ITEM 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion is an analysis of the Company’s results of operations for years shown and was derived from the audited consolidated financial statements of Greene County Bancorp, Inc. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual 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 annual report, describe future plans or strategies and include Greene County Bancorp, Inc.’s expectations of future financial results. The words “believe,” “may,” “will,” “intend,” “expect,” “anticipate,” “project,” and similar expressions identify forward-looking statements. Greene County Bancorp, Inc.’s ability to predict results or the effect of future plans or strategies or qualitative or quantitative changes based on market risk exposure is inherently uncertain. Factors that could affect actual results include but are not limited to:
changes in general market interest rates,
changes in general economic conditions,
credit risk,
(d) continued period of high inflation could adversely impact customers,
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cybersecurity risks,
bank failures,
changes in general business and economic trends,
legislative and regulatory changes,
monetary and fiscal policies of the U.S. Treasury and the Federal Reserve,
changes in the quality or composition of Greene County Bancorp, Inc.’s loan and investment portfolios,
deposit flows,
competition, and
(m) demand for financial services in Greene County Bancorp, Inc.’s market area.
These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements, since results in future periods may differ materially from those currently expected because of various risks and uncertainties.
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Selected Financial Data
At or for the years ended June 30,
(Dollars in thousands, except per share amounts)
SELECTED FINANCIAL CONDITION DATA:
Total assets
Loans receivable, net of allowance for credit loss on loans
Securities available-for-sale, at fair value
Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $548 and $483 at June 30, 2025 and 2024 (9)
Equity securities
Deposits
Borrowings
Shareholders' equity
AVERAGE BALANCES:
Total assets
Interest-earning assets
Loans receivable, net of allowance for credit loss on loans
Securities, net of allowance for credit loss on securities
Deposits
Borrowings
Shareholders' equity
SELECTED OPERATIONS DATA:
Total interest income
Total interest expense
Net interest income
Provision (benefit) for credit losses (9)
Net interest income after provision for credit losses (9)
Total noninterest income
Total noninterest expense
Income before provision for income taxes
Provision for income taxes
Net income
FINANCIAL RATIOS:
Return on average assets (1)
Return on average shareholders’ equity (2)
Noninterest expenses to average total assets
Average interest-earning assets to average interest-bearing liabilities
Net interest rate spread (3)
Net interest margin (4)
Efficiency ratio (5)
Shareholders’ equity to total assets, at end of period
Average shareholders’ equity to average assets
Dividend payout ratio (6)
Actual dividends declared to net income (7)
Non-performing assets to total assets, at end of period
Non-performing loans to net loans, at end of period
Allowance for credit losses on loans to non-performing loans (9)
Allowance for credit losses on loans to total loans receivable (9)
Book value per share (8)
Basic earnings per share
Diluted earnings per share
OTHER DATA:
Closing market price of common stock
Number of full-service offices
Number of full-time equivalent employees
(1) Ratio of net income to average total assets.
(2) Ratio of net income to average shareholders’ equity.
(3) The difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(4) Net interest income as a percentage of average interest-earning assets.
(5) Noninterest expense divided by the sum of net interest income and noninterest income.
(6) Dividends per share divided by basic earnings per share. This calculation does not take into account the waiver of dividends by Greene County Bancorp, MHC.
(7) Dividends declared divided by net income.
(8) Shareholders’ equity divided by outstanding shares.
(9) The Company adopted the CECL accounting standard effective July 1, 2023. For periods subsequent to adoption, the allowance is calculated under the CECL methodology. The periods prior to adoption, the allowance calculation was based on the incurred loss methodology.
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GENERAL
Greene County Bancorp, Inc. (the “Company”) is the holding company for the Bank of Greene County (the “Bank”), a community-based bank offering a variety of financial services to meet the needs of the communities it serves. Greene County Bancorp, Inc.’s stock is traded on the NASDAQ Capital Market under the symbol “GCBC.” Greene County Bancorp, MHC is a mutual holding company that owns 54.1% of the Company’s outstanding common stock. The Bank of Greene County is a federally chartered savings bank. The Bank of Greene County’s principal business is attracting deposits from customers within its market area and investing those funds primarily in loans, with excess funds used to invest in securities. At June 30, 2025, the Bank of Greene County operated 18 full-service branches, an administration office, lending centers, an operations center, customer call center, and a wealth management center in New York’s Hudson Valley and Capital District Regions of New York State. In June 2004, Greene County Commercial Bank (“Commercial Bank”) was opened for the limited purpose of providing financial services to local municipalities. The Commercial Bank is a subsidiary of the Bank of Greene County, and is a New York State-chartered commercial bank. In June 2011, Greene Property Holdings, Ltd. was formed as a New York corporation that has elected under the Internal Revenue Code to be a real estate investment trust. Greene Properties Holding, Ltd. is a subsidiary of the Bank of Greene County. Certain mortgages and notes held by the Bank of Greene County were transferred to and are beneficially owned by Greene Property Holdings, Ltd. The Bank of Greene County continues to service these loans.
Overview of the Company’s Activities and Risks
The Company’s results of operations depend primarily on its net interest income, which is the difference between the income earned on the Company’s loan and securities portfolios and its cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by the Company’s provision for credit losses, noninterest income and noninterest expense. Noninterest income consists primarily of fees and service charges. The Company’s noninterest expense consists principally of compensation and employee benefits, occupancy, equipment and data processing, and other operating expenses. Results of operations are also significantly affected by general economic and competitive conditions, changes in interest rates, as well as government policies and actions of regulatory authorities. Additionally, future changes in applicable law, regulations or government policies may materially affect the Company.
To operate successfully, the Company must manage various types of risk, including but not limited to, market or interest rate risk, credit risk, transaction risk, liquidity risk, security risk, strategic risk, reputation risk and compliance risk.
Market risk is the risk of loss from adverse changes in market prices and/or interest rates. Since net interest income (the difference between interest earned on loans and investments and interest paid on deposits and borrowings) is the Company’s primary source of revenue. Net interest income is affected by changes in interest rates as well as fluctuations in the level and duration of the Company’s assets and liabilities.
Interest rate risk is the most significant market risk affecting the Company since the majority of the Company’s assets and liabilities are sensitive to changes in interest rates. The Company’s primary sources of funds are deposits and proceeds from principal and interest payments on loans, mortgage-backed securities and debt securities. 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.
Credit risk is the risk to the Company’s earnings and shareholders’ equity that results from customers, to whom loans have been made and to the issuers of debt securities in which the Company has invested, failing to repay their obligations. The magnitude of risk depends on the capacity and willingness of borrowers and debt issuers to repay and the sufficiency of the value of collateral obtained to secure the loans made or investments purchased.
Liquidity risk is the risk the Company may not be able to satisfy current or future financial commitments or may become unduly reliant on alternate funding sources. The Company’s objective is to fund balance sheet growth while meeting the cash flow requirements of depositors. Management is responsible for liquidity monitoring and has available different sources of liquidity as requirements and demands change. These demands include loan growth and repayments, security purchases and maturities, deposit inflows and outflows, and payments on borrowings. Management continually monitors trends to identify patterns that might improve the predictability and timing of the Company’s liquidity position.
Operational risk is the risk to current or anticipated earnings or capital arising from inadequate or failed internal processes or systems, the misconduct or errors of people, and adverse external events. Operational losses result from internal fraud; external fraud including cybersecurity risks; employment practices and workplace safety, clients, products, and business practices; damage to physical assets; business disruption and system failures; and execution, delivery, and process management.
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Critical Accounting Policies
The accounting and reporting policies followed by the Company conform, in all material respects, to accounting principles generally accepted in the United States of America (“GAAP”) and to general practices within the financial services industry. In the course of normal business activity, management must select and apply many accounting policies and methodologies and make estimates and assumptions that lead to the financial results presented in the Company’s consolidated financial statements and accompanying notes. There are uncertainties inherent in making these estimates and assumptions, which could materially affect the Company’s financial condition or results of operations.
Critical accounting estimates as those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations. The more significant of these policies are summarized in Note 1 to the consolidated financial statements of this Annual Report Form 10-K. Not all significant accounting policies require management to make difficult, subjective or complex judgments. The allowance for credit losses on loans and unfunded commitments policies noted below are deemed the Company’s critical accounting estimate.
The allowance for credit losses consists of the allowance for credit losses for loans and unfunded commitments. The measurement of Current Expected Credit Losses (“CECL”) on financial instruments requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses under the CECL approach is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. The Company then considers whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. Finally, the Company considers forecasts about future economic conditions that are reasonable and supportable. The allowance for credit losses for loans, as reported in our consolidated statements of financial condition, is adjusted by a provision (expense) for credit losses, which is recognized in earnings, and reduced by the charge-off of loans, net of recoveries. The allowance for credit losses on unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit. However, a liability is not recognized for commitments unconditionally cancellable by the Company. The allowance for credit losses on unfunded commitments is determined by estimating future draws and applying the expected loss rates on those draws and is included in accrued expenses and other liabilities on the Company’s consolidated statements of financial condition.
Management of the Company considers the accounting policy relating to the allowance for credit losses to be a critical accounting estimate given the uncertainty in evaluating the level of the allowance required to cover management’s estimate of all expected credit losses over the expected contractual life of our loan portfolios. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolios, in light of the factors then prevailing, may result in significant changes in the allowance for credit losses in those future periods. While management’s current evaluation of the allowance for credit losses indicates that the allowance is appropriate, the allowance may need to be increased under adversely different conditions or assumptions. Going forward, the impact of utilizing the CECL approach to calculate the allowance for credit losses will be significantly influenced by the composition, characteristics and quality of our loan portfolios, as well as the prevailing economic conditions and forecasts utilized. Changes in the national unemployment rate and national GDP could have a material impact on the model’s estimation of the allowance. Material changes to these and other relevant factors may result in greater volatility to the allowance for credit losses, and therefore, greater volatility to our reported earnings. This critical accounting policy and its application are periodically reviewed with the Audit Committee and the Board of Directors.
Management’s methodology in determining the allowance for credit losses on loans and unfunded commitments can be found in Note 1 to the consolidated financial statements of this Annual Report Form 10-K. The activity in the allowance for credit losses on loans and unfunded commitments is depicted in supporting tables in Note 4 to the consolidated financial statements of this Annual Report Form 10-K.
Management of Credit Risk
Management considers credit risk to be an important risk factor affecting the financial condition and operating results of the Company. The potential for loss associated with this risk factor is managed through a combination of policies approved by the Company’s Board of Directors, the monitoring of compliance with these policies, and the periodic reporting and evaluation of loans with problem characteristics. Policies relate to the maximum amount that can be granted to a single borrower and such borrower’s related interests, the aggregate amount of loans outstanding by type in relation to total assets and capital, loan concentrations, loan-to-collateral value ratios, approval limits and other underwriting criteria. Policies also exist with respect to the rating of loans, determination of when loans should be placed on a non-performing status and the factors to be considered in establishing the Company’s allowance for credit losses. Management also considers credit risk when evaluating potential and current holdings of securities. Credit risk is a critical component in evaluating corporate debt securities. The Company has purchased municipal securities as part of its strategy based on the fact that such securities can offer a higher tax-equivalent yield than other similar investments.
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FINANCIAL OVERVIEW
Net income for the year ended June 30, 2025 amounted to $31.1 million, or $1.83 per basic and diluted share, as compared to $24.8 million, or $1.45 per basic and diluted share, for the year ended June 30, 2024, an increase of $6.3 million, or 25.7%. The increase in net income was primarily due to an increase of $14.0 million in interest income partially offset by an increase of $4.9 million in interest expense. The provision for credit losses amounted to a charge of $1.3 million and $766,000 for the years ended June 30, 2025 and 2024, respectively. Net interest income increased $9.1 million when comparing the years ended June 30, 2025 and 2024. The increase in net interest income resulted from an increase in interest rates earned on interest-earnings assets outpacing the increase in interest rates paid on interest-bearing liabilities, and by interest-earnings assets growing faster than interest-bearing liabilities when comparing the years ended June 30, 2025 and 2024. Growth in interest-earning assets was due to loans and securities. Growth in loans was primarily in commercial real estate.
Net interest rate spread and margin both increased when comparing the years ended June 30, 2025 and 2024. Net interest rate spread increased 22 basis points to 1.97% for the year ended June 30, 2025, compared to 1.75% for the year ended June 30, 2024. Net interest margin increased 21 basis points to 2.19% for the year ended June 30, 2025, compared to 1.98% for the year ended June 30, 2024. The increase during the year ended June 30, 2025 was due to increases in interest income on loans and securities, as they continue to reprice at higher yields and the interest rates earned on new balances were higher than the historic low levels from the prior periods.
Total assets grew $214.8 million, or 7.6%, to $3.0 billion at June 30, 2025 as compared to $2.8 billion at June 30, 2024. Net loans increased $127.0 million, or 8.6%, to $1.6 billion at June 30, 2025 as compared to $1.5 billion at June 30, 2024. Securities classified as available-for-sale and held-to-maturity increased $91.9 million, or 8.8%, to $1.1 billion at June 30, 2025 as compared to $1.0 billion at June 30, 2024. Deposits increased $250.6 million, or 10.5%, to $2.6 billion at June 30, 2025 as compared to $2.4 billion at June 30, 2024. Total shareholders’ equity increased to $238.8 million at June 30, 2025 from $206.0 million at June 30, 2024, resulting primarily from net income of $31.1 million and a decrease in accumulated other comprehensive loss of $6.2 million, partially offset by dividends declared and paid of $4.5 million.
Comparison of Financial Condition as of June 30, 2025 and 2024
CASH AND CASH EQUIVALENTS
Total cash and cash equivalents decreased $7.3 million to $183.1 million at June 30, 2025 from $190.4 million at June 30, 2024. 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. As of June 30, 2025, the Company believes it has maintained a strong liquidity position.
SECURITIES
Securities available-for-sale and held-to-maturity increased $91.9 million, or 8.8%, to $1.1 billion at June 30, 2025 as compared to $1.0 billion at June 30, 2024. Securities purchases totaled $444.2 million during the year ended June 30, 2025, primarily consisting of $308.5 million of state and political subdivision securities, $88.4 million of mortgage-backed securities, $24.7 million of U.S. Treasury securities, $16.7 million of collateralized mortgage obligations, and $5.9 million of corporate debt securities. Principal pay-downs and maturities during the year ended June 30, 2025 amounted to $353.5 million, primarily consisting of $258.7 million of state and political subdivision securities, $58.0 million of U.S. Treasury securities, $32.7 million of mortgage-backed securities, $2.8 million of collateralized mortgage obligations and $1.3 million of corporate debt securities. Sales during the year ended June 30, 2025 amounted to $6.7 million of U.S. Treasury securities.
U.S. Treasury and mortgage-backed securities are issued by U.S. government entities and agencies. These securities are either explicitly and/or implicitly guaranteed by the U.S. government as to timely repayment of principal and interest, are highly rated by major rating agencies, and have a long history of zero credit losses. Therefore, the Company determined a zero credit loss assumption, and did not calculate or record an allowance for credit loss for these securities. An allowance for credit losses on investment securities held-to-maturity has been recorded for certain municipal securities issued by state and political subdivisions and corporate debt securities to account for expected lifetime credit loss using the CECL methodology.
There was no allowance for credit losses recorded on available-for-sale securities as of either period presented as each of the securities in the portfolio are investment grade, current as to principal and interest and their price changes are consistent with interest and credit spreads when adjusting for convexity, rating, and industry differences.
Securities held-to-maturity are evaluated for credit losses on a quarterly basis under the CECL methodology. The Allowance for Credit Losses on securities held-to-maturity was $548,000 and $483,000 at June 30, 2025 and 2024, respectively.
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The Company holds 59.2% of its securities portfolio at June 30, 2025 in state and political subdivision securities to take advantage of tax savings and to promote the Company’s participation in the communities in which it operates. Mortgage-backed securities and asset-backed securities held within the portfolio do not contain sub-prime loans and are not exposed to the credit risk associated with such lending.
Investment Maturity Schedule
The following table sets forth information with regard to contractual maturities of debt securities shown in amortized cost ($) and weighted average yield (%) at June 30, 2025. Weighted-average yields are an arithmetic computation of income not fully tax equivalent (“FTE”) adjusted divided by amortized cost. Mortgage-backed securities balances are presented based on final maturity date and do not reflect the expected cash flows from monthly principal repayments. Expected maturities may differ from contractual maturities, because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. No tax-equivalent adjustments were made in calculating the weighted average yield.
(Dollars in thousands)
1 year or less
1-5 years
5-10 years
After 10 years
Total
Securities available-for-sale :
U.S. Treasury securities
U.S. government sponsored enterprises
State and political subdivisions
MBS-residential
MBS-multi-family
Corporate debt securities
Total securities available-for-sale
Securities held-to-maturity :
U.S. Treasury securities
State and political subdivisions
MBS-residential
MBS-multi-family
Corporate debt securities
Other securities
Total securities held-to-maturity
LOANS
Net loans receivable increased $127.0 million, or 8.6%, to $1.6 billion at June 30, 2025 from $1.5 billion at June 30, 2024. The loan growth experienced during the year ended June 30, 2025 consisted primarily of $117.9 million in commercial real estate loans, $5.5 million in commercial loans, and $4.9 million in home equity 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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Loan Portfolio Composition
The following table presents the composition of the Company’s loan portfolio at amortized cost in dollar amounts and percentages as of the dates indicated.
At June 30,
(Dollars in thousands)
Balance
Percent
Balance
Percent
Balance
Percent
Balance
Percent
Balance
Percent
Residential real estate
Commercial real estate
Home equity
Consumer
Commercial
Total loans gross loans (1)(2)
Loan balances include net deferred fees/cost of ($567,000) and ($42,000) at June 30, 2025 and 2024, respectively.
Loan balances exclude accrued interest receivable of $7.0 million and $6.2 million at June 30, 2025 and 2024, respectively, which is included in accrued interest receivable in the consolidated statement of financial condition.
The following table presents commercial real estate loans by concentrations:
At June 30, 2025
(Dollars in thousands)
Balance
Percentage of
total
Owner occupied:
Mixed use real estate
Warehouse
Office building
Retail
Construction
Other
Total owner occupied
Non-owner occupied:
Multi-family
Retail plaza
Mixed use real estate
Construction
Office building
Motel/hotel
Warehouse
Other
Total non-owner occupied
Total commercial real estate
Commercial real estate loans are the largest segment of the Company’s loan portfolio and are comprised of 84.4% in non-owner occupied loans and 15.6% in owner occupied loans. These loans are generally secured by commercial, residential investment or industrial property types. The Company’s commercial real estate loan portfolio generally consists of standalone loans supported by both sufficient cash flows and collateral. On a portfolio basis, the Company’s non-owner occupied commercial real estate loans have a weighted average LTV of approximately 57.2%, and the Company’s owner occupied commercial real estate loans have a weighted average LTV of approximately 49.4%, as of June 30, 2025. The Company’s commercial real estate loans are primarily made within our market area in Greene, Columbia, Albany, Ulster and Rensselaer Counties of New York State. The Company actively monitors economic and credit trends for borrower industries and manages our commercial real estate portfolio concentrations to mitigate its credit risk exposure.
As of June 30, 2025, the Company’s largest commercial real estate concentration was non-owner occupied multi-family loans, at $282.3 million or 26.8% of total commercial real estate loans. Non-owner occupied multi-family loans provide much needed housing for the residents located in our market area and have historically performed well with strong credit metrics. As of June 30, 2025, the weighted average LTV was approximately 58.8% for the non-owner occupied multi-family loan segment.
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As of June 30, 2025, non-owner occupied construction loans were $72.0 million or 6.8% of total commercial real estate loans. Construction loans are typically 12 to 24 months in duration with active monitoring, which may include pre-engineering review and third-party site inspections for more complex projects. High volatility commercial real estate loan exposure totaled $5.5 million or 1.0% of the Company’s construction exposure. Construction loans are primarily comprised of approximately 33.5% mixed use real estate, 27.3% multi-family buildings, 18.1% pre-construction and land loans, and 12.1% residential real estate.
The Company’s outstanding balance of non-owner occupied commercial real estate office loans were $67.9 million or 6.4% of total commercial real estate loans as of June 30, 2025. The office loans are primarily low-rise, non-metropolitan buildings, located within our geographic footprint. As of June 30, 2025, the weighted average LTV was approximately 59.3% for the non-owner occupied office loan segment.
Loan Maturity Schedule and Interest Rate Sensitivity
The following table sets forth certain information as of June 30, 2025, regarding the amount of loans maturing or re-pricing in the Company's portfolio. Adjustable-rate loans are included in the period in which interest rates are next scheduled to adjust rather than the period in which they contractually mature and fixed-rate loans are included in the period in which the final contractual repayment is due. Lines of credit with no specified maturity date are included in the category “1 year or less.”
1 year or less
1-5 years
5-15 years
After 15 years
(In thousands)
Total
Fixed rate:
Residential real estate
Commercial real estate
Home equity
Consumer
Commercial
Total fixed rate loans
Variable rate:
Residential real estate
Commercial real estate
Home equity
Consumer
Commercial
Total variable rate loans
Total loan portfolio
Potential Problem Loans
Management continually identifies, analyzes and monitors the quality of the loan portfolio and has established a loan review process designed to help grading credit risk inherent in the commercial loan portfolio. The credit quality grade helps management make a consistent assessment of each loan relationship’s credit risk. Consistent with regulatory guidelines, the Company provides for the classification of loans and other assets considered being of lesser quality. Such ratings coincide with the “Substandard”, “Doubtful” and “Loss” classifications used by federal regulators in their examination of financial institutions. Assets that do not currently expose the insured financial institutions to sufficient risk to warrant classification in one of the aforementioned categories but otherwise possess weaknesses are designated “Special Mention.” The components of the Company’s underwriting and monitoring functions are critical to the timely identification, classification and resolution of problem credits. For further discussion regarding how management determines when a loan should be classified, see Part II, Item 8 Financial Statements and Supplemental Data, Note 4, Loans and Allowance for Credit Losses on Loans of this Annual Report.
Non-accrual Loans and Non-performing Assets
Non-performing assets consist of non-accrual loans, loans over 90 days past due and still accruing, other real estate owned that has been acquired in partial or full satisfaction of the loan obligation or upon foreclosure, and non-performing securities.
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Generally, management places loans on non-accrual status once the loans have become 90 days or more delinquent. A non-accrual loan is defined as a loan in which collectability is questionable and therefore interest on the loan will no longer be recognized on an accrual basis. A loan is not placed back on accrual status until the borrower has demonstrated the ability and willingness to make timely payments on the loan. A loan does not have to be 90 days delinquent in order to be classified as non-performing and may be placed on non-accrual when circumstances indicate that the borrower may be unable to meet the contractual principal or interest payments. The threshold for evaluating classified and non-performing loans specifically evaluated for individual credit loss is $250,000. Foreclosed real estate represents property acquired through foreclosure proceedings and is valued at the lower of the carrying amount or fair value, less any estimated disposal costs. The Company monitors loan modifications made to borrowers experiencing financial difficulty. As of June 30, 2025, two loans have been modified in the last 12 months with a total amortized basis of $2.8 million. As of June 30, 2024, there were three loans modified with a total amortized basis of $4.1 million.
Analysis of Non-accrual Loans and Non-performing Assets
The table below details additional information related to non-accrual loans at the dates indicated:
At June 30,
(Dollars in thousands)
Non-accrual loans:
Residential real estate
Commercial real estate
Home equity
Consumer
Commercial
Total non-accrual loans
Foreclosed real estate:
Residential real estate
Commercial
Total foreclosed real estate
Total non-performing assets
Non-accrual loans to total loans
Non-performing loans to total loans
Non-performing assets to total assets
Allowance for credit losses on loans to non-performing loans
Allowance for credit losses on loans to non-accrual loans
At June 30, 2025 and June 30, 2024, there were no loans delinquent greater than 90 days and accruing.
The Company analyses loans on an individual basis when management determines that the individual loan no longer exhibits risk characteristics consistent with its designated pool of loans, under the Company’s CECL methodology. Loans individually evaluated had an amortized cost basis of $751,000 and $1.4 million, with an allowance for credit losses on loans of $549,000 and $662,000, at June 30, 2025 and 2024, respectively.
Non-performing assets amounted to $3.1 million and $3.7 million at June 30, 2025 and 2024, respectively. Loans on non-accrual status totaled $3.1 million at June 30, 2025, of which there were one commercial real estate loan totaling $142,000, and three residential real estate loans totaling $841,000 in the process of foreclosure. Included in non-accrual loans were $1.2 million of loans which were less than 90 days past due at June 30, 2025, but have a recent history of delinquency greater than 90 days past due. These loans will be returned to accrual status once they have demonstrated a history of timely payments. Loans on non-accrual status totaled $3.7 million at June 30, 2024, of which there were four residential real estate loans totaling $686,000 and three commercial real estate loan totaling $1.6 million in the process of foreclosure. Included in non-accrual loans were $1.5 million of loans which were less than 90 days past due at June 30, 2024, but have a recent history of delinquency greater than 90 days past due. These loans will be returned to accrual status once they have demonstrated a history of timely payments.
In addition to non-performing assets discussed above, the Company has identified potential problem loans classified as substandard or special mention, totaling $45.4 million at June 30, 2025 compared to $48.6 million at June 30, 2024, a decrease of $3.2 million. During the year ended June 30, 2025, the Company upgraded 10 commercial real estate relationships and 15 commercial relationships to pass, and 10 commercial real estate relationships and 5 commercial relationships were paid-off. This was offset by 14 commercial real estate relationships and 11 commercial relationships that were downgraded to classified from pass, due to the deterioration in the borrower cash flows and financial performance during the year end June 30, 2025. During the year ended June 30, 2024, the Company downgraded to classified from pass 17 commercial real estate relationships and 9 commercial loan relationships, due to the deterioration in the borrower cash flows and financial performance. This was offset by 4 commercial real estate relationships and 1 commercial relationship that were upgraded to pass, and 7 commercial real estate relationships and 2 commercial relationships that were paid-off during the year ended June 30, 2024. Management continues to monitor classified loan relationships closely. The Company had no loans classified doubtful or loss at June 30, 2025 or June 30, 2024.
For additional details on non-performing loans, see the table in Part II, Item 8 Financial Statements and Supplemental Data, Note 4, Loans and Allowance for Credit Losses on Loans of this Annual Report.
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ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses (the “ACL”) on loans is established through a provision made periodically by charges or benefits to the provision for credit losses. This is necessary to maintain the ACL at a level which management believes is reasonably reflective of the overall loss expected over the contractual life of the loan portfolio. Management has an established ACL policy to govern the use of judgments exercised in evaluating the ACL required to estimate the expected credit losses over the expected contractual life of the loan portfolios and the material effect that such judgments can have on the consolidated financial statements. While management uses available information to recognize losses on loans, additions or reductions to the allowance may fluctuate from one reporting period to another. These fluctuations are reflective of changes in the reasonable and supportable forecast, analysis of loans individually evaluated, and/or changes in management’s assessment of factors.
The ACL on loans is based on the results of life of loan quantitative models, reserves associated with collateral-dependent loans individually evaluated and adjustments for the impact of current economic conditions not accounted for in the quantitative models. The discounted cash flow methodology is used to calculate the ACL on loans for the residential real estate, commercial real estate, home equity and commercial loan segments. The remaining life method is utilized to determine the ACL on loans for the consumer loan segment. The Company elected to use the practical expedient to evaluate loans individually, if they are collateral dependent loans that are on non-accrual status with a balance of $250,000 or greater, which is consistent with regulatory requirements. The fair value of collateral for collateral dependent loans less selling expenses will be compared to the loan balance to determine if an ACL on loans is required. A qualitative factor framework has been developed to adjust the quantitative loss rates for asset-specific risk characteristics or current conditions at the reporting date.
The Company charges loans off against the ACL on loans when it becomes evident that a loan cannot be collected within a reasonable amount of time or that it will cost the Company more than it will receive, and all possible avenues of repayment have been analyzed, including the potential of future cash flow, the value of the underlying collateral, and strength of any guarantors or co-borrowers. Generally, consumer loans and smaller business loans (not secured by real estate) in excess of 90 days are charged-off against the ACL on loans, unless equitable arrangements are made. Included within consumer installment loan charge-offs and recoveries are deposit accounts that have been overdrawn in excess of 60 days. For loans secured by real estate, a charge-off is recorded when it is determined that the collection of all or a portion of a loan may not be collected and the amount of that loss can be reasonably estimated. The ACL on loans is increased by a provision for credit losses (which results in a charge to expense) and recoveries of loans previously charged off and is reduced by charge-offs.
The ACL on loans totaled $20.1 million at June 30, 2025, compared to $19.2 million at June 30, 2024. The ACL on loans to total loans receivable was 1.24% at June 30, 2025, compared to 1.28% at June 30, 2024. The ACL on loans as of June 30, 2025 increased as compared to June 30, 2024, primarily attributable to growth in gross loans, an increase in the reserve for individually evaluated loans, and a modest deterioration in the economic forecasts used in the CECL models on loans as of June 30, 2025. This was partially offset by an improvement in the qualitative factor assessments on loans as of June 30, 2025.
Net charge-offs totaled $349,000 and $1.4 million for years ended June 30, 2025 and 2024, respectively. There were no material charge-offs in any loan segment during the year ended June 30, 2025 and one commercial loan charged-off for the year ended June 30, 2024, which was fully reserved for as an individually evaluated loan through the allowance for credit losses .
Index
Analysis of Allowance for Credit Losses Activity
The following table sets forth the activity and allocation of the allowance for credit losses on loans at the dates indicated.
At June 30,
(Dollars in thousands)
Balance at the beginning of the period
Adoption of ASU No. 2016-13
Charge-offs:
Residential real estate
Commercial real estate
Home equity
Consumer
Commercial
Total loans charged off
Recoveries:
Residential real estate
Commercial real estate
Consumer
Commercial
Total recoveries
Net charge-offs
Provisions (benefit) charged to operations
Balance at the end of the period
Allowance for credit losses to total loans receivable
Residential real estate net charge-offs to average loans outstanding
Commercial real estate net charge-offs to average loans outstanding
Home equity net charge-offs to average loans outstanding
Consumer net charge-offs to average loans outstanding
Commercial net charge-offs to average loans outstanding
Net charge-offs to average loans outstanding
Net charge-offs to average assets
Allocation of Allowance for Credit Losses
The following table sets forth the allocation of the allowance for credit losses by loan segment at the dates indicated.
At June 30,
Percent
Percent
Percent
Percent
Percent
of loans
of loans
of loans
of loans
of loans
Amount of
in each
Amount of
in each
Amount of
in each
Amount of
in each
Amount of
in each
allowance
category
allowance
category
allowance
category
allowance
category
allowance
category
for credit
to total
for credit
to total
for credit
to total
for credit
to total
for credit
to total
(Dollars in thousands)
loss
loans
loss
loans
loss
loans
loss
loans
loss
loans
Residential real estate
Commercial real estate
Home equity
Consumer
Commercial
Total
Index
The allowance for credit losses on unfunded commitments
The allowance for credit losses on unfunded commitments represents the amount held against credit exposures that are not represented on the consolidate balance sheets. The allowance is recognized as a liability, a component of other liabilities, with adjustments as an expense in other noninterest expense. The Company estimates expected credit losses over the contractual period in which the Company has exposure to a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over the estimated contractual life. The Company considers the following segments of unfunded commitments exposure; home equity line of credits, commercial line of credits, consumer loans, the residential and commercial real estate loans committed but not closed and the unfunded portion of the construction loans. The probable funding amount by segment is multiplied by the respective reserve percentage calculated in the allowance for credit losses on loans to calculate a reserve on unfunded commitments.
At June 30, 2025, the allowance for credit losses on unfunded commitments was $1.8 million, as compared to $1.3 million at June 30, 2024.
For further discussion and detail regarding the Allowance for Credit Loss, please refer to Part II, Item 8 Financial Statements and Supplemental Data, Note 4 Loans and Allowance for Credit Losses on Loans of this Annual Report. Management considers the ACL to be appropriate based on evaluation and analysis of the loan portfolio.
DERIVATIVES
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, primarily by managing the amount, sources and duration of its assets and liabilities. The Company has interest rate derivatives that result from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions.
The Company enters into interest rate swap agreements with its commercial customers to provide them with a long-term fixed rate, while simultaneously entering into offsetting interest rate swap agreements with a counterparty to swap the fixed rate to a variable rate to manage interest rate exposure. These interest rate swap agreements are not designated as hedges for accounting purposes. As the interest rate swap agreements have substantially equivalent and offsetting terms, they do not present any material exposure to the Company’s consolidated statements of income. The Company records its interest rate swap agreements at fair value and are presented within other assets and other liabilities on the consolidated statements of financial condition. Changes in the fair value of assets and liabilities arising from these derivatives are included, net, in other operating income in the consolidated statement of income.
Under terms of the agreements with the third-party counterparties, the Company provides cash collateral to the counterparty, when required, for the initial trade. Subsequent to the trade, the margin is exchanged in either direction, based upon the estimated fair value of the underlying contracts. Cash collateral represents the amount that is exchanged under master netting agreements that allows the Company to offset the derivative position with the related collateral. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.
The Company also participates in the credit exposure of certain interest rate swaps in which it participates in the related commercial loan. The Company receives an upfront fee for participating in the credit exposure of the interest rate swap and recognizes the fee to other operating income. Under the terms of these risk participation agreements (“RPAs”), the “participating bank” receives a fee from the “lead bank” in exchange for the guarantee of reimbursement if the customer defaults on an interest rate swap. The interest rate swap is transacted such that any and all exchanges of interest payments (favorable and unfavorable) are made between the lead bank and the customer. In the event that an early termination of the swap occurs and the customer is unable to make a required close out payment, the participating bank assumes that obligation and is required to make this payment.
RPAs in which the Company acts as the lead bank are referred to as “participations-out,” in reference to the credit risk associated with the customer derivatives being transferred out of the Company. Participations-out generally occur concurrently with the sale of new customer derivatives. The RPAs participations-out are spread out over three financial institution counterparties and terms range between three to ten years. The Company’s credit exposure transferred out was $506,000 and $105,000 as of June 30, 2025 and 2024, respectively. The Company transferred out RPAs with a notional amount of $18.9 million and $8.0 million as of June 30, 2025 and 2024, respectively.
Index
RPAs in which the Company acts as the participating bank are referred to as “participations-in,” in reference to the credit risk associated with the counterparty’s derivatives being assumed by the Company. The Company’s maximum credit exposure is based on its proportionate share of the settlement amount of the referenced interest rate swap. Settlement amounts are generally calculated based on the fair value of the swap plus outstanding accrued interest receivables from the customer. The RPAs participations-ins are spread out over five financial institution counterparties and terms range between two to twelve years. The credit exposure associated with risk participations-ins was $1.0 million and $276,000 as of June 30, 2025 and 2024, respectively. The Company held RPAs with a notional amount of $130.9 million and $112.3 million as of June 30, 2025 and 2024, respectively.
PREMISES AND EQUIPMENT
Premises and equipment amounted to $15.2 million and $15.6 million at June 30, 2025 and 2024, respectively. Purchases totaled $691,000 during the year ended June 30, 2025, consisting primarily of data equipment for a new disaster recovery and new surveillance systems for the Company’s branch network. Purchases totaled $1.5 million during the year ended June 30, 2024, consisting primarily of building improvements and equipment for a new lending center located in Albany, New York and a new office building located in Catskill, New York, and IT equipment. Depreciation for the year ended June 30, 2025 totaled $1.1 million, compared to $928,000 for the year ended June 30, 2024. There were no disposals of premises and equipment during the fiscal years ended June 30, 2025 and 2024.
PREPAID EXPENSES AND OTHER ASSETS
Prepaid expenses and other assets totaled $19.3 million at June 30, 2025, compared to $17.2 million at June 30, 2024, an increase of $2.1 million. The increase was primarily due to a $4.1 million increase in the fair value of back-to-back interest rate swap assets, offset by a decrease of $1.5 million in deferred taxes.
Real estate acquired as a result of foreclosure, or in-substance foreclosure, deed in lieu of foreclosure or in full or partial satisfaction of loans, is classified as foreclosed real estate (“FRE”) until such time as it is sold. When real estate is classified as FRE, it is recorded at the estimated fair value of the property less estimated costs to dispose at the time of acquisition to establish a new carrying value. Write downs from the carrying value of the loan to estimated fair value, which are required at the time of foreclosure, are charged to the allowance for credit losses. Subsequent adjustments to the carrying value of such properties resulting from declines in fair value result in the establishment of a valuation allowance and are charged to operations in the period in which the declines occur. At June 30, 2025 and 2024, the Company had no foreclosed real estate.
DEPOSITS
Deposits totaled $2.6 billion at June 30, 2025 and $2.4 billion at June 30, 2024, an increase of $250.6 million, or 10.5%. The Company had $51.6 million and zero brokered deposits at June 30, 2025 and June 30, 2024, respectively. NOW deposits increased $192.6 million, or 10.9%, and certificates of deposits increased $89.7 million, or 64.8%, when comparing June 30, 2025 and June 30, 2024. Noninterest bearing deposits decreased $15.3 million, or 12.2%, money market deposits decreased $10.5 million, or 9.3%, and savings deposits decreased $5.9 million, or 2.3%, when comparing June 30, 2025 and June 30, 2024.
The following table summarizes deposits by major categories:
At June 30,
(Dollars in thousands)
Amount
Percent
Amount
Percent
Amount
Percent
Noninterest-bearing deposits
Certificates of deposit
Savings deposits
Money market deposits
NOW deposits
Total deposits
The following table summarizes deposits by depositor type:
At June 30,
(Dollars in thousands)
Amount
Percent
Amount
Percent
Amount
Percent
Business deposits
Retail deposits
Municipal deposits
Brokered deposits
Total deposits
Index
The Company’s deposit base and liquidity position continues to be strong, and the deposit base is well diversified across segments to meet the transactional and investment needs of our customers. Municipal deposits are primarily from local New York State government entities, such as counties, cities, villages and towns, as well as school districts and fire departments. There is a seasonal component to municipal deposits levels associated with annual tax collections and fiscal spending patterns. In general, municipal balances increase at the end of the first and third quarters of our fiscal year. Municipal deposits above the FDIC insured limit are required to be collateralized by irrevocable municipal letters of credits issued by the Federal Home Loan Bank, municipal bonds, US Treasuries or government agency securities. Additionally, the Company offers large retail, business and municipal customers the ability to enhance FDIC insurance coverage, by electing to participate their deposit balance into a national deposit network.
The Company has many long-standing relationships with municipal entities throughout its market areas and their deposits have provided a stable funding source for the Company. The Company has a separate municipal department for the retention, management, and monitoring of municipal relationships.
Uninsured deposits represent the portion of deposit accounts that exceed the FDIC insurance limit. The Company calculates its uninsured deposit balances based on the methodologies and assumptions used for regulatory reporting requirements, which includes affiliate deposits and collateralized deposits.
The following table summarizes total uninsured deposits based on the same methodologies and assumptions used for the Bank’s regulatory reporting:
At June 30,
(Dollars in thousands)
Estimated amount of uninsured for the Bank of Greene County
Estimated amount of uninsured for Greene County Commercial Bank (1)
Uninsured deposits, per regulatory requirements
(1) All of Greene County Commercial Bank deposits in excess of FDIC insurance limits are fully collateralized.
The following table estimates uninsured deposits after certain exclusions :
(Dollars in thousands)
At June 30, 2025
Uninsured deposits, per regulatory requirements
Less: Affiliate deposits
Collateralized deposits
Uninsured deposits, after exclusions
Immediately available liquidity (1)
Uninsured deposits coverage
Reflects $183.1 million of cash and cash equivalents, $221.1 million and $18.2 million of remaining borrowing capacity from the Federal Home Loan Bank and the Federal Reserve Bank, as of June 30, 2025, respectively.
Uninsured deposits after exclusions represents 12.5% of total deposits as of June 30, 2025. The Company believes that this presentation provides a more accurate view of deposits at risk, given that affiliate deposits are not customer facing and therefore are eliminated upon consolidation, and collateralized deposits are fully secured by investments and municipal letters of credit. The Company continually monitors the level and composition of uninsured deposits.
The following table presents the maturity distribution of certificates of deposits of $250,000 or more:
(Dollars in thousands)
At June 30, 2025
Portion of certificates of deposits in excess of insurance limits
Certificates of deposits otherwise uninsured with a maturity of:
Within three months
After three but within six months
After six but within twelve months
Over twelve months
The amount of certificates of deposit by time remaining to maturity as of June 30, 2025 is set forth in Part II, Item 8 Financial Statements and Supplemental Data, Note 6, Deposits of this Annual Report.
Index
BORROWINGS
Borrowings for the Company amounted to $128.1 million at June 30, 2025 compared to $199.1 million at June 30, 2024, a decrease of $71.0 million. At June 30, 2025, borrowings included $74.0 million of overnight borrowings with the Federal Home Loan Bank of New York (“FHLB”), $49.9 million of Fixed-to-Floating Rate Subordinated Notes, and $4.2 million of long-term borrowings with the FHLB.
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 15, 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 June 30, 2025, there were $20.0 million of Subordinated Note Purchases Agreements outstanding, net of issuance costs.
On September 15, 2021, the Company entered into Subordinated Note Purchase Agreements with 18 qualified institutional investors, issued at 3.00% Fixed-to-Floating Rate due September 15, 2031, in the aggregate principal amount of $30.0 million, carried net of issuance costs of $499,000 amortized over a period of 60 months. These notes are callable on September 15, 2026. At June 30, 2025, there were $29.9 million of these Subordinated Note Purchases Agreements outstanding, net of issuance costs.
The Company’s borrowing agreements and additional borrowing capacity are discussed further within Part II, Item 8 Financial Statements and Supplemental Data, Note 7 Borrowings of this Annual Report.
OTHER LIABILITIES
Other liabilities, consisting primarily of accrued liabilities, totaled $33.9 million at June 30, 2025, compared to $31.4 million at June 30, 2024, an increase of $2.5 million. The change was primarily due to an increase of $2.4 million in employee benefits, including short-term incentive plans and supplemental executive retirement plans when comparing the years ended June 30, 2025 to June 30,2024.
For further information regarding these changes, see Part II, Item 8 Financial Statements and Supplemental Data, Note 9 Employee Benefits Plans and Note 10 Stock-Based Compensation of this Annual Report .
SHAREHOLDERS’ EQUITY
Shareholders’ equity increased to $238.8 million at June 30, 2025 compared to $206.0 million at June 30, 2024, resulting primarily from net income of $31.1 million and a decrease in accumulated other comprehensive loss of $6.2 million, partially offset by dividends declared and paid of $4.5 million.
On September 17, 2019, the Board of Directors of the Company adopted a stock repurchase program. Under the repurchase program, the Company may repurchase up to 400,000 shares of its common stock. Repurchases are 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. As of June 30, 2025, the Company had repurchased a total of 48,000 shares of the 400,000 shares authorized by the repurchase program. The Company did not repurchase any shares during the years ended June 30, 2025 and 2024, respectively.
Selected Equity Data:
At June 30,
Shareholders’ equity to total assets, at end of period
Book value per share (1)
Closing market price of common stock
For the years ended June 30,
Average shareholders’ equity to average assets
Dividend payout ratio (2)
Actual dividends paid to net income (3)
(1) Shareholders’ equity divided by outstanding shares.
(2) The dividend payout ratio has been calculated based on the dividends declared per share divided by basic earnings per share. No adjustments have been made for dividends waived by Greene County Bancorp, MHC (“MHC”), the owner of 54.1% of the Company’s shares outstanding.
(3) Dividends declared divided by net income. The MHC waived its right to receive dividends declared during the three months ended June 30, 2023, December 31, 2023, March 31, 2024, June 30, 2024, March 31, 2025 and June 30, 2025. Dividends declared during the three months ended September 30, 2023, September 30, 2024, and December 31, 2024 were paid to the MHC. The MHC’s ability to waive the receipt of dividends is dependent upon annual approval of its members as well as receiving the non-objection of the Federal Reserve Board.
Index
Comparison of Operating Results for the Years Ended June 30, 2025 and 2024
Average Balance Sheet
The following table sets forth certain information relating to the Company for the years ended June 30, 2025 and 2024. For the years 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 are based on daily averages. Average loan balances include non-performing loans. The loan yields are calculated net amortization of certain deferred fees and costs that are considered adjustments to yields.
Fiscal years ended June 30,
(Dollars in thousands)
Average
outstanding
balance
Interest
earned/
paid
Average yield/
rate
Average
outstanding
balance
Interest
earned/
paid
Average yield/
rate
Interest-earning Assets:
Loans receivable, net (1)
Securities non-taxable
Securities taxable
Interest-earning bank balances and federal funds
FHLB stock
Total interest-earning assets
Cash and due from banks
Allowance for credit losses on loans
Allowance for credit losses on securities held-to-maturity
Other noninterest-earning assets
Total assets
Interest-Bearing Liabilities:
Savings and money market deposits
NOW deposits
Certificates of deposit
Borrowings
Total interest-bearing liabilities
Noninterest-bearing deposits
Other noninterest-bearing liabilities
Shareholders' equity
Total liabilities and equity
Net interest income
Net interest rate spread
Net earnings assets
Net interest margin
Average interest-earning assets to average interest-bearing liabilities
( 1 ) Calculated net of deferred loan fees and costs, loan discounts, and loans in process.
Index
Non-GAAP to GAAP Reconciliation
The following table summarizes the adjustments made to arrive at the fully taxable-equivalent net interest margins.
Taxable-equivalent net interest income and net interest margin
For the years ended June 30,
(Dollars in thousands)
Net interest income (GAAP)
Tax-equivalent adjustment (1)
Net interest income fully taxable-equivalent basis (non-GAAP)
Average interest-earning assets (GAAP)
Net interest margin fully taxable-equivalent basis (non-GAAP)
( 1 ) Interest income calculated on a taxable-equivalent basis (non-GAAP) includes the additional 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 21.0% for federal income taxes, and 4.44% for New York State income taxes for the years ended June 30, 2025 and 2024.
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:
Change attributable to changes in volume (changes in volume multiplied by prior rate);
Change attributable to changes in rate (changes in rate multiplied by prior volume); and
(iii)
The net change.
The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.
Years ended June 30,
2025 versus 2024
2024 versus 2023
Increase/(decrease)
Total
Increase/(decrease)
Total
Due to
increase/
Due to
increase/
(In thousands)
Volume
Rate
(decrease)
Volume
Rate
(decrease)
Interest-earning assets:
Loans receivable, net (1)
Securities non-taxable
Securities taxable
Interest-bearing bank balances and federal funds
FHLB stock
Total interest-earning assets
Interest-bearing liabilities:
Savings and money market deposits
NOW deposits
Certificates of deposit
Borrowings
Total interest-bearing liabilities
Net change in net interest income
( 1 ) Calculated net of deferred loan fees, loan discounts, and loans in process.
As the above table shows, net interest income for the fiscal year ended June 30, 2025, has been affected most significantly by the increase in the volume of loans, taxable securities, and the increase in rates on said interest-earning assets. This was partially offset by an increase in volume of NOW and certificates of deposits. Net interest rate spread increased 22 basis points to 1.97% for the year ended June 30, 2025, compared to 1.75% for the year ended June 30, 2024. Net interest margin increased 21 basis points to 2.19% for the year ended June 30, 2025, compared to 1.98% for the year ended June 30, 2024. The increase during the year ended June 30, 2025 was due to increases in interest income on loans and securities, as they continue to reprice at higher yields and the interest rates earned on new balances were higher than the historic low levels from the prior periods.
Index
INTEREST INCOME
Interest income for the year ended June 30, 2025, amounted to $117.7 million as compared to $103.7 million for the year ended June 30, 2024, an increase of $14.0 million, or 13.5%. The increase in rate on interest-earning assets had the greatest impact on interest income when comparing the years ended June 30, 2025 and 2024. Interest income is derived from loans, securities and other interest-earning assets. Total average interest-earning assets increased to $2.7 billion for the year ended June 30, 2025 as compared to $2.6 billion for the year ended June 30, 2024, an increase of $170.7 million, or 6.6%. The yield earned on such assets increased 26 basis points to 4.30% for the year ended June 30, 2025 as compared to 4.04% for the year ended June 30, 2024.
Interest income earned on loans increased to $80.0 million for the year ended June 30, 2025 as compared to $71.5 million for the year ended June 30, 2024. Average loans outstanding increased $96.6 million, or 6.6%, to $1.6 billion for the year ended June 30, 2025 as compared to $1.5 billion for the year ended June 30, 2024. The yield on such loans increased 23 basis points to 5.15% for the year ended June 30, 2025 as compared to 4.92% for the year ended June 30, 2024. At June 30, 2025, approximately 64.3% of the loan portfolio was adjustable-rate, of which a large portion is tied to the Prime Rate.
Interest income earned on securities (excluding FHLB stock) increased to $34.0 million for the year ended June 30, 2025 as compared to $27.9 million for the year ended June 30, 2024. The average balance of securities increased $79.1 million, to $1.1 billion for the year ended June 30, 2025 as compared to $1.0 billion for the year ended June 30, 2024. The average yield on securities non-taxable increased 23 basis points to 3.02% for the year ended June 30, 2025 as compared to 2.79% for the year ended June 30, 2024. The average yield on securities taxable increased 56 basis points to 3.09% for the year ended June 30, 2025 as compared to 2.53% for the year ended June 30, 2024. No adjustments were made to tax-effect the income for the state and political subdivision securities, which often carry a lower yield because of the offset expected from income tax benefits gained from holding such securities.
Interest income earned on federal funds and interest-bearing bank balances amounted to $3.5 million for the year ended June 30, 2025 as compared to $4.0 million for the year ended June 30, 2024. The average balance of federal funds and interest-bearing bank balances decreased $5.0 million, or 6.8%, to $68.8 million for the year ended June 30, 2025 as compared to $73.8 million for the year ended June 30, 2024. Dividends on FHLB stock increased to $202,000 for the year ended June 30, 2025 as compared to $195,000 for the year ended June 30, 2024.
INTEREST EXPENSE
Interest expense for the year ended June 30, 2025 amounted to $57.6 million as compared to $52.7 million for the year ended June 30, 2024, an increase of $4.9 million. The increase in the average balance of interest-bearing liabilities had the greatest impact on interest expense when comparing the years ended June 30, 2025 and 2024. The rate paid on interest-bearing liabilities increased 4 basis points to 2.33% for the year ended June 30, 2025 compared to 2.29% for the year ended June 30, 2024. Total average interest-bearing liabilities increased to $2.5 billion for the year ended June 30, 2025 as compared to $2.3 billion for the year ended June 30, 2024, an increase of $168.3 million, or 7.3%. The majority of the increase related to NOW and certificates of deposit accounts, primarily resulting from growth in new deposit relationships within business and municipal accounts.
Interest expense paid on savings and money market accounts amounted to $1.6 million for the year ended June 30, 2025 as compared to $1.5 million for the year ended June 30, 2024, an increase of $140,000, or 9.6%. The average rate paid on savings and money market accounts increased 7 basis points to 0.46% for the year ended June 30, 2025 as compared to 0.39% for the year ended June 30, 2024. The average balance of savings and money market accounts decreased by $22.8 million to $350.9 million for the year ended June 30, 2025 as compared to $373.7 million for the year ended June 30, 2024.
Interest expense paid on NOW accounts amounted to $46.6 million for the year ended June 30, 2025 as compared to $43.6 million for the year ended June 30, 2024, an increase of $3.0 million, or 6.9%. The average rate paid on NOW accounts decreased 2 basis points to 2.49% for the year ended June 30, 2025 as compared to 2.51% for the year ended June 30, 2024. The average balance of NOW accounts increased $135.1 million to $1.9 billion for the year ended June 30, 2025 as compared to $1.7 billion for the year ended June 30, 2024.
Interest expense paid on certificates of deposit amounted to $6.8 million for the year ended June 30, 2025 as compared to $4.6 million for the year ended June 30, 2024, an increase of $2.2 million, or 46.9%. The average rate paid on certificates of deposit decreased 21 basis points to 3.83% for the year ended June 30, 2025 as compared to 4.04% for the year ended June 30, 2024. The average balance on certificates of deposits increased $62.7 million to $177.4 million for the year ended June 30, 2025 as compared to $114.7 million for the year ended June 30, 2024.
Index
Interest expense on borrowings amounted to $2.5 million for the year ended June 30, 2025 as compared to $3.0 million for the year ended June 30, 2024, as the average balance of borrowings decreased $6.7 million to $66.0 million for the year ended June 30, 2025 as compared to $72.7 million for the year ended June 30, 2024. The average rate paid on borrowings decreased 26 basis points to 3.83% for the year ended June 30, 2025 as compared to 4.09% for the year ended June 30, 2024.
PROVISION FOR CREDIT LOSSES ON LOANS
Management continues to closely monitor asset quality and adjust the level of the allowance for credit losses. The amount recognized for the provision for credit losses is determined by management based on its ongoing analysis of the adequacy of the allowance for credit losses. Provision for credit losses on loans amounted to a charge of $1.3 million and $786,000 for the years ended June 30, 2025 and 2024, respectively. The provision for the year ended June 30, 2025, was primarily attributable to growth in gross loans and a modest deterioration in the economic forecasts used in the CECL models as of June 30, 2025, partially offset by an improvement in the qualitative factors assessments. The allowance for credit losses on loans to total loans receivable was 1.24% at June 30, 2025 compared to 1.28% at June 30, 2024.
For additional details relating to the allocation of the provision for credit losses, see Part II, Item 8 Financial Statements and Supplemental Data, Note 4, Loans and Allowance for Credit Losses on Loans of this report.
NONINTEREST INCOME
(Dollars in thousands)
For the years ended June 30,
Change from prior year
Amount
Percent
Service charges on deposit accounts
Debit card fees
Investment services
E-commerce fees
Bank owned life insurance
Net loss on sale of securities available-for-sale
Other operating income
Total noninterest income
Noninterest income increased $1.3 million, or 9.5%, to $15.2 million for the year ended June 30, 2025 compared to $13.9 million for the year ended June 30, 2024. The increase during the year ended June 30, 2025 was primarily due increases in other operating income, service charge account fees, and income from bank owned life insurance. This was partially offset by a $665,000 loss on sales of securities available-for-sale. Other operating income primarily increased due to recognition of an $610,000 Employee Retention Tax Credit, an increase in fee income earned on customer interest rate swap contracts of $528,000, and an increase in loan fees of $242,000.
NONINTEREST EXPENSE
(Dollars in thousands)
For the years ended June 30,
Change from prior year
Amount
Percent
Salaries and employee benefits
Occupancy expense
Equipment and furniture expense
Service and data processing fees
Computer software, supplies and support
Advertising and promotion
FDIC insurance premiums
Legal and professional fees
Other
Total noninterest expense
Noninterest expense increased $2.1 million, or 5.6%, to $39.4 million for the year ended June 30, 2025 as compared to $37.3 million for the year ended June 30, 2024. The increase during the year ended June 30, 2025 was primarily due to an increase of $579,000 in salaries and employee benefit costs, as new positions were created during the period to support the Company’s continued growth, an increase of $545,000 in service and data processing fees, an increase of $796,000 in the unfunded commitment expense related to the allowance for credit losses on unfunded commitments, due to the Company’s increased contractual obligations to extend credit, and an increase of $183,000 in occupancy expenses, mostly due to repairs and maintenance on the Company’s buildings. This was partially offset by a decrease of $163,000 in legal and professional fees during the year ended June 30, 2025.
Index
INCOME TAXES
Provision for income taxes reflects the expected tax associated with the pre-tax income generated for the given period and certain regulatory requirements. The effective tax rate was 10.2% and 7.6% for the years ended June 30, 2025 and 2024, respectively. The statutory tax rate is impacted by the benefits derived from tax-exempt bond and loan income, the Company’s real estate investment trust subsidiary income, income received on the bank owned life insurance and tax credits, to arrive at the effective tax rate. The increase in the effective tax rate for the year ended June 30, 2025, was primarily due to higher pre-tax income and reflects a lower mix of tax-exempt income from municipal bonds, tax advantage loans, and bank owned life insurance in proportion to pre-tax income. Additionally, the Company was able to recognize historic preservation tax credits on the Company’s wealth management center, located at 345 Main Street, in Catskill New York for the year ended June 30, 2024.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity resources. The Company’s primary sources of funds are deposits and proceeds from principal and interest payments on loans, mortgage-backed securities and debt securities, with lines of credit available through the Federal Home Loan Bank, Atlantic Community Bankers Bank and three other financial institutions, as needed. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit outflows, mortgage prepayments, and lending activities are greatly influenced by general interest rates, economic conditions and competition.
The Company’s most liquid assets are cash and cash equivalent accounts. The levels of these assets are dependent on the Company’s operating, financing, lending and investing activities during any given period. At June 30, 2025, cash and cash equivalents totaled $183.1 million, or 6.0% of total assets.
The Company’s primary investing activities are the origination of residential and commercial real estate mortgage loans, other consumer and commercial loans, and the purchase of securities. Loan originations exceeded repayments by $127.0 million and $90.7 million and purchases of securities totaled $444.2 million and $329.6 million for the years ended June 30, 2025 and 2024, respectively. These activities were funded primarily through deposit growth, principal payments on loans and securities, and borrowings. Loan sales did not provide an additional source of liquidity during the years ended June 30, 2025 and 2024, as the Company originated loans for retention in its portfolio.
The Company monitors its liquidity position on a daily basis. Excess short-term liquidity is usually invested in interest-earning deposits with the Federal Reserve Bank of New York. In the event the Company requires funds beyond its ability to generate them internally, additional sources of funds are available through the use of FHLB advance programs made available to the Bank of Greene County. During the year ended June 30, 2025, the Bank of Greene County’s maximum borrowing from the FHLB reached $201.1 million. As of the year ended June 30, 2025, there were $168.2 million of borrowings and letters of credit outstanding with the FHLB. The liquidity position can be significantly impacted on a daily basis by funding needs associated with Greene County Commercial Bank. These funding needs are also impacted by the collection of taxes and state aid for the municipalities using the services of Greene County Commercial Bank.
As needed, to enhance strong levels of liquidity and to fund loan demand, the Bank and Commercial Bank (the “Banks”) may accept brokered deposits, generally in denominations of less than $250,000, from national brokerage networks, custodial deposit networks or through IntraFi’s one-way CDARS and ICS products, including IntraFi’s Insured Network Deposits (“IND”). The Banks combined can place and obtain brokered deposits up to 30.0% of total deposits, in the amount of $791.9 million based on policy. Additionally, the Banks participate in the IntraFi reciprocal (“two-way”) CDARS and the ICS products, which provides for reciprocal two-way transactions among other institutions, facilitated by IntraFi, for the purpose of maximizing FDIC insurance for depositors.
The Company had $51.6 million and zero brokered deposits as of June 30, 2025 and June 30, 2024, respectively.
Ensuring adequate liquidity to meet the Company’s cash and collateral obligations and due to the speed at which the movement of deposits may exit the bank, the Company’s primary liquidity measurement is focused on forward cash flows and the time sequence of available liquidity. This liquidity time sequence is determined by when cash becomes available in the Bank's Federal Reserve Account and then analyzed in time intervals of Minute 1, Day 1, Week 1 and Month 1.
The Company’s secondary liquidity measurement is On-Balance Sheet liquidity, which utilizes cash and cash equivalents, the market value of unpledged securities and the market value of pledged but unencumbered securities.
Index
At June 30, 2025, liquidity measures were as follows:
Primary:
Minute 1: (Cash and cash equivalents / non-contractual deposits)
Day 1: (Minute 1 liquidity plus same day borrowing capacity / non-contractual deposits)
Week 1: (Day 1 liquidity plus unpledged marketable investments and one-third brokered deposit capacity / non-contractual deposits)
Month 1: (Week 1 liquidity plus remaining borrowing capacity / non-contractual deposits)
Secondary:
On-Balance Sheet: (Cash plus unpledged and unencumbered securities / non-contractual deposits)
Off-balance sheet arrangements. In the normal course of business, the Company is party to certain financial instruments, which in accordance with accounting principles generally accepted in the United States, are not included in its Consolidated Statements of Condition. The Company is also a party to certain financial instruments with off balance sheet risk such as commitments under standby letters of credit, unused portions of lines of credit, commitments to fund new loans, interest rate swaps, and risk participation agreements. Loan commitments are agreements by the Company to lend monies at a future date. These loan commitments are subject to the same credit policies and reviews as the Company’s loans. The Company records such instruments when funded. Because most of these loan commitments expire within one year from the date of issue, the total amount of these loan commitments as of June 30, 2025, are not necessarily indicative of future cash requirements.
The Company’s unfunded loan commitments and unused lines of credit are as follows at June 30, 2025 and 2024:
(In thousands)
Unfunded loan commitments
Unused lines of credit
Standby letters of credit
Total commitments
The Company anticipates that it will have sufficient funds available to meet current commitments and other funding needs based on the level of cash and cash equivalents as well as the securities available-for-sale portfolio and borrowing capacity.
Certificates of deposit scheduled to mature in one year or less from June 30, 2025 totaled $191.9 million. Based upon the Company’s experience and its current pricing strategy, management believes that a significant portion of such deposits will remain with the Company.
The Company has an Irrevocable Letter of Credit Reimbursement Agreement with the FHLB, whereby upon the Bank of Greene County’s request, on behalf of Greene County Commercial Bank, an irrevocable letter of credit is issued to secure municipal transactional deposit accounts above the FDIC insured limit. These letters of credit are secured by residential and commercial real estate mortgage loans. The amount of funds available to the Company through the FHLB line of credit is reduced by any letters of credit outstanding. There were $90.0 million in municipal letters of credit outstanding at June 30, 2025.
Capital Resources. The Company and the Bank considers current needs and future growth, with the sources of capital being the retention of earnings, less dividends paid, and proceeds from the issuance of subordinated debt. The Company believes its current capital is adequate to support ongoing operations. As a result of the consistent earnings throughout the fiscal year, the Company did not push down any additional capital to the Bank of Greene County during the fiscal years ended June 30, 2025 and June 30, 2024. At June 30, 2025 and 2024, the Bank of Greene County and Greene County Commercial Bank exceeded all of their regulatory capital requirements, as illustrated in Part II, Item 8 Financial Statements and Supplementary Data Note 19. Regulatory Matters of this Annual Report. Shareholders’ equity represented 7.9% and 7.3% of total consolidated assets at June 30, 2025 and 2024, respectively.
IMPACT OF INFLATION AND CHANGING PRICES
The consolidated financial statements of Greene County Bancorp, Inc. and notes thereto, presented elsewhere herein, have been prepared in accordance with U.S. generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time and due to inflation. The impact of inflation is reflected in the increased cost of Greene County Bancorp, Inc.’s operations. Unlike most industrial companies, nearly all the assets and liabilities of Greene County Bancorp, Inc. are monetary. As a result, interest rates have a greater impact on Greene County Bancorp, Inc.’s performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the price of goods and services.
Index
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
Recent accounting pronouncements which may impact the Company’s financial statements are discussed within Part II, Item 8 Financial Statements and Supplementary Data, Note 1 Summary of significant accounting policies of this Annual Report.
