September 30, 2022 and June 30, 2022 due to the recent
rise in interest rate. The RPAs participations-ins are spread out over four
financial institution counterparties and terms range between 5 to 14 years.

                                       41

————————————————– ——————————

Index

The Bank of Greene County and its wholly-owned subsidiary, Greene County
Commercial Bank, met all applicable regulatory capital requirements at September
30, 2022 and June 30, 2022.

                                                                              To Be Well
                                                  For Capital              Capitalized Under
(Dollars in                                         Adequacy               Prompt Corrective            Capital Conservation
thousands)                Actual                    Purposes               Action Provisions                   Buffer
The Bank of
Greene County       Amount        Ratio       Amount        Ratio         Amount         Ratio        Actual           Required
As of September
30, 2022:

Total risk-based
capital            $ 231,458        15.8 %   $ 117,115          8.0 %   $   146,394        10.0 %          7.81 %            2.50 %
Tier 1
risk-based
capital              213,112        14.6        87,836          6.0         117,115         8.0            8.56              2.50
Common equity
tier 1 capital       213,112        14.6        65,877          4.5          95,156         6.5           10.06              2.50
Tier 1 leverage
ratio                213,112         8.3       102,161          4.0         127,702         5.0            4.34              2.50

As of June 30,
2022:

Total risk-based
capital            $ 221,236        16.0 %   $ 110,294          8.0 %   $   137,867        10.0 %          8.05 %            2.50 %
Tier 1
risk-based
capital              203,935        14.8        82,720          6.0         110,294         8.0            8.79              2.50
Common equity
tier 1 capital       203,935        14.8        62,040          4.5          89,614         6.5           10.29              2.50
Tier 1 leverage
ratio                203,935         8.1       100,193          4.0         125,242         5.0            4.14              2.50



Greene County
Commercial Bank
As of September
30, 2022:

Total risk-based
capital            $ 101,262        42.3 %   $ 19.174         8.0 %   $ 23,967        10.0 %     34.25 %      2.50 %
Tier 1
risk-based
capital              101,262        42.3       14,380         6.0       19,174         8.0       36.25        2.50
Common equity
tier 1 capital       101,262        42.3       10,785         4.5       15,579         6.5       37.75        2.50
Tier 1 leverage
ratio                101,262         9.0       44,928         4.0       56,160         5.0        5.02        2.50

As of June 30,
2022:

Total risk-based
capital            $  94,408        41.5 %   $ 18,195         8.0 %   $ 22,744        10.0 %     33.51 %      2.50 %
Tier 1
risk-based
capital               94,408        41.5       13,646         6.0       18,195         8.0       35.51        2.50
Common equity
tier 1 capital        94,408        41.5       10,235         4.5       14,783         6.5       37.01        2.50
Tier 1 leverage
ratio                 94,408         8.1       46,874         4.0       

58,593 5.0 4.06 2.50

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