GREENE COUNTY BANCORP: Management Discussion and Analysis of Financial Position and Results of Operations (Form 10-Q)

Overview of the Company’s activities and risks

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

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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 refinancings, 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.
As we continue to monitor and adapt to the changing environment due to COVID-19,
we will continue to evaluate our internal controls over financial reporting.

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) economic or political changes related to the COVID-19 pandemic,

(d) legislative and regulatory changes,

(e) the monetary and fiscal policies of the we Treasury and the Federal Reserve,

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

and investment portfolios,

 (g) deposit flows,


 (h) competition, and

(i) 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 in its periodic reports filed with the
SEC, including period-end regulatory capital ratios for itself and its
subsidiary banks, and does so without compliance with Regulation G, on the
widely-shared assumption that the SEC regards such non-GAAP measures to be
exempt from Regulation G. The Company uses in this Report additional non-GAAP
financial measures that are commonly utilized by financial institutions and have
not been specifically exempted by the SEC from Regulation G. The Company
provides, as supplemental information, such non-GAAP measures included in this
Report as described immediately below.

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

Allowance for loan losses to total loans receivable:  The allowance for loan
losses to total loans receivable ratio is calculated by dividing the balance in
the allowance for loan losses by the gross loans outstanding at the end of the
period. This ratio is utilized to show the historical relationship between the
allowance for loan losses and the balances of loans at the end each period
presented in conjunction with other financial information related to asset
quality such as nonperforming loans, charge-offs, and classified assets to
indicate the overall adequacy of the allowance for loan losses. The Company has
adjusted the calculation of the allowance for loan losses to total loans
receivable to exclude loans that are 100% guaranteed by the Small Business
Administration as these present no credit risk to the Company. With a
significant balance in SBA loans at December 31, 2020, this adjusted calculation
is used to provide a better basis of comparison with other periods presented
within the financial statements presented.

Comparison of financial position to December 31, 2020 and June 30, 2020

ASSETS

Total assets of the Company were $1.9 billion at December 31, 2020 and $1.7
billion at June 30, 2020, an increase of $188.1 million, or 11.2%. Securities
available-for-sale and held-to-maturity amounted to $740.9 million at December
31, 2020 as compared to $610.4 million at June 30, 2020, an increase of $130.5
million, or 21.4%.  Net loans increased  $38.0 million, or 3.8%, to $1.0 billion
at December 31, 2020 as compared to $993.5 million at June 30, 2020.

CASH AND CASH EQUIVALENTS

Total cash and cash equivalents increased $16.5 million to $57.0 million at
December 31, 2020 from $40.5 million at June 30, 2020. 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.

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SECURITIES

Securities available-for-sale and held-to-maturity increased $130.5 million, or
21.4%, to $740.9 million at December 31, 2020 as compared to $610.4 million at
June 30, 2020. This increase was the result of utilizing excess cash on hand due
to an increase in deposits. Securities purchases totaled $296.2 million during
the six months ended December 31, 2020 and consisted of $189.5 million of state
and political subdivision securities and $89.0 million of mortgage-backed
securities, $6.0 million of corporate securities, $7.0 million of US Government
Agency securities and $4.7 million of other securities. Principal pay-downs and
maturities during the six months ended December 31, 2020 amounted to $163.8
million, primarily consisting of $35.3 million of mortgage-backed securities,
$118.1 million of state and political subdivision securities, and $4.6 million
of collateralized mortgage obligations, $2.5 million of US Government agency
securities, $2.0 million of corporate debt securities and $1.3 million of other
securities. At December 31, 2020, 61.9% of our securities portfolio consisted of
state and political subdivision securities to take advantage of tax savings and
to promote Greene County Bancorp, Inc.'s participation in the communities in
which it operates. Mortgage-backed securities and asset-backed securities held
within the portfolio do not contain sub-prime loans and are not exposed to the
credit risk associated with such lending.

                                                 December 31, 2020                    June 30, 2020
(Dollars in thousands)                                      Percentage of                     Percentage of
                                              Balance           portfolio       Balance           portfolio
Securities available-for-sale:
U.S. government sponsored enterprises      $    6,951                 0.9 %   $     504                 0.1 %
State and political subdivisions              196,404                26.5       177,107                29.0
Mortgage-backed securities-residential         47,432                 6.4        15,528                 2.5
Mortgage-backed securities-multifamily         77,147                10.4        28,910                 4.7
Corporate debt securities                       4,170                 0.6         4,660                 0.8
Total securities available-for-sale           332,104                44.8       226,709                37.1
Securities held-to-maturity:
U.S. government sponsored enterprises               -                   -         2,000                 0.3
State and political subdivisions              262,005                35.4       210,535                34.5
Mortgage-backed securities-residential         25,484                 3.4        38,884                 6.4
Mortgage-backed securities-multifamily        108,697                14.7       127,582                20.9
Corporate debt securities                       7,095                 1.0         2,593                 0.4
Other securities                                5,488                 0.7         2,063                 0.4
Total securities held-to-maturity             408,769                55.2       383,657                62.9
Total securities                           $  740,873               100.0 %   $ 610,366               100.0 %



LOANS

Net loans receivable increased $38.0 million, or 3.8%, to $1.0 billion at
December 31, 2020 from $993.5 million at June 30, 2020.  Of the $1.0 billion in
net loans receivable at December 31, 2020, $62.1 million were SBA Paycheck
Protection Program ("PPP") loans. The loan growth experienced during the six
months consisted primarily of $66.7 million in commercial real estate loans,
$20.2 million in residential real estate loans and $2.9 million in multi-family
loans. This growth was partially offset by a $4.4 million decrease in
residential construction and land loans, $2.7 million decrease in commercial
construction loans, $2.2 million decrease in home equity loans, $42.0 million
decrease in commercial loans of which $37.7 million consisted of SBA PPP loans,
and a $1.9 million increase in allowance for loan losses offset by a $1.4
million increase in deferred fees due to the forgiveness of SBA PPP loans.  SBA
PPP loans decreased $37.7 million to $62.1 million from $99.8 million at June
30, 2020, due to the receipt of forgiveness proceeds.  The Bank of Greene County
continues to use a conservative underwriting policy in regard to all loan
originations, and does not engage in sub-prime lending or other exotic loan
products. A significant decline in home values, however, in the Company's
markets could have a negative effect on the consolidated results of operations,
as any such decline in home values would likely lead to a decrease in
residential real estate loans and new home equity loan originations and
increased delinquencies and defaults in both the consumer home equity loan and
the residential real estate loan portfolios and result in increased losses in
these portfolios. Updated appraisals are obtained on loans when there is a
reason to believe that there has been a change in the borrower's ability to
repay the loan principal and interest, generally, when a loan is in a delinquent
status. Additionally, if an existing loan is to be modified or refinanced,
generally, an appraisal is ordered to ensure continued collateral adequacy.

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(Dollars in thousands)                               December 31, 2020                     June 30, 2020
                                                                Percentage of                       Percentage of
                                                  Balance           Portfolio         Balance           Portfolio
Residential real estate                       $   299,479                28.5 %   $   279,332                27.6 %
Residential construction and land                   7,494                 0.7          11,847                 1.2
Multi-family                                       28,000                 2.7          25,104                 2.5
Commercial real estate                            448,122                42.5         381,415                37.6
Commercial construction                            72,200                 6.9          74,920                 7.4
Home equity                                        19,922                 1.9          22,106                 2.2
Consumer installment                                4,851                 0.5           4,817                 0.5
Commercial loans                                  171,099                16.3         213,119                21.0
Total gross loans                               1,051,167               100.0 %     1,012,660               100.0 %
Allowance for loan losses                         (18,270 )                           (16,391 )
Deferred fees and costs                            (1,378 )                            (2,747 )
Total net loans                               $ 1,031,519                         $   993,522



The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed
into law on March 27, 2020, and provides over $2.0 trillion in emergency
economic relief to individuals and businesses impacted by the COVID-19 pandemic.
The CARES act authorized the Small Business Administration ("SBA") to
temporarily guarantee loans under a new 7(a) loan program called the Paycheck
Protection Program ("PPP"). The Consolidated Appropriations Act, 2021 provides
amendments to the PPP program, including additional loans through the SBA.
Although we were not already a qualified SBA lender, we enrolled in the PPP by
completing the required documentation and will participate in additional funding
under the Consolidated Appropriations Act, 2021. PPP loans have an interest rate
of 1.0%, a two-year or five-year loan term to maturity, and principal and
interest payments deferred until the lender receives the applicable forgiven
amount or ten months after the end of the borrower's loan forgiveness covered
period. The SBA guarantees 100% of the PPP loans made to eligible borrowers. The
entire principal amount of the borrower's PPP loan, including any accrued
interest, is eligible to be reduced by the loan forgiveness amount under the PPP
so long as employee and compensation levels of the business are maintained and
the loan proceeds are used for other qualifying expenses. The Company had 826
PPP loans with a total balance of $62.1 million outstanding at December 31,
2020, compared to 1,267 PPP loans with a total balance of $99.8 million
outstanding at June 30, 2020.

LOAN LOSS ALLOWANCE

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 Bank of Greene County's allowance for loan losses. Such agencies may require
The Bank of Greene County to recognize additions to the allowance based on their
judgment about information available to them at the time of their examination.
The Bank of Greene County considers smaller balance residential mortgages, home
equity loans and installment loans to customers as small, homogeneous loans,
which are evaluated for impairment collectively based on historical loss
experience.  Larger balance residential and commercial mortgage and business
loans are viewed individually and considered impaired if it is probable that The
Bank of Greene County will not be able to collect scheduled payments of
principal and interest when due, according to the contractual terms of the loan
agreements. The measurement of impaired loans is generally based on the fair
value of the underlying collateral. The Bank of Greene County 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 Bank
more than it will receive, and all possible avenues of repayment have been
analyzed, including the potential of future cash flow, the value of the
underlying collateral, and strength of any guarantors or co-borrowers.
Generally, consumer loans and smaller business loans (not secured by real
estate) in excess of 90 days are charged-off against the allowance for loan
losses, unless equitable arrangements are made. For loans secured by real
estate, a charge-off is recorded when it is determined that the collection of
all or a portion of a loan may not be collected and the amount of that loss can
be reasonably estimated. The 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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The Bank of Greene County recognizes that strategies put in place to assist
borrowers through the COVID-19 pandemic may not be sufficient to fully mitigate
the impact to borrowers and that it is likely that a portion of the loan
portfolio will default and result in losses to The Bank of Greene County. As a
result, provision for loan losses amounted to $1.3 million and $690,000 for the
three months ended December 31, 2020 and 2019, respectively, and amounted to
$2.5 million and $1.2 million for the six months ended December 31, 2020 and
2019, respectively.  Much uncertainty remains regarding the duration of the
containment strategies and the overall impact to the economy and to local
businesses. Management is closely monitoring the changes within its economic
environment, stress testing the loan portfolio under various scenarios, and
adjusting the allowance for loan loss as necessary to remain adequately
reserved.

Analysis of loan loss allowance activity

At or for the past six months

                                                                                        December 31,
(Dollars in thousands)                                                                 2020                  2019
Balance at the beginning of the period                                      $        16,391       $        13,200
Charge-offs:
Residential real estate                                                                  26                   101
Consumer installment                                                                    146                   248
Commercial loans                                                                        500                   204
Total loans charged off                                                                 672                   553

Recoveries:
Residential real estate                                                                   7                    10
Consumer installment                                                                     39                    50
Commercial loans                                                                          -                    36
Total recoveries                                                                         46                    96

Net charge-offs                                                                         626                   457

Provisions charged to operations                                                      2,505                 1,241
Balance at the end of the period                                            

$ 18,270 $ 13,984

Net charge-offs to average loans outstanding (annualized)                              0.12 %                0.11 %
Net charge-offs to nonperforming assets (annualized)                                  39.87 %               24.83 %
Allowance for loan losses to nonperforming loans                                     663.16 %              413.85 %
Allowance for loan losses to total loans receivable                                    1.74 %                1.62 %

Provision for loan losses on total loans receivable (excluding PPP loans)

            1.85 %                1.62 %



Unaccounted for 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.  It should be noted that management does not
evaluate all loans individually for impairment. Generally, The Bank of Greene
County considers residential mortgages, home equity loans and installment loans
as small, homogeneous loans, which are evaluated for impairment collectively
based on historical loan experience and other factors.  In contrast, large
commercial mortgage, construction, multi-family, business loans and select
larger balance residential mortgage loans are viewed individually and considered
impaired if it is probable that The Bank of Greene County will not be able to
collect scheduled payments of principal and interest when due, according to the
contractual terms of the loan agreement. The measurement of impaired loans is
generally based on the fair value of the underlying collateral. The majority of
The Bank of Greene County loans, including most nonaccrual loans, are small
homogenous loan types adequately supported by collateral.  Management considers
the payment status of loans in the process of evaluating the adequacy of the
allowance for loan losses among other factors. Based on this evaluation, a
delinquent loan's risk rating may be downgraded to either pass-watch, special
mention, or substandard, and the allocation of the allowance for loan loss is
based upon the risk associated with such designation. 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.

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Analysis of unaccounted-for loans and non-performing assets

                                                              December 31,      June 30,
(Dollars in thousands)                                                2020          2020
Nonaccruing loans:
Residential real estate                                      $       1,670       $ 2,513
Multi-family                                                             -           151
Commercial real estate                                                 560           781
Home equity                                                            247           319
Commercial                                                             278           313
Total nonaccruing loans                                      $       2,755       $ 4,077
Foreclosed real estate:
Residential real estate                                                385             -
Total foreclosed real estate                                           385             -
Total nonperforming assets                                   $       3,140  

$ 4,077

Troubled debt restructuring:
Nonperforming (included above)                               $         306       $   304
Performing (accruing and excluded above)                               901  

909

Total nonperforming assets as a percentage of total assets            0.17 %        0.24 %
Total nonperforming loans to net loans                                0.27  

% 0.41%

AT December 31, 2020 and June 30, 2020, there were no loans over 90 days and accrual. There was no property seized in June 30, 2020.

The table below details additional information relating to unrecorded loans for the three and six months ended. the 31st of December:

                                                For the three months               For the six months
                                                 ended December 31,                 ended December 31
(In thousands)                                2020                2019            2020             2019
Interest income that would have been
recorded if loans had been performing in
accordance with original terms             $        92         $        53     $      198       $      154
Interest income that was recorded on
nonaccrual loans                                    88                  42            126               92



Nonperforming assets amounted to $3.1 million and $4.1 million at December 31,
2020 and June 30, 2020, respectively. Nonaccrual loans consisted primarily of
loans secured by real estate at December 31, 2020 and June 30, 2020. Loans on
nonaccrual status totaled $2.8 million at December 31, 2020 of which $433,000
were in the process of foreclosure. At December 31, 2020, there were four
residential loans in the process of foreclosure totaling $204,000. Included in
nonaccrual loans were $1.5 million of loans which were less than 90 days past
due at December 31, 2020, but have a recent history of delinquency greater than
90 days past due. These loans will be returned to accrual status once they have
demonstrated a history of timely payments. Loans on nonaccrual status totaled
$4.1 million at June 30, 2020 of which $1.3 million were in the process of
foreclosure. At June 30, 2020, there were eight residential loans in the process
of foreclosure totaling $1.0 million. Included in nonaccrual loans were $1.4
million of loans which were less than 90 days past due at June 30, 2020, but
have a recent history of delinquency greater than 90 days past due.

In order to assist borrowers through the COVID-19 pandemic, The Bank of Greene
County instituted a loan deferment 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. Provisions under the CARES Act were extended under the Consolidated
Appropriations Act signed into law on December 27, 2020. Payment deferrals
consisted of either principal deferrals or full payment deferrals.  Based on
guidance provided by bank regulators on March 22, 2020 regarding deferrals
granted due to COVID-19, these have not been reported as delinquent and we will
continue to recognize interest income during the deferral period. These loans
will be closely monitored to determine collectability and accrual and
delinquency status will be updated as deemed appropriate.

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The following table details loans that have payments deferred at December 31,
2020.

                                                                     Principal Payment
                               Full Payment Deferral                     Deferral                      Total Deferral
                                                 Number                            Number                         Number
(Dollars in thousands)      Balance             of Loans         Balance          of Loans        Balance        of Loans
Residential              $        1,514                 15     $     1,293                11     $    2,807              26
Multi-family                        390                  1             242                 1            632               2
Nonresidential                    7,366                 20             933                 4          8,299              24
Home Equity                           -                  -               7                 1              7               1
Consumer installment                  -                  -               5                 1              5               1
Commercial loans                  2,782                 12               -                 -          2,782              12
Total                    $       12,052                 48     $     2,480                18     $   14,532              66



The following table details loans that have payments deferred at June 30, 2020.

                                                                   Principal Payment
                               Full Payment Deferral                   Deferral                    Total Deferral
                                                 Number                          Number                       Number
(Dollars in thousands)       Balance            of Loans        Balance    
    of Loans       Balance       of Loans
Residential               $       31,373              172     $    17,664             109     $  49,037            281
Multi-family                       8,264               10           4,226               7        12,490             17
Nonresidential                    74,481              173          36,267              85       110,748            258
Commercial construction              339                1               -               -           339              1
Home equity                          291                7             140               8           431             15
Consumer installment                 116               10             133              17           249             27
Commercial loans                   8,537               64          11,643              43        20,180            107
Total                     $      123,401              437     $    70,073             269     $ 193,474            706



Impaired Loans

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

The table below details additional information on impaired loans at December 31,
2020 and June 30, 2020:

(In thousands)                                                                     December 31, 2020       June 30, 2020
Balance of impaired loans, with a valuation allowance                            $             1,115     $         1,662

Provisions relating to impaired loans included in the allowance for loan losses

                      177                 228
Balance of impaired loans, without a valuation allowance                                       1,042               1,608
Total impaired loans                                                                           2,157               3,270



                                              For the three months            For the six months
                                               ended December 31,             ended December 31,
(In thousands)                                2020             2019           2020           2019
Average balance of impaired loans for
the periods ended                          $     2,559       $   3,272     $    2,870      $   3,150
Interest income recorded on impaired
loans during the periods ended                      29              41             44            108



DEPOSITS

Deposits totaled $1.7 billion at December 31, 2020 and $1.5 billion at June 30,
2020, an increase of $178.6 million, or 11.9%. Noninterest-bearing deposits
increased $19.6 million, or 14.2%, NOW deposits increased $137.2 million, or
14.4%, money market deposits increased $488,000 or 0.4%, and savings deposits
increased $21.8 million, or 9.1%, when comparing December 31, 2020 and June 30,
2020.  These increases were offset by a decrease in certificates of deposits of
$506,000, or 1.4%, when comparing December 31, 2020 and June 30, 2020. Deposits
increased during the six months ended December 31, 2020 as a result of an
increase in new account relationships, the opening of a new branch on Wolf Road
in Albany County, NY, and an increase in municipal deposits at Greene County
Commercial Bank, primarily from tax collection and new account relationships.

                                       39

————————————————– ——————————

  Index
                                           December 31,        Percentage                            Percentage
(In thousands)                                     2020      of Portfolio       June 30, 2020      of Portfolio
Noninterest-bearing deposits               $    157,778               9.4 %   $       138,187               9.2 %
Certificates of deposit                          35,119               2.1              35,625               2.4
Savings deposits                                263,206              15.7             241,371              16.1
Money market deposits                           134,458               8.0             133,970               8.9
NOW deposits                                  1,089,157              64.8             951,922              63.4
Total deposits                             $  1,679,718             100.0 %   $     1,501,075             100.0 %



BORROWINGS

At December 31, 2020, The Bank of Greene County had pledged approximately $371.2
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 $266.5 million at December 31, 2020, of which $6.1 million in borrowings
were outstanding at December 31, 2020.  There were no short-term or overnight
borrowings outstanding at December 31, 2020.  There were no irrevocable stand-by
letters of credit outstanding at December 31, 2020. The $6.1 million in
borrowings consisted of long-term fixed rate advances with a weighted average
rate of 1.79% and a weighted average maturity of 12 months.

The Bank of Greene County also pledges securities and certificates of deposit as
collateral at the Federal Reserve Bank discount window for overnight borrowings.
At December 31, 2020, approximately $4.2 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
December 31, 2020. The Company had $10.9 million of the Paycheck Protection Plan
Lending Facility ("PPPLF") outstanding as of June 30, 2020, which provides banks
additional funding for liquidity whereby PPP loans are pledged as collateral.
No PPPLF borrowings were outstanding at December 31, 2020.

The Bank of Greene County has established unsecured lines of credit with
Atlantic Central Bankers Bank for $10.0 million and three other financial
institutions for $64.5 million. Greene County Bancorp, Inc. 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. At December 31, 2020, there were no
balances outstanding on any of these lines of credit.  Greene County Bancorp,
Inc., had borrowings outstanding with Atlantic Central Bankers Bank of $7.0
million at June 30, 2020.

The Company entered into Subordinated Note Purchase Agreements with 12 qualified
institutional investors on September 17, 2020, issued at 4.75% Fixed-to-Floating
Rate due September 15, 2030, in the aggregate principal amount of $20.0 million,
carried net of issuance costs of $367,000 amortized over a period of 60 months.
These notes are callable on September 15, 2025.  At December 31, 2020, there
were $19.6 million of Subordinated Note Purchases Agreements outstanding, net of
issuance costs.

Expected maturities of long-term loans at December 31, 2020 were as follows:

(In thousands)
Within the twelve months ended December 31,
2021                                          $ 2,950
2022                                            3,150
After 5 years                                       -
                                              $ 6,100



EQUITY

Equity brought to $ 138.7 million at December 31, 2020 of
$ 128.8 million at June 30, 2020, resulting mainly from the net result of $ 11.1 million, partially offset by declared and paid dividends of $ 941,000 and an increase in other comprehensive comprehensive income of $ 198,000.

                                       40

————————————————– ——————————

Index

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 six months
ending December 31, 2020, the Company did not repurchase any shares.

Selected equity data:

                                                                 December 31, 2020       June 30, 2020
Shareholders' equity to total assets, at end of period                        7.44 %              7.68 %
Book value per share                                           $             16.30     $         15.13
Closing market price of common stock                           $             25.49     $         22.30



                                                                  For the six months ended
                                                                        December 31,
                                                                      2020                2019
Average shareholders' equity to average assets                        7.45 %              8.52 %
Dividend payout ratio1                                               18.46 %             18.80 %
Actual dividends paid to net income2                                  8.50 %             13.79 %



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, 2019, September
30, 2020 and December 31, 2020, respectively. Dividends declared during the
three months ended December 31, 2019 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.

                                       41

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Index

Comparison of operating results for the three and six months ended December 31, 2020 and 2019

Average Balance Sheet

The following table sets forth certain information relating to Greene County
Bancorp, Inc. for the three and six months ended December 31, 2020 and 2019. For
the periods indicated, the total dollar amount of interest income from average
interest-earning assets and the resultant yields, as well as the interest
expense on average interest-bearing liabilities, are expressed both in dollars
and rates.  No tax equivalent adjustments were made.  Average balances were
based on daily averages. Average loan balances include nonperforming loans. The
loan yields include net amortization of certain deferred fees and costs that are
considered adjustments to yields.

                                                      Three months ended December 31,
                                            2020                                          2019
                               Average      Interest        Average          Average      Interest        Average
                           Outstanding      Earned /        Yield /      Outstanding      Earned /        Yield /
(Dollars in thousands)         Balance          Paid           Rate          Balance          Paid           Rate
Interest-earning
Assets:
Loans receivable, net1    $  1,045,144     $  11,766           4.50 %   $    841,604     $   9,801           4.66 %
Securities2                    720,994         3,145           1.74          516,840         3,166           2.45
Interest-bearing bank
balances and federal
funds                           71,051            21           0.12           43,559           207           1.90
FHLB stock                       1,187            17           5.73            1,619            23           5.68
Total interest-earning
assets                       1,838,376        14,949           3.25 %      1,403,622        13,197           3.76 %
Cash and due from banks         11,820                                        10,328
Allowance for loan
losses                         (17,579 )                                     (13,525 )
Other
noninterest-earning
assets                          27,797                                        23,445
Total assets              $  1,860,414                                  $  1,423,870

Interest-Bearing
Liabilities:
Savings and money
market deposits           $    378,566     $     226           0.24 %   $    318,522     $     323           0.41 %
NOW deposits                 1,113,352           729           0.26          808,219         1,760           0.87
Certificates of deposit         35,132            98           1.12           36,374           122           1.34
Borrowings                      26,350           287           4.36           18,485            81           1.75
Total interest-bearing
liabilities                  1,553,400         1,340           0.34 %      1,181,600         2,286           0.77 %
Noninterest-bearing
deposits                       151,075                                       108,256
Other
noninterest-bearing
liabilities                     20,355                                        15,760
Shareholders' equity           135,584                                       118,254
Total liabilities and
equity                    $  1,860,414                                  $  1,423,870

Net interest income                        $  13,609                                     $  10,911
Net interest rate
spread                                                         2.91 %                                        2.99 %
Net earnings assets       $    287,976                                  $    220,022
Net interest margin                                            2.96 %                                        3.11 %
Average
interest-earning assets
to average
interest-bearing
liabilities                     118.35 %                                      118.79 %


————————————————– ——————————

1Calculated net of deferred loan fees and costs, loan discounts, and loans in
process.
2Includes tax-free securities, mortgage-backed securities, and asset-backed
securities.
                                                                   For the three months ended
Taxable-equivalent net interest income and net interest margin            December 31,
(Dollars in thousands)                                                     2020             2019
Net interest income (GAAP)                                       $       13,609      $    10,911
Tax-equivalent adjustment(1)                                                705              627
Net interest income (fully taxable-equivalent)                   $       

14 314 $ 11,538

Average interest-earning assets                                  $    1,838,376      $ 1,403,622
Net interest margin (fully taxable-equivalent)                             3.11 %           3.29 %


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 3.98% for New York
State income taxes for the period ended December 31, 2020 and 2019.

                                       42

————————————————– ——————————

  Index
                                                          Six months ended December 31,
                                            2020                                                     2019
                               Average      Interest        Average          Average                            Average
                           Outstanding      Earned /        Yield /      Outstanding            Interest        Yield /
(Dollars in thousands)         Balance          Paid           Rate          Balance       Earned / Paid           Rate

Interests

Assets:

Loans receivable, net1    $  1,037,476     $  21,958           4.23 %   $    823,051     $        19,206           4.67 %
Securities2                    681,761         6,267           1.84          479,199               6,148           2.57
Interest-bearing bank
balances and federal
funds                           46,445            28           0.12           41,533                 405           1.95
FHLB stock                       1,247            34           5.45            1,512                  46           6.08
Total interest-earning
assets                       1,766,929        28,287           3.20 %      1,345,295              25,805           3.84 %
Cash and due from banks         11,675                                        10,532
Allowance for loan
losses                         (17,064 )                                     (13,377 )
Other
noninterest-earning
assets                          26,931                                        22,547
Total assets              $  1,788,471                                  $  1,364,997

Interest-Bearing
Liabilities:
Savings and money
market deposits           $    378,467     $     525           0.28 %   $    324,109     $           664           0.41 %
NOW deposits                 1,049,088         1,710           0.33        
 748,421               3,346           0.89
Certificates of deposit         35,216           207           1.18           36,679                 245           1.34
Borrowings                      23,122           420           3.63           16,110                 139           1.73
Total interest-bearing
liabilities                  1,485,893         2,862           0.39 %      1,125,319               4,394           0.78 %
Noninterest-bearing
deposits                       148,049                                       107,465
Other
noninterest-bearing
liabilities                     21,204                                        15,917
Shareholders' equity           133,325                                       116,296
Total liabilities and
equity                    $  1,788,471                                  $  1,364,997

Net interest income                        $  25,425                                     $        21,411
Net interest rate
spread                                                         2.81 %                                              3.06 %
Net earnings assets       $    281,036                                  $    219,976
Net interest margin                                            2.88 %                                              3.18 %
Average
interest-earning assets
to average
interest-bearing
liabilities                     118.91 %                                      119.55 %


————————————————– ——————————

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

                                                                   For the six months ended
Taxable-equivalent net interest income and net interest margin           December 31,
(Dollars in thousands)                                                    2020            2019
Net interest income (GAAP)                                       $      25,425     $    21,411
Tax-equivalent adjustment(1)                                             1,407           1,203
Net interest income (fully taxable-equivalent)                   $      

26 832 $ 22,614

Average interest-earning assets                                  $   1,766,929     $ 1,345,295
Net interest margin (fully taxable-equivalent)                            

3.04% 3.36%


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 3.98% for New York
State income taxes for the periods ended December 31, 2020 and 2019.

                                       43

————————————————– ——————————

Index

Rate / Volume Analysis

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

(i) Change due to volume changes (volume changes multiplied by

advance rate);

(ii) Variation attributable to rate variations (rate variations 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 December 31,                  Six Months Ended December 31,
(Dollars in thousands)                                           2020 versus 2019                               2020 versus 2019
                                                       Increase/(Decrease)                Total        Increase/(Decrease)              Total
                                                              Due To                  Increase/              Due To                 Increase/
                                                       Volume              Rate      (Decrease)         Volume           Rate      (Decrease)

Interest Earning Assets:
Loans receivable, net1                             $    2,310       $      (345 )   $     1,965     $    4,681       $ (1,929 )   $     2,752
Securities2                                             1,037            (1,058 )           (21 )        2,163         (2,044 )           119
Interest-bearing bank balances and federal funds           81              (267 )          (186 )           43           (420 )          (377 )
FHLB stock                                                 (6 )               -              (6 )           (8 )           (4 )           (12 )
Total interest-earning assets                           3,422            

(1,670) 1,752 6,879 (4,397) 2,482

Interest-Bearing Liabilities:
Savings and money market deposits                          54              (151 )           (97 )           98           (237 )          (139 )
NOW deposits                                              502            (1,533 )        (1,031 )          996         (2,632 )        (1,636 )
Certificates of deposit                                    (4 )             (20 )           (24 )          (10 )          (28 )           (38 )
Borrowings                                                 46               160             206             80            201             281
Total interest-bearing liabilities                        598            

(1,544) (946) 1,164 (2,696) (1,532) Net change in net interest income

                  $    2,824       $      

(126) $ 2,698 $ 5,715 $ (1,701) $ 4,014

————————————————– ——————————

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

GENERAL

Return on average assets and return on average equity are common methods of
measuring operating results. Annualized return on average assets decreased to
1.33% for the three months ended December 31, 2020 as compared to 1.44% for the
three months ended December 31, 2019, and was 1.24% and 1.46% for the six months
ended December 31, 2020 and 2019, respectively.  Annualized return on average
equity increased to 18.28% for the three months and decreased to 16.61% for the
six months ended December 31, 2020, as compared to 17.29% for the three months
and 17.16% for the six months ended December 31, 2019. The decrease in return on
average assets for the three and six months ended December 31, 2020 and the
decrease of return on average equity for the six months ended December 31, 2020,
was primarily the result of balance sheet growth outpacing growth in net income.
The increase in return on average shareholders' equity for the three months
ended December 31, 2020 was primarily due to the receipt of $1.5 million in PPP
fee income due to forgiveness of funds received on SBA PPP loans. Net income
amounted to $6.2 million and $5.1 million for the three months ended December
31, 2020 and 2019, respectively, an increase of $1.1 million, or 21.2%, and
amounted to $11.1 million and $10.0 million for the six months ended December
31, 2020 and 2019, respectively, an increase of $1.1 million, or 11.0%. Average
assets increased $436.5 million, or 30.7%, to $1.9 billion for the three months
ended December 31, 2020 as compared to $1.4 billion for the three months ended
December 31, 2019. Average equity increased $17.3 million, or 14.7%, to $135.6
million for the three months ended December 31, 2020 as compared to $118.3
million for the three months ended December 31, 2019. Average assets increased
$423.5 million, or 31.0%, to $1.8 billion for the six months ended December 31,
2020 as compared to $1.4 billion for the six months ended December 31, 2019.
Average equity increased $17.0 million, or 14.6%, to $133.3 million for the six
months ended December 31, 2020 as compared to $116.3 million for the six months
ended December 31, 2019.

                                       44

————————————————– ——————————

Index

INCOME FROM INTEREST

Interest income amounted to $15.0 million for the three months ended December
31, 2020 as compared to $13.2 million for the three months ended December 31,
2019, an increase of $1.8 million, or 13.3%. Interest income amounted to $28.3
million for the six months ended December 31, 2020 as compared to $25.8 million
for the six months ended December 31, 2019, an increase of $2.5 million, or
9.6%. The increase in average balances on loans and securities as well as the
recognition of PPP fee income due to the forgiveness of SBA PPP loans had the
greatest impact on interest income.  Average loan balances increased $203.5
million and $214.4 million and the yield on loans decreased 16 and 44 basis
points for the three and six months ended December 31, 2020 and 2019,
respectively.  Included in interest-earning assets at December 31, 2020, are
$62.1 million of SBA Paycheck Protection Program (PPP) loans at a rate of
1.00%.  A decline in yields on loans was offset by the receipt of $1.5 million
in SBA PPP fee income for the three and six months ended December 31, 2020,
which was realized through a deferred origination fee and recognized within
interest income.  There were no SBA PPP loans outstanding at December 31, 2019.
Average securities increased $204.2 million and $202.6 million, and the yield on
such securities decreased 71 basis points and 73 basis points when comparing the
three and six months ended December 31, 2020 and 2019, respectively.

INTEREST CHARGES

Interest expense amounted to $1.3 million for the three months ended December
31, 2020 as compared to $2.3 million for the three months ended December 31,
2019, a decrease of $946,000, or 41.4%.  Interest expense amounted to $2.9
million for the six months ended December 31, 2020 as compared to $4.4 million
for the six months ended December 31, 2020, a decrease of $1.5 million or 34.9%.
As illustrated in the rate/volume table, interest expense decreased $1.5 million
and $2.7 million when comparing the three and six months ended December 31, 2020
and 2019 due to the decrease in the rate paid on interest-bearing liabilities.
Decreases in the rate paid on interest-bearing liabilities was offset by an
increase in interest expense of $598,000 and $1.1 million when comparing these
same periods due to the increased average balances.

Cost of interest-bearing liabilities decreased 43 and 39 basis points when
comparing the three and six months ended December 31, 2020 and 2019,
respectively.  The cost of NOW deposits decreased 61 and 56 basis points, the
cost of savings and money market deposits decreased 17 and 13 basis points, and
the cost of Certificates of deposit decreased 22 and 16 basis points when
comparing the three and six months ending December 31, 2020, and 2019,
respectively.  The decrease in cost of interest-bearing liabilities was offset
by growth in the average balance of interest-bearing liabilities of $371.8
million and $360.6 million, most notably due to an increase in NOW deposits of
$305.1 million and $300.7 million, an increase in average savings and money
market deposits of $60.0 million and $54.4 million, and an increase in
borrowings of $7.9 million and $7.0 million when comparing the three and six
months ended December 31, 2020 and 2019, respectively. The cost on borrowings
increased 261 and 190 basis points when comparing the three and six months ended
December 31, 2020 and 2019.  The increase in cost on borrowings is due to the
Company entering into Subordinated Note Purchase Agreements on September 17,
2020, issued at 4.75% Fixed-to-Floating Rate due September 15, 2030, in the
aggregate principal amount of $20.0 million.  These notes are callable on
September 15, 2025.  At December 31, 2020, there were $19.6 million of
Subordinated Note Purchases Agreements outstanding, net of issuance costs.

NET INTEREST PRODUCT

Net interest income increased $2.7 million to $13.6 million for the three months
ended December 31, 2020 from $10.9 million for the three months ended December
31, 2019. Net interest income increased $4.0 million to $25.4 million for the
six months ended December 31, 2020 from $21.4 million for the six months ended
December 31, 2019. The increase in net interest income was primarily the result
of the growth in the average balance of interest-earnings assets, which
increased $434.8 million and $421.6 million when comparing the three and six
months ended December 31, 2020 and 2019, respectively.  Included in
interest-earning assets at December 31, 2020, are $62.1 million of SBA Paycheck
Protection Program (PPP) loans at a rate of 1.00%.  Included in interest income
was the receipt of $1.5 million in SBA PPP fee income for the three and six
months ended December 31, 2020, which was realized through a deferred
origination fee and recognized within interest income.  Costs of
interest-bearing liabilities decreased 43 and 39 basis points when comparing the
three and six months ended December 31, 2020 and 2019, respectively.  The
decline in costs was offset by growth in interest-bearing liabilities of $371.8
million and $360.6 million when comparing the three and six months ended
December 31, 2020 and 2019, respectively.

Net interest rate spread and margin both decreased when comparing the three and
six months ended December 31, 2020 and 2019. Net interest rate spread decreased
eight basis points to 2.91% for the three months ended December 31, 2020
compared to 2.99% for the three months ended December 31, 2019. Net interest
rate spread decreased 25 basis points to 2.81% for the six months ended December
31, 2020 compared to 3.06% for the six months ended December 31, 2019. Net
interest margin decreased 15 basis points and 30 basis points to 2.96% and
2.88%, respectively, for the three and six months ended December 31, 2020
compared to 3.11% and 3.18%, respectively, for the three and six months ended
December 31, 2019.  Decreases in net interest spread and margin resulted
primarily from lower yields on loans and securities offset by growth in average
loan and securities balances and lower costs of interest-bearing liabilities.

                                       45

————————————————– ——————————

Index

Net interest income on a taxable-equivalent basis includes the additional amount
of interest income that would have been earned if the Company's investment in
tax-exempt securities and loans had been subject to federal and New York State
income taxes yielding the same after-tax income. Tax equivalent net interest
margin was 3.11% and 3.29% for the three months ended December 31, 2020 and
2019, respectively, and was 3.04% and 3.36% for the six months ended December
31, 2020 and 2019, 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, including in a rising rate
environment.  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 Bank has taken a number of measures in an attempt to
mitigate the impact of the Coronavirus on the economy. The Federal Reserve Bank
has maintained interest rates near 0.00%-0.25% which has had an impact to the
Company for the three and six months ended December 31, 2020.  It is anticipated
that the low interest rate environment will continue to have a negative impact
on the Company's interest spread and margin during the fiscal year ended June
30, 2021. The Company continually monitors its interest rate risk and the impact
to net interest income and capital from the interest rate decrease is well
within established limits.

PROVISION FOR LOAN LOSSES

Management continues to closely monitor asset quality and adjust the level of
the allowance for loan losses when necessary. The amount recognized for the
provision for loan losses is determined by management based on its ongoing
analysis of the adequacy of the allowance for loan losses. Provision for loan
losses amounted to $1.3 million and $690,000 for the three months ended December
31, 2020 and 2019, respectively, and amounted to $2.5 million and $1.2 million
for the six months ended December 31, 2020 and 2019, respectively. The increase
in provision for loan loss was primarily due to the impact of the COVID-19
pandemic, growth in gross loans, an increase in loans adversely classified and a
commercial loan charge-off of $500,000. The Company instituted a loan deferment
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. Provisions under the CARES
Act were extended under the Consolidated Appropriations Act, 2021 signed into
law on December 27, 2020. At December 31, 2020, the Company had $14.5 million
consisting of 66 loans on payment deferral as a result of the pandemic, which is
down from $193.5 million consisting of 706 loans at June 30, 2020.  Management
continues to monitor these loans, however, it remains uncertain that all of
these loans will continue to perform as agreed once they reach the end of the
deferral period.  At December 31, 2020, there were four loans totaling $204,000
that were previously on deferment that are now on nonaccrual.  These loans are
within the residential and commercial loan portfolios. Loans classified as
substandard or special mention totaled $38.2 million at December 31, 2020 and
$32.8 million at June 30, 2020, an increase of $5.4 million.  Loans classified
as substandard or special mention increased due to insufficient cash flows and
revenues related to the COVID-19 pandemic.  Reserves on loans classified as
substandard or special mention totaled $3.4 million at December 31, 2020
compared to $2.4 million at June 30, 2020, an increase of $981,000 which is
attributable to the increase in classified loans. No loans were classified as
doubtful or loss at December 31, 2020 or June 30, 2020. Allowance for loan
losses to total loans receivable was 1.74% at December 31, 2020 compared to
1.62% at June 30, 2020.  Total loans receivable included $62.1 million and $99.8
million of SBA Paycheck Protection Program (PPP) loans at December 31, 2020 and
June 30, 2020, respectively.  Excluding these SBA guaranteed loans, the
allowance for loan losses to total loans receivable would have been 1.85% and
1.80% at December 31, 2020 and June 30, 2020, respectively.

Net charge-offs for the three months ended December 31, 2020 totaled $588,000
compared to $149,000 for the three months ended December 31, 2019.  Net
charge-offs totaled $626,000 and $457,000 for the six months ended December 31,
2020 and 2019, respectively. The increase in charge-off activity for the six
months ended December 31, 2020 was primarily within the commercial loan
portfolio offset by recoveries on consumer installment loans of $40,000.

Nonperforming loans amounted to $2.8 million and $4.1 million at December 31,
2020 and June 30, 2020, respectively. The decrease in nonperforming loans during
the period was primarily due to $1.3 million in loan repayments, $588,000 in
charge-offs and $293,000 in loans returned to performing status, offset in part
by $861,000 of loans placed into nonperforming status. At December 31, 2020
nonperforming assets were 0.17% of total assets compared to 0.24% at June 30,
2020. Nonperforming loans were 0.27% and 0.41% of net loans at December 31, 2020
and June 30, 2020, respectively. At December 30, 2019, nonperforming assets to
total assets were 0.25% and nonperforming loans to net loans were 0.40%. The
Company has not been an originator of "no documentation" mortgage loans, and the
loan portfolio does not include any mortgage loans that the Company classifies
as sub-prime.

                                       46

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  Index
NONINTEREST INCOME

                                          For the three months                                                  For the six months
(In thousands)                             ended December 31,              Change from Prior Year               ended December 31,              Change from Prior Year
Noninterest income:                          2020             2019          Amount             Percent             2020            2019          Amount             Percent

Service charges on deposit accounts $ 934 $ 1,111 $

  (177 )            (15.93 )%   $     1,740      $    2,236     $      (496 )            (22.18 )%
Debit card fees                               917              755             162               21.46            1,810           1,498             312               20.83
Investment services                           216              168              48               28.57              377             313              64               20.45
E-commerce fees                                28               31              (3 )             (9.68 )             57              66              (9 )            (13.64 )
Other operating income                        299              251              48               19.12              488             469              19                4.05
Total noninterest income              $     2,394       $    2,316     $        78                3.37 %    $     4,472      $    4,582     $      (110 )             (2.40 )%



Noninterest income increased $78,000, or 3.4%, and totaled $2.4 million and $2.3
million for the three months ended December 31, 2020 and 2019, respectively.
Noninterest income decreased $110,000, or 2.4%, and totaled $4.5 million and
$4.6 million for the six months ended December 31, 2020 and 2019. The decrease
was primarily due to decreases in service charges on deposit accounts offset by
an increase in debit card fees resulting from continued growth in the number of
checking accounts with debit cards.

NONINTEREST EXPENSE

                                              For the three months                                              For the six months
(In thousands)                                 ended December 31,             Change from Prior Year            ended December 31,            Change from Prior Year
Noninterest expense:                             2020             2019     
    Amount          Percent            2020           2019          Amount 

Percent

Salaries and employee benefits            $     4,771       $    3,992     $       779            19.51 %   $     9,178     $    7,934     $     1,244            15.68 %
Occupancy expense                                 464              441              23             5.22             979            907              72             7.94
Equipment and furniture expense                   164              126              38            30.16             315            407             (92 )         (22.60 )
Service and data processing fees                  671              638              33             5.17           1,284          1,212              72             5.94
Computer software, supplies and support           327              264              63            23.86             633            506             127  

25.10

Advertising and promotion                         109              142             (33 )         (23.24 )           220            258             (38 )         (14.73 )
FDIC insurance premiums                           174               12             162         1,350.00             348            (27 )           375        (1,388.89 )
Legal and professional fees                       319              325              (6 )          (1.85 )           595            604              (9 )          (1.49 )
Other                                             541              595             (54 )          (9.08 )         1,121          1,156             (35 )          (3.03 )
Total noninterest expense                 $     7,540       $    6,535     $     1,005            15.38 %   $    14,673     $   12,957     $     1,716            13.24 %



Noninterest expense increased $1.0 million, or 15.4%, to $7.5 million for the
three months ended December 31, 2020 as compared to $6.5 million for the three
months ended December 31, 2019. Noninterest expense increased $1.7 million, or
13.2%, to $14.7 million for the six months ended December 31, 2020, compared to
$13.0 million for the six months ended December 31, 2019. The increase in
noninterest expense during the three and six months ended December 31, 2020 was
primarily due to an increase in salaries and employee benefits expenses
resulting from additional staffing for a new branch located in Albany, New York,
which opened in September 2020.  Due to continued growth, staffing was also
increased within our lending department, information technology department and
branch offices. FDIC insurance premiums also increased for the three and six
months December 31, 2020, due to credits received during the three and six
months ended December 31, 2019.

INCOME TAXES

The 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 14.0% and 13.0% for the three and six
months ended December 31, 2020, compared to 14.8% and 15.4% for the three and
six months ended December 31, 2019.  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, 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.

LIQUIDITY AND CAPITAL RESOURCES

Market risk is the risk of loss in a financial instrument arising from adverse
changes in market rates or prices such as interest rates, foreign currency
exchange rates, commodity prices, and equity prices. Greene County Bancorp,
Inc.'s most significant form of market risk is interest rate risk since the
majority of Greene County Bancorp, Inc.'s assets and liabilities are sensitive
to changes in interest rates.  Greene County Bancorp, Inc.'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. The impact of the COVID-19 pandemic has added to the
uncertainty regarding the Company's liquidity needs, with reductions in interest
and principal payments from loans and changes in deposit activity, estimating
cash flow has become more challenging. At December 31, 2020, the Company had
$57.0 million in cash and cash equivalents, representing 3.1% of total assets,
and had $347.4 million available in unused lines of credit. The Federal Reserve
has instituted a program, the Paycheck Protection Plan Lending Facility
("PPPLF") to provide banks additional funding for liquidity whereby the PPP
loans are pledged as collateral. The PPPLF allows banks to offer these loans to
local businesses while maintaining strong liquidity to meet cash flow needs.
Principal repayment of these borrowings will be made upon receipt of payment on
the underlying loans being pledged as collateral and interest will be charged at
a rate of 0.35%. At June 30, 2020, the Company had $10.9 million of PPPLF
borrowings outstanding.  The PPPLF was paid off during the six months ended
December 31, 2020.

                                       47

————————————————– ——————————

Index

AT December 31, 2020, the liquidity measures were as follows:

Cash equivalents/(deposits plus short term borrowings)                      

3.39% (cash equivalents plus non-pledged securities) / (deposits plus short-term borrowings)

12.05% (cash equivalents plus non-pledged securities plus additional borrowing capacity) / (deposits plus short-term borrowings)

32.69%

Greene County Bank unfunded loan commitments and unused lines of credit are as follows at December 31, 2020:

(In thousands)                   2020
Unfunded loan commitments   $ 111,598
Unused lines of credit         79,247
Standby letters of credit       3,753
Total commitments           $ 194,598



Greene County Bancorp, Inc. 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 where the Company acts as the lead bank are referred to as
"participations-out," in reference to the credit risk associated with the
customer derivatives being transferred out of the Company. Participations-out
generally occur concurrently with the sale of new customer derivatives. The
Company had no participations-out at December 31, 2020 or June 30, 2020. 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 Company's estimate of the credit exposure
associated with its risk participations-in was $6.1 million and $3.3 million at
December 31, 2020 and June 30, 2020, respectively. The current amount of credit
exposure is spread out over ten counterparties, and terms range between one to
ten years.

Greene County Bancorp, Inc. 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.

Greene County Bank and Greene County Commercial Bank meets all regulatory capital requirements applicable to December 31, 2020 and June 30, 2020.

                                       48

————————————————– ——————————

  Index
                                                                                To Be Well
                                                                               Capitalized
(Dollars in                                         For Capital                   Prompt                Capital Conservation
thousands)                Actual                 Adequacy Purposes                Action                       Buffer
The Bank of        Amount        Ratio       Amount           Ratio        Amount       Ratio         Actual           Required
Greene County
As of December
31, 2020:

Total risk-based
capital            $ 163,632        16.5 %   $    79,492           8.0 %   $ 99,365        10.0 %          8.47 %            2.50 %
Tier 1
risk-based
capital              151,140        15.2          59,619           6.0       79,492         8.0            9.21              2.50
Common equity
tier 1 capital       151,140        15.2          44,714           4.5       64,587         6.5           10.71              2.50
Tier 1 leverage
ratio                151,140         8.2          74,173           4.0       92,716         5.0            4.15              2.50

As of June 30,
2020:

Total risk-based
capital            $ 142,524        16.0 %   $    71,393           8.0 %   $ 89,241        10.0 %          7.97 %            2.50 %
Tier 1
risk-based
capital              131,305        14.7          53,545           6.0       71,393         8.0            8.71              2.50
Common equity
tier 1 capital       131,305        14.7          40,158           4.5       58,007         6.5           10.21              2.50
Tier 1 leverage
ratio(1)             131,305         8.1          65,238           4.0       81,547         5.0            4.05              2.50

Greene County
Commercial Bank
As of December
31, 2020:

Total risk-based
capital            $  64,234        43.7 %   $    11,766           8.0 %   $ 14,708        10.0 %         35.67 %            2.50 %
Tier 1
risk-based
capital               64,234        43.7           8,825           6.0       11,766         8.0           37.67              2.50
Common equity
tier 1 capital        64,234        43.7           6,619           4.5        9,560         6.5           39.17              2.50
Tier 1 leverage
ratio                 64,234         8.7          29,425           4.0       36,781         5.0            4.73              2.50

As of June 30,
2020:

Total risk-based
capital            $  60,832        45.3 %   $    10,754           8.0 %   $ 13,442        10.0 %         37.26 %            2.50 %
Tier 1
risk-based
capital               60,832        45.3           8,065           6.0       10,754         8.0           39.26              2.50
Common equity
tier 1 capital        60,832        45.3           6,049           4.5        8,737         6.5           40.76              2.50
Tier 1 leverage
ratio                 60,832         9.0          26,976           4.0       33,720         5.0            5.02              2.50


(1) Average assets have been adjusted for PPPLF borrowings in the calculation of the Tier 1 Leverage Ratio.

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