Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s Discussion and Analysis of Financial Condition and Results of Operation
Overview of the Company’s Activities and Risks
The Company’s results of operations depend primarily on its net interest income, which is the difference between the income earned on the Company’s loan and securities portfolios and its cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by the Company’s provision for credit losses, noninterest income and noninterest expense. Noninterest income consists primarily of fees and service charges. The Company’s noninterest expense consists principally of compensation and employee benefits, occupancy, equipment and data processing, and other operating expenses. Results of operations are also significantly affected by general economic and competitive conditions, changes in interest rates, as well as government policies and actions of regulatory authorities. Additionally, future changes in applicable law, regulations or government policies may materially affect the Company.
To operate successfully, the Company must manage various types of risk, including but not limited to, market or interest rate risk, credit risk, transaction risk, liquidity risk, security risk, strategic risk, reputation risk and compliance risk.
Market risk is the risk of loss from adverse changes in market prices and/or interest rates. 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 and 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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Non-GAAP Financial Measures
Regulation G, a rule adopted by the Securities and Exchange Commission (“SEC”), applies to certain SEC filings, including earnings releases, made by registered companies that contain “non-GAAP financial measures.” “GAAP” is generally accepted accounting principles in the United States of America. Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure (if a comparable GAAP measure exists) and a statement of the Company’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures. The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP. When these exempted measures are included in public disclosures, supplemental information is not required. Financial institutions like the Company and its subsidiary banks are subject to an array of bank regulatory capital measures that are financial in nature but are not based on GAAP and are not easily reconcilable to the closest comparable GAAP financial measures, even in those cases where a comparable measure exists. The Company follows industry practice in disclosing its financial condition under these various regulatory capital measures, including period-end regulatory capital ratios for itself and its subsidiary banks, in its periodic reports filed with the SEC, and it does so without compliance with Regulation G, on the widely-shared assumption that the SEC regards such non-GAAP measures to be exempt from Regulation G. The Company uses in this Report additional non-GAAP financial measures that are commonly utilized by financial institutions and have not been specifically exempted by the SEC from Regulation G. The Company provides, as supplemental information, such non-GAAP measures included in this Report as described immediately below.
Fully Tax-Equivalent Net Interest Income and Net Interest Margin: Net interest income, as a component of the tabular presentation by financial institutions of Selected Financial Information regarding their recently completed operations, as well as disclosures based on that tabular presentation, is commonly presented on a tax-equivalent basis. That is, to the extent that some component of the institution's net interest income, which is presented on a before-tax basis, is exempt from taxation (e.g., is received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added to the actual before-tax net interest income total. This adjustment is considered helpful in comparing one financial institution's net interest income to that of another institution or in analyzing any institution’s net interest income trend line over time, to correct any analytical distortion that might otherwise arise from the fact that financial institutions vary widely in the proportions of their portfolios that are invested in tax-exempt securities, and that even a single institution may significantly alter over time the proportion of its own portfolio that is invested in tax-exempt obligations. Moreover, net interest income is itself a component of a second financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average interest-earning assets. For purposes of this measure as well, tax-equivalent net interest income is generally used by financial institutions, again to provide a better basis of comparison from institution to institution and to better demonstrate a single institution’s performance over time. While we present net interest income and net interest margin utilizing GAAP measures (no tax-equivalent adjustments) as a component of the tabular presentation within our disclosures, we do provide as supplemental information net interest income and net interest margin on a tax-equivalent basis.
Critical Accounting Policies
Critical accounting estimates as those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations. The more significant of these policies are summarized in Note 1, Summary of significant accounting policies to the consolidated financial statements presented in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025. Not all significant accounting policies require management to make difficult, subjective or complex judgments. The allowance for credit losses on loans and unfunded commitments policies noted below are deemed the Company’s critical accounting estimate.
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The allowance for credit losses consists of the allowance for credit losses for loans and unfunded commitments. The measurement of Current 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 on loans 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 on loans indicates that the allowance is appropriate, the allowance may need to be increased under adversely different conditions or assumptions. The impact of utilizing the CECL models to calculate the allowance for credit losses are 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.
The Company’s policies on the CECL method for allowance for credit losses are disclosed in Note 1, Summary of significant accounting policies with the audited consolidated financial statements and notes presented in the Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
Comparison of Financial Condition at December 31, 2025 and June 30, 2025
ASSETS
Total assets of the Company were $3.1 billion at December 31, 2025 and $3.0 billion at June 30, 2025, an increase of $106.4 million, or 3.5%. Securities available-for-sale and held-to-maturity increased $89.7 million, or 7.9%, to $1.2 billion at December 31, 2025 as compared to $1.1 billion at June 30, 2025. Net loans receivable increased $58.6 million, or 3.6%, to $1.7 billion at December 31, 2025 as compared to $1.6 billion at June 30, 2025.
CASH AND CASH EQUIVALENTS
Total cash and cash equivalents for the Company were $124.1 million at December 31, 2025 and $183.1 million at June 30, 2025, a decrease of $59.0 million, or 32.2%. The level of cash and cash equivalents is a function of the daily account clearing needs and deposit levels as well as activities associated with securities transactions and loan funding. All of these items can cause cash levels to fluctuate significantly on a daily basis. The Company has continued to maintain strong capital and liquidity positions as of December 31, 2025 and June 30, 2025.
SECURITIES
Securities available-for-sale and held-to-maturity increased $89.7 million, or 7.9%, to $1.2 billion at December 31, 2025 as compared to $1.1 billion at June 30, 2025. Securities purchases totaled $459.6 million during the six months ended December 31, 2025, and consisted primarily of $219.3 million of U.S. Treasuries, $189.5 million of state and political subdivision securities, $37.9 million of mortgage-backed securities, $9.0 million of corporate debt securities, and $3.9 million of collateralized mortgage obligations. Principal pay-downs and maturities during the six months ended December 31, 2025 amounted to $364.9 million, primarily consisting of $180.0 million of U.S. Treasuries, $153.4 million of state and political subdivision securities, $21.3 million of mortgage-backed securities, $8.3 million of corporate debt securities, and $1.9 million of collateralized mortgage obligations. Sales during the quarter ended December 31, 2025, amounted to $5.4 million of Federal Agency securities and $ 2.9 million of U.S. Treasury securities. At December 31, 2025, 57.8% of our securities portfolio consisted of state and political subdivision securities to take advantage of tax savings and to promote the Company’s participation in the communities in which it operates. Mortgage-backed securities, which represent 32.4% of our securities portfolio at December 31, 2025, do not contain sub-prime loans and are not exposed to the credit risk associated with such lending.
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The following table summarizes the securities portfolio by classification as a percentage of the portfolio. The values are reported at the balance sheet carrying value, as of December 31, 2025 and June 30, 2025. Refer to the financial statements Note 3, Securities for the complete fair value of securities.
| (Dollars in thousands) | December 31, 2025Balance | December 31, 2025Percentage of portfolio | June 30, 2025Balance | June 30, 2025Percentage of portfolio |
|---|---|---|---|---|
| Securities available-for-sale: | ||||
| U.S. Treasury securities | $47,505 | $3.9% | 10,453 | 0.9% |
| U.S. government sponsored enterprises | 6,400 | 0.5 | 11,644 | 1.0 |
| State and political subdivisions | 227,450 | 18.6 | 209,844 | 18.5 |
| Mortgage-backed securities-residential | 36,144 | 3.0 | 31,587 | 2.8 |
| Mortgage-backed securities-multifamily | 75,911 | 6.2 | 74,597 | 6.6 |
| Corporate debt securities | 18,180 | 1.5 | 17,937 | 1.6 |
| Total securities available-for-sale | 411,590 | 33.7 | 356,062 | 31.4 |
| Securities held-to-maturity: | ||||
| U.S. Treasury securities | 15,877 | 1.3 | 15,850 | 1.4 |
| State and political subdivisions | 479,390 | 39.2 | 460,919 | 40.7 |
| Mortgage-backed securities-residential | 159,926 | 13.1 | 138,468 | 12.2 |
| Mortgage-backed securities-multifamily | 123,656 | 10.1 | 130,119 | 11.6 |
| Corporate debt securities | 31,419 | 2.6 | 30,763 | 2.7 |
| Other securities | 26 | 0.0 | 28 | 0.0 |
| Total securities held-to-maturity | 810,294 | 66.3 | 776,147 | 68.6 |
| Total securities (at carrying value) | $1,221,884 | $100.0% | 1,132,209 | 100.0% |
There was no allowance for credit losses on securities available-for-sale as of either period presented as 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 $616,000 and $548,000 at December 31, 2025 and June 30, 2025, respectively.
LOANS
Net loans receivable increased $58.6 million, or 3.6%, to $1.7 billion at December 31, 2025 as compared to $1.6 billion at June 30, 2025. Loan growth experienced during the six months ended December 31, 2025, consisted primarily of $43.5 million in commercial real estate loans, $12.9 million in commercial loans, and $6.5 million in home equity loans. The allowance for credit losses on loans increased $1.2 million, or 5.9%, to $21.3 million at December 31, 2025 as compared to $20.1 million at June 30, 2025. The increase in the allowance for credit losses was primarily attributable to an increase in loan volume. The Company continues to experience loan growth as a result of the continued growth in its customer base and its relationships with other financial institutions in originating loan participations. The Company continues to use a conservative underwriting policy in its 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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The following tables present the composition of the Company’s loan portfolio at amortized cost in dollar amounts and percentages as of the dates indicated.
| (Dollars in thousands) | December 31, 2025Balance | December 31, 2025Percentage of portfolio | June 30, 2025Balance | June 30, 2025Percentage of portfolio |
|---|---|---|---|---|
| Residential real estate | $414,829 | $24.6% | 417,719 | 25.7% |
| Commercial real estate | 1,097,997 | 65.1 | 1,054,504 | 64.8 |
| Home equity | 40,574 | 2.4 | 34,103 | 2.1 |
| Consumer | 4,106 | 0.2 | 4,311 | 0.3 |
| Commercial | 129,678 | 7.7 | 116,769 | 7.1 |
| Total gross loans(1)(2) | 1,687,184 | 100.0% | 1,627,406 | 100.0% |
| Allowance for credit losses on loans | (21,334) | (20,146) | ||
| Total net loans | $1,665,850 | $1,607,260 |
(1)
Loan balances include net deferred fees/(costs) of ($483,000) and ($567,000) at December 31, 2025 and at June 30, 2025, respectively.
(2)
Loan balances exclude accrued interest receivable of $7.7 million and $7.0 million at December 31, 2025 and at June 30, 2025, respectively, which is included in accrued interest receivable in the consolidated statement of financial condition.
Commercial and commercial real estate loans classified as substandard and special mention totaled $36.8 million at December 31, 2025, and $39.4 million at June 30, 2025, a decrease of $2.6 million. The decrease in the loans classified during the period ended December 31, 2025, was primarily due to upgrades of commercial real estate loans that were considered to be performing and paying in accordance with the terms of their loan agreements and commercial real estate loans that were paid off during the period. Of the loans classified as substandard or special mention, $36.1 million were performing at December 31, 2025. There were no loans classified as doubtful or loss at December 31, 2025 or June 30, 2025.
The following table presents commercial real estate loans by concentrations:
At December 31, 2025
| (Dollars in thousands) | Balance | Percentage of total |
|---|---|---|
| Owner occupied: | ||
| Warehouse | $43,718 | 4.0% |
| Mixed use real estate | 28,462 | 2.6 |
| Office building | 20,932 | 1.9 |
| Retail | 18,069 | 1.6 |
| Firehouse | 9,710 | 0.9 |
| Other | 44,356 | 4.0 |
| Total owner occupied | 165,247 | 15.0 |
| Non-owner occupied: | ||
| Multi-family | 288,254 | 26.3 |
| Retail plaza | 135,495 | 12.3 |
| Mixed use real estate | 106,377 | 9.7 |
| Office building | 86,679 | 7.9 |
| Construction | 77,586 | 7.1 |
| Motel/hotel | 61,890 | 5.6 |
| Warehouse | 53,610 | 4.9 |
| Other | 122,750 | 11.2 |
| Total non-owner occupied | 932,750 | 85.0 |
| Total commercial real estate | $1,097,997 | 100.0% |
Commercial real estate loans are the largest segment of the Company’s loan portfolio and are comprised of 85.0% in non-owner occupied loans and 15.0% 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 57.7%, and the Company’s owner occupied commercial real estate loans have a weighted average LTV of approximately 50.1%, as of December 31, 2025. The Company’s commercial real estate loans are primarily made within our market area in Greene, Columbia, Albany, Ulster, Rensselaer, and Saratoga Counties of New York State. The Company actively monitors the economic and credit trends for borrower industries and manages our commercial real estate portfolio concentrations to mitigate its credit risk exposure.
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As of December 31, 2025, the Company’s largest commercial real estate concentration was non-owner occupied multi-family loans at $288.3 million, or 26.3% of total commercial real estate loans. Non-owner occupied multi-family loans provide much needed housing for the residents located in our market area and have historically performed well with strong credit metrics. As of December 31, 2025, the weighted average LTV was approximately 57.3% for the non-owner occupied multi-family loan segment.
As of December 31, 2025, non-owner occupied construction loans were $77.6 million, or 7.1% 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 $7.2 million of the Company’s construction exposure. Construction loans are primarily comprised of approximately 41.2% multi-family buildings, 23.6% mixed use real estate, 12.4% self-storage and 12.0% condominiums.
The Company’s outstanding balance of non-owner occupied commercial real estate office loans were $86.7 million, or 7.9% of total commercial real estate loans as of December 31, 2025. The office loans are primarily low-rise, non-metropolitan buildings, located within our geographic footprint. As of December 31, 2025, the weighted average LTV was approximately 59.0% for the non-owner occupied office loan segment.
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 qualitative 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 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.
Additional information about the ACL on loans is included in Note 4, Loans and Allowance for Credit Losses on Loans, of the Company’s 2025 Annual Report on Form 10-K for the fiscal year ended June 30, 2025. Management considers the ACL to be appropriate based on evaluation and analysis of the loan portfolio.
The ACL on loans totaled $21.3 million at December 31, 2025, compared to $20.1 million at June 30, 2025. The ACL on loans to total loans receivable was 1.26% at December 31, 2025 compared to 1.24% at June 30, 2025. The increase in the ACL on loans from December 31, 2025 to June 30, 2025, was primarily attributable to an increase in loan volume and growth in securities held-to-maturity that require an allowance.
Net charge-offs on loans amounted to $140,000 and $95,000 for the three months ended December 31, 2025 and 2024, respectively, an increase of $45,000. Net charge-offs totaled $200,000 and $209,000 for the six months ended December 31, 2025 and 2024, respectively. There were no material charge-offs in any loan segment during the three and six months ended December 31, 2025.
At December 31, 2025, the allowance for credit losses on unfunded commitments totaled $1.5 million as compared to $1.8 million at June 30, 2025, a decrease of $319,000, or 18.0%. The decrease in the provision for the six months ended December 31, 2025, was primarily due to a decrease in the Company’s contractual obligation to extend credit.
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Non-accrual Loans and Non-performing Assets
Non-performing assets consist of non-accrual loans, loans over 90 days past due, and other real estate owned that has been acquired in partial or full satisfaction of the loan obligation or upon foreclosure, and non-performing securities.
Generally, management places loans on non-accrual status once the loans have become 90 days or more delinquent. A non-accrual loan is defined as a loan in which collectability is questionable and therefore interest on the loan will no longer be recognized on an accrual basis. A loan is not placed back on accrual status until the borrower has demonstrated the ability and willingness to make timely payments on the loan. A loan does not have to be 90 days delinquent in order to be classified as non-performing and may be placed on non-accrual when circumstances indicate that the borrower may be unable to meet the contractual principal or interest payments. The threshold for evaluating classified and non-performing loans specifically evaluated for individual credit loss is $250,000. Foreclosed real estate represents property acquired through foreclosure and is valued at the lower of the carrying amount or fair value, less any estimated disposal costs. The Company monitors loan modifications made to borrowers experiencing financial difficulty. As of December 31, 2025, three loans have been modified in the last 12 months with a total amortized basis of $2.8 million. As of December 31, 2024, there were four loans modified with a total amortized basis of $6.7 million.
Analysis of Non-accrual Loans and Non-performing Assets
| (Dollars in thousands) | December 31, 2025 | June 30, 2025 |
|---|---|---|
| Non-accrual loans: | ||
| Residential real estate | $2,294 | 2,265 |
| Commercial real estate | 605 | 628 |
| Home equity | 216 | 30 |
| Consumer | 17 | 2 |
| Commercial | 129 | 135 |
| Total non-accrual loans | $3,261 | 3,060 |
| Total non-performing assets | $3,261 | 3,060 |
| Non-accrual loans to total loans | 0.20% | 0.19% |
| Non-performing loans to total loans | 0.20% | 0.19% |
| Non-performing assets to total assets | 0.10% | 0.10% |
| Allowance for credit losses on loans to non-performing loans | 654.22% | 658.37% |
| Allowance for credit losses on loans to non-accrual loans | 654.22% | 658.37% |
At December 31, 2025 and June 30, 2025, there were no loans delinquent greater than 90 days and accruing.
Non-performing assets amounted to $3.3 million and $3.1 million at December 31, 2025 and June 30, 2025, respectively. Loans on non-accrual status totaled $3.3 million at December 31, 2025, of which there were four residential real estate loans totaling $668,000 and one commercial real estate loans totaling $142,000 in the process of foreclosure. Included in non-accrual loans were $2.0 million of loans which were less than 90 days past due at December 31, 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 $3.1 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.
DEPOSITS
Deposit flows are influenced significantly by general economic conditions, changes in prevailing interest rates and competition. The diversity of deposit accounts offered allows the Company to be competitive in obtaining funds and responding to changes in consumer demand. Deposits are obtained predominantly from the areas in which the Company’s branch offices are located. The Company relies primarily on competitive pricing of its deposit products, customer service, and long-standing relationships with customers to attract and retain these deposits. However, market interest rates and rates offered by competing financial institutions significantly affect the Company’s ability to attract and retain deposits. The Company uses traditional means of advertising its deposit products, including radio, television, print and social media. While the Company accepts certificates of deposits in excess of $250,000, they are not subject to preferential rates. The Company does not actively solicit such deposits, as they are more difficult to retain than core deposits. The Company’s emphasis is placed on acquiring locally, stable, low-cost deposits to fund high-quality loans without taking on unnecessary interest rate risk. The ability to attract and maintain deposits and the rates paid on these deposits are and will continue to be affected by market conditions.
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Deposits totaled $2.6 billion at December 31, 2025 and June 30, 2025, respectively. The Company had $31.6 million and $51.6 million brokered deposits at December 31, 2025 and June 30, 2025, respectively. NOW deposits increased $48.1 million, or 2.5%, when comparing December 31, 2025 and June 30, 2025. Certificates of deposits decreased $22.2 million, or 9.7%, money market deposits decreased $16.1 million, or 15.7%, noninterest bearing deposits decreased $5.0 million, or 4.5%, and savings deposits decreased $3.6 million, or 1.4%, when comparing December 31, 2025 and June 30, 2025.
The following table summarizes deposits by major categories:
| (Dollars in thousands) | December 31, 2025 | Percentage of portfolio | June 30, 2025 | Percentage of portfolio |
|---|---|---|---|---|
| Noninterest-bearing deposits | $105,171 | $4.0% | 110,163 | 4.2% |
| Certificates of deposit | 205,948 | 7.8 | 228,174 | 8.6 |
| Savings deposits | 242,930 | 9.2 | 246,488 | 9.3 |
| Money market deposits | 86,686 | 3.3 | 102,787 | 3.9 |
| NOW deposits | 2,000,305 | 75.7 | 1,952,223 | 74.0 |
| Total deposits | $2,641,040 | $100.0% | 2,639,835 | 100.0% |
The following table summarizes deposits by depositor type:
| (Dollars in thousands) | December 31, 2025 | Percentage of portfolio | June 30, 2025 | Percentage of portfolio |
|---|---|---|---|---|
| Business deposits | $511,930 | $19.4% | 499,964 | 18.9% |
| Retail deposits | 910,168 | 34.4 | 903,767 | 34.2 |
| Municipal deposits | 1,187,377 | 45.0 | 1,184,514 | 44.9 |
| Brokered deposits | 31,565 | 1.2 | 51,590 | 2.0 |
| Total deposits | $2,641,040 | $100.0% | 2,639,835 | 100.0% |
The Company’s deposit base and liquidity position continues to be strong, and the deposit base is well diversified across segments to meet the transactional and investment needs of our customers. Municipal deposits are primarily from local New York State government entities, such as counties, cities, villages and towns, as well as school districts and fire departments. There is a seasonal component to municipal deposits levels associated with annual tax collections and fiscal spending patterns. In general, municipal balances increase at the end of the first and third quarters of our fiscal year. Municipal deposits above the FDIC insured limit are required to be collateralized by irrevocable municipal letters of credits issued by the Federal Home Loan Bank, municipal bonds, US Treasuries or government agency securities. Additionally, the Company offers large retail, business and municipal customers the ability to enhance FDIC insurance coverage, by electing to participate their deposit balance into a national deposit network.
The Company has many long-standing relationships with municipal entities throughout its market areas and their deposits have provided a stable funding source for the Company. The Company has a separate municipal department for the retention, management, and monitoring of municipal relationships.
Uninsured deposits represents the portion of deposit accounts that exceed the FDIC insurance limit. The Company calculates its uninsured deposit balances based on the methodologies and assumptions used for regulatory reporting requirements, which includes affiliate deposits and collateralized deposits.
The following table summarizes total uninsured deposits based on the same methodologies and assumptions used for the Bank’s regulatory reporting:
| (Dollars in thousands) | December 31, 2025 | June 30, 2025 |
|---|---|---|
| Estimated amount of uninsured for the Bank of Greene County | $361,606 | 388,060 |
| Estimated amount of uninsured for Greene County Commercial Bank(1) | 1,092,354 | 1,049,268 |
| Uninsured deposits, per regulatory requirements | $1,453,960 | 1,437,328 |
(1)
All of Greene County Commercial Bank deposits in excess of FDIC insurance limits are fully collateralized.
39
The following table estimates uninsured deposits after certain exclusions:
| (Dollars in thousands) | December 31, 2025 | June 30, 2025 |
|---|---|---|
| Uninsured deposits, per regulatory requirements | $1,453,960 | 1,437,328 |
| Less: Affiliate deposits | (40,896) | (59,018) |
| Collateralized deposits | (1,092,354) | (1,049,268) |
| Uninsured deposits, after exclusions | $320,710 | 329,042 |
| Immediately available liquidity(1) | $337,371 | 422,398 |
| Uninsured deposits coverage | 105.2% | 128.4% |
(1)
Reflects $124.1 million and $183.1 million of cash and cash equivalents, $194.9 million and $221.1 million of remaining borrowing capacity from the Federal Home Loan Bank, and $18.4 million and $18.2 million of remaining borrowing capacity from the Federal Reserve Bank, as of December 31, 2025 and June 30, 2025, respectively.
Uninsured deposits after exclusions represent 12.1% and 12.5% of total deposits as of December 31, 2025 and June 30, 2025, respectively. 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.
BORROWINGS
At December 31, 2025, the Bank had pledged approximately $681.5 million of its residential and commercial mortgage portfolio as collateral for borrowing and irrevocable municipal letters of credit at the Federal Home Loan Bank of New York (“FHLB”). The maximum amount of funding available from the FHLB was $429.0 million at December 31, 2025, of which there were $180.0 million of overnight borrowings, $4.2 million long-term fixed rate borrowings and $50.0 million irrevocable municipal letters of credit outstanding at December 31, 2025. At June 30, 2025, the Bank had $74.0 million in overnight borrowings, $4.2 million of long-term fixed rate borrowings and $90.0 million in irrevocable municipal letters of credit at the FHLB. Interest rates on overnight borrowings are determined at the time of borrowing. The irrevocable municipal letters of credit with the FHLB have been issued to secure municipal transactional deposit accounts, on behalf of Greene County Commercial Bank.
The FHLB term borrowings include long-term fixed rate borrowings from the “FHLB 0.0% Development Advance (ZDA) Program.” The Company receives a corresponding credit related to the FHLB term fixed rate borrowings, which effectively reduces the interest rate paid to zero percent. At December 31, 2025 and June 30, 2025, the Bank had a FHLB long-term fixed rate borrowing of $2.2 million at a stated rate of 3.8%, maturing October 2027, and a FHLB long-term fixed rate borrowing of $2.0 million at a stated rate of 4.2%, maturing June 2028.
The Bank pledges securities and certificates of deposit as collateral at the Federal Reserve Bank discount window for overnight borrowings. At December 31, 2025 and June 30, 2025, approximately $18.4 million and $18.2 million, respectively, of collateral was available to be pledged against potential borrowings at the Federal Reserve Bank discount window. There were zero overnight borrowings outstanding with the Federal Reserve Bank at December 31, 2025 and June 30, 2025.
The Bank has established unsecured lines of credit with Atlantic Community Bankers Bank for $15.0 million and three other financial institutions for $90.0 million. The lines of credit provide for overnight borrowing and the interest rate is determined at the time of the borrowing. There were zero borrowings outstanding with these lines of credit for the Bank at December 31, 2025 and June 30, 2025.
On September 17, 2020, the Company entered into Subordinated Note Purchase Agreements (“SNPAs”) with 14 qualified institutional investors, issued at 4.75% Fixed-to-Floating Rate due September 17, 2030, in the aggregate principal amount of $20.0 million, carried net of issuance costs of $424,000 amortized over a period of 60 months. These notes were callable on September 17, 2025 and had a floating interest rate of 8.99%. On October 1, 2025, the Company redeemed the entire outstanding principal amount of $20.0 million. The redemption was funded by cash on hand.
On September 15, 2021, the Company entered into SNPAs with 18 qualified institutional investors, issued at 3.00% Fixed-to-Floating Rate due September 15, 2031, in the aggregate principal amount of $30.0 million, carried net of issuance costs of $499,000 amortized over a period of 60 months. These notes are callable on September 15, 2026. At December 31, 2025, there were $29.9 million of these SNPAs outstanding, net of issuance costs.
40
The sales of the SNPAs were made in a private placement to accredited investors under the exemption from registration provided under Securities and Exchange Commission Rule 506. The Notes are not registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
For regulatory purposes, the Company allocated the SNPAs to the Bank of Greene County to qualify as Tier 1 capital subject to a 25.0% of capital limitation under risk-based capital guidelines. The portion that exceeds 25.0% of capital limitation qualifies as Tier 2 capital.
At December 31, 2025, there were no other long-term borrowings and therefore, no scheduled maturities of long-term borrowings.
EQUITY
Shareholders’ equity increased to $258.3 million at December 31, 2025 as compared to $238.8 million at June 30, 2025, resulting primarily from net income of $19.2 million and a decrease in accumulated other comprehensive loss of $1.8 million, partially offset by dividends declared and paid of $1.6 million.
When market interest rates rise, the fair value of the fixed income bond portfolio will decrease, resulting in additional unrealized losses, and depending on the extent of the rise in interest rates, the increase in unrealized losses could be significant. The non-credit portion of unrealized losses are recorded to accumulated other comprehensive income (loss), a component of Shareholders' Equity. A significant increase in market rates may have a negative impact on book value per share. The Company's bond portfolio is expected to mature at par and therefore the unrealized losses in the portfolio that result from higher market interest rates will decrease as the bonds become closer to maturity. However, if the Company were required to sell investment securities with an unrealized loss for any reason, including liquidity needs, the unrealized loss would become realized and reduce both net income for the reported period and regulatory capital, which as currently reported, excludes unrealized losses on investment securities.
The Federal Reserve has reduced the federal funds interest rate by 100 basis points in the third and fourth quarters of 2024, and 75 basis points in the third and fourth quarters of 2025, from the recent high of 5.25 percent. With the recent Federal Reserve rate cuts, the long-term interest rates began to decrease. This resulted in the fair values of the fixed income bond portfolio to increase and therefore decreased the unrealized loss position as of December 31, 2025. Additionally, the Company continued to purchase investment securities in the higher interest rate environment, decreasing the unrealized loss position.
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. For the three and six months ended December 31, 2025, the Company did not repurchase any shares.
| Selected Equity Data: | At December 31, 2025 | At June 30, 2025 |
|---|---|---|
| Shareholders’ equity to total assets, at end of period | 8.21% | 7.85% |
| Book value per share(1) | $15.17 | $14.03 |
| Closing market price of common stock | $22.23 | $22.22 |
| Line item | For the six months ended December 31, 2025 | For the six months ended December 31, 2024 |
|---|---|---|
| Average shareholders’ equity to average assets | 8.23% | 7.71% |
| Dividend payout ratio(2) | 17.70% | 22.22% |
| Actual dividends paid to net income(3) | 8.17% | 22.33% |
(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 March 31, 2024, June 30, 2024, March 31, 2025, June 30, 2025, September 30, 2025, and December 31, 2025. Dividends declared during the three months ended 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.
41
Comparison of Operating Results for the Three and Six Months Ended December 31, 2025 and 2024
Average Balance Sheet
The following table sets forth certain information relating to the Company for the three and six months ended December 31, 2025 and 2024. For the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, are expressed in both dollars and rates. No tax equivalent adjustments made. Average balances were based on daily averages. Average loan balances include non-performing loans. The loan yields include net amortization of certain deferred fees and costs that are considered adjustments to yields.
| (Dollars in thousands) | Three months ended December 31, 2025Averageoutstandingbalance | Three months ended December 31, 2025Interestearned /paid | Three months ended December 31, 2025 · Averageyieldrate | Three months ended December 31, 2024Averageoutstandingbalance | Three months ended December 31, 2024Interestearned /paid | Three months ended December 31, 2024Averageyield /rate |
|---|---|---|---|---|---|---|
| Interest-earning Assets: | ||||||
| Loans receivable, net(1) | $1,680,049 | 22,413 | $5.34% | $1,517,478 | 19,480 | 5.13% |
| Securities non-taxable | 682,463 | 5,422 | 3.18 | 657,173 | 4,943 | 3.01 |
| Securities taxable | 549,075 | 4,696 | 3.42 | 467,014 | 3,550 | 3.04 |
| Interest-bearing bank balances and federal funds | 82,301 | 910 | 4.42 | 112,245 | 1,397 | 4.98 |
| FHLB stock | 3,450 | 56 | 6.49 | 2,353 | 48 | 8.16 |
| Total interest-earning assets | 2,997,338 | 33,497 | 4.47% | 2,756,263 | 29,418 | 4.27% |
| Cash and due from banks | 13,348 | 12,124 | ||||
| Allowance for credit losses on loans | (21,403) | (19,861) | ||||
| Allowance for credit losses on securities held-to-maturity | (599) | (465) | ||||
| Other noninterest-earning assets | 113,064 | 102,531 | ||||
| Total assets | $3,101,748 | $2,850,592 | ||||
| Interest-Bearing Liabilities: | ||||||
| Savings and money market deposits | $328,027 | 350 | $0.43% | $344,438 | 368 | 0.43% |
| NOW deposits | 2,106,237 | 11,778 | 2.24 | 1,903,899 | 12,637 | 2.65 |
| Certificates of deposit | 211,392 | 1,797 | 3.40 | 172,089 | 1,733 | 4.03 |
| Borrowings | 60,190 | 513 | 3.41 | 65,348 | 612 | 3.75 |
| Total interest-bearing liabilities | 2,705,846 | 14,438 | 2.13% | 2,485,774 | 15,350 | 2.47% |
| Noninterest-bearing deposits | 108,946 | 117,809 | ||||
| Other noninterest-bearing liabilities | 33,869 | 30,597 | ||||
| Shareholders' equity | 253,087 | 216,412 | ||||
| Total liabilities and equity | $3,101,748 | $2,850,592 | ||||
| Net interest income | $19,059 | $14,068 | ||||
| Net interest rate spread | 2.34% | 1.80% | ||||
| Net earnings assets | $291,492 | $270,489 | ||||
| Net interest margin | 2.54% | 2.04% | ||||
| Average interest-earning assets to average interest-bearing liabilities | 110.77% | 110.88% |
(1)
Calculated net of deferred loan fees and costs, loan discounts, and loans in process.
42
| (Dollars in thousands | Six months ended December 31, 2025Averageoutstandingbalance | Six months ended December 31, 2025Interestearned /paid | Six months ended December 31, 2025 · Averageyieldrate | Six months ended December 31, 2024Averageoutstandingbalance | Six months ended December 31, 2024Interestearned /paid | Six months ended December 31, 2024Averageyield /rate |
|---|---|---|---|---|---|---|
| Interest-earning Assets: | ||||||
| Loans receivable, net(1) | $1,663,954 | 44,386 | $5.34% | $1,503,778 | 38,723 | 5.15% |
| Securities non-taxable | 675,992 | 10,688 | 3.16 | 633,256 | 9,411 | 2.97 |
| Securities taxable | 509,835 | 8,565 | 3.36 | 454,929 | 6,864 | 3.02 |
| Interest-bearing bank balances and federal funds | 60,389 | 1,384 | 4.58 | 78,760 | 2,086 | 5.30 |
| FHLB stock | 3,174 | 97 | 6.11 | 2,199 | 103 | 9.37 |
| Total interest-earning assets | 2,913,344 | 65,120 | 4.47% | 2,672,922 | 57,187 | 4.28% |
| Cash and due from banks | 12,858 | 12,223 | ||||
| Allowance for credit losses on loans | (20,874) | (19,504) | ||||
| Allowance for credit losses on securities held-to-maturity | (574) | (474) | ||||
| Other noninterest-earning assets | 110,232 | 101,469 | ||||
| Total assets | $3,014,986 | $2,766,636 | ||||
| Interest-Bearing Liabilities: | ||||||
| Savings and money market deposits | $336,268 | 770 | $0.46% | $352,392 | 799 | 0.45% |
| NOW deposits | 2,009,615 | 22,874 | 2.28 | 1,813,606 | 24,379 | 2.69 |
| Certificates of deposit | 210,926 | 3,644 | 3.46 | 160,417 | 3,366 | 4.20 |
| Borrowings | 65,717 | 1,253 | 3.81 | 74,504 | 1,439 | 3.86 |
| Total interest-bearing liabilities | 2,622,526 | 28,541 | 2.18% | 2,400,919 | 29,983 | 2.50% |
| Noninterest-bearing deposits | 110,388 | 121,551 | ||||
| Other noninterest-bearing liabilities | 33,958 | 30,752 | ||||
| Shareholders' equity | 248,114 | 213,414 | ||||
| Total liabilities and equity | $3,014,986 | $2,766,636 | ||||
| Net interest income | $36,579 | $27,204 | ||||
| Net interest rate spread | 2.29% | 1.78% | ||||
| Net earnings assets | $290,818 | $272,003 | ||||
| Net interest margin | 2.51% | 2.04% | ||||
| Average interest-earning assets to average interest-bearing liabilities | 111.09% | 111.33% |
(1)
Calculated net of deferred loan fees and costs, loan discounts, and loans in process.
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(Dollars in thousands) | For the three months ended December 31, 2025 | For the three months ended December 31, 2024 | For the six months ended December 31, 2025 | For the six months ended December 31, 2024 |
|---|---|---|---|---|
| Net interest income (GAAP) | $19,059 | $14,068 | $36,579 | 27,204 |
| Tax-equivalent adjustment(1) | 2,174 | 1,867 | 4,284 | 3,579 |
| Net interest income fully taxable-equivalent basis (non-GAAP) | $21,233 | $15,935 | $40,863 | 30,783 |
| Average interest-earning assets (GAAP) | $2,997,338 | $2,756,263 | $2,913,344 | 2,672,922 |
| Net interest margin fully taxable-equivalent basis (non-GAAP) | 2.83% | 2.31% | 2.81% | 2.30% |
(1)
Interest income calculated on a taxable-equivalent basis (non-GAAP) includes the additional amount of interest income that would have been earned if the Company’s investment in tax-exempt securities and loans had been subject to federal and New York State income taxes yielding the same after-tax income. The rate used for this adjustment was 21% for federal income taxes and 4.44% for New York State income taxes for the periods ended December 31, 2025 and 2024, respectively.
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Rate / Volume Analysis
The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected the Company’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to:
(i)
Change attributable to changes in volume (changes in volume multiplied by prior rate);
(ii)
Change attributable to changes in rate (changes in rate multiplied by prior volume); and
(iii)
The net change.
The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.
| (In thousands) | Three months ended December 31, 2025 versus 2024 · Increase/(decrease)Due toVolume | Three months ended December 31, 2025 versus 2024 · Total increase/(decrease) | Six months ended December 31, 2025 versus 2024 · Increase/(decrease)Due toVolume | Six months ended December 31, 2025 versus 2024 · Total increase/(decrease) |
|---|---|---|---|---|
| Interest-earning assets: | ||||
| Loans receivable, net(1) | $2,122 | $2,933 | $4,206 | $5,663 |
| Securities non-taxable | 194 | 479 | 656 | 1,277 |
| Securities taxable | 670 | 1,146 | 880 | 1,701 |
| Interest-bearing bank balances and federal funds | (343) | (487)) | (444) | (702)) |
| FHLB stock | 19 | 8) | 37 | (6)) |
| Total interest-earning assets | 2,662 | 4,079 | 5,335 | 7,933 |
| Interest-bearing liabilities: | ||||
| Savings and money market deposits | (18) | (18) | (43) | (29) |
| NOW deposits | 1,240 | (859)) | 2,461 | (1,505)) |
| Certificates of deposit | 360 | 64) | 939 | 278) |
| Borrowings | (46) | (99)) | (168) | (186)) |
| Total interest-bearing liabilities | 1,536 | (912)) | 3,189 | (1,442)) |
| Net change in net interest income | $1,126 | $4,991 | $2,146 | $9,375 |
(1)
Calculated net of deferred loan fees, loan discounts, and loans in process.
GENERAL
Return on average assets and return on average equity are common methods of measuring operating results. Annualized return on average assets increased to 1.33% for the three months ended December 31, 2025 as compared to 1.05% for the three months ended December 31, 2024. Annualized return on average equity increased to 16.27% for the three months ended December 31, 2025 as compared to 13.84% for the three months ended December 31, 2024. Annualized return on average assets increased to 1.27% for the six months ended December 31, 2025 as compared to 0.99% for the six months ended December 31, 2024. Annualized return on average equity increased to 15.45% for the six months ended December 31, 2025 as compared to 12.89% for the six months ended December 31, 2024. The increase in return on average assets and average equity for the three and six months ended December 31, 2025 was primarily the result of net income outpacing growth in the balance sheet.
Net income amounted to $10.3 million for the three months ended December 31, 2025 as compared to $7.5 million for the three months ended December 31, 2024, an increase of $2.8 million. Net income amounted to $19.2 million for the six months ended December 31, 2025 as compared to $13.8 million for the six months ended December 31, 2024, an increase of $5.4 million.
Average assets increased $251.2 million, or 8.8%, to $3.1 billion for the three months ended December 31, 2025 as compared to $2.9 billion for the three months ended December 31, 2024. Average equity increased $36.7 million, or 17.0%, to $253.1 million for the three months ended December 31, 2025 as compared to $216.4 million for the three months ended December 31, 2024. Average assets increased $248.4 million, or 9.0%, to $3.0 billion for the six months ended December 31, 2025 as compared to $2.8 billion for the six months ended December 31, 2024. Average equity increased $34.7 million, or 16.3%, to $248.1 million for the six months ended December 31, 2025 as compared to $213.4 million for the six months ended December 31, 2024.
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INTEREST INCOME
Interest income amounted to $33.5 million for the three months ended December 31, 2025 as compared to $29.4 million for the three months ended December 31, 2024, an increase of $4.1 million, or 13.9%. Interest income amounted to $65.1 million for the six months ended December 31, 2025 as compared to $57.2 million for the six months ended December 31, 2024, an increase of $7.9 million, or 13.9%. The increase in the average balances on loans and securities had the greatest impact on interest income when comparing the 2025 and 2024 periods. The increase in yields of loans and securities also increased during the comparative periods contributing to higher interest income.
Average loan balances increased $162.6 million and $160.2 million and the yield on loans increased 21 and 19 basis points when comparing the three and six months ended December 31, 2025 and 2024, respectively. The average balance of securities increased $107.4 million and $97.6 million and the yield on such securities increased 27 and 26 basis points when comparing the three and six months ended December 31, 2025 and 2024, respectively. Average interest-bearing bank balances and federal funds decreased $29.9 million and $18.4 million and the yield on interest-bearing bank balances and federal funds decreased 56 and 72 basis points when comparing the three and six months ended December 31, 2025 and 2024, respectively.
INTEREST EXPENSE
Interest expense amounted to $14.4 million for the three months ended December 31, 2025 as compared to $15.4 million for the three months ended December 31, 2024, a decrease of $912,000, or 5.9%. Interest expense amounted to $28.5 million for the six months ended December 31, 2025 as compared to $30.0 million for the six months ended December 31, 2024, a decrease of $1.4 million, or 4.8%. The decrease during the three and six months ended December 31, 2025, was primarily due to the decrease in the average cost of funds, partially offset by the increase in the average balance of interest-bearing liabilities. The decrease in the cost of NOW deposits had the greatest impact on interest expense when comparing the three and six months ended December 31, 2025 and 2024.
The cost of NOW deposits decreased 41 basis points for the three and six months ended December 31, 2025 and 2024, respectively, and the cost of certificates of deposit decreased 63 and 74 basis points when comparing the three and six months ended December 31, 2025 and 2024, respectively. The growth in interest-bearing liabilities was primarily due to an increase in average NOW deposits of $202.3 million and $196.0 million and an increase in average certificates of deposits of $39.3 million and $50.5 million when comparing the three and six months ended December 31, 2025 and 2024, respectively. This was partially offset by a decrease in average savings and money market deposits of $16.4 million and $16.1 million, and a decrease in borrowings of $5.2 million and $8.8 million when comparing the three and six months ended December 31, 2025 and 2024. Yields on interest-bearing deposits decreased when comparing the three and six months ended December 31, 2025 and 2024, as the Company continued a strategic reduction in deposit rates that aligns with the Federal Reserve’s rate cuts.
NET INTEREST INCOME
Net interest income increased $5.0 million to $19.1 million for the three months ended December 31, 2025, from $14.1 million for the three months ended December 31, 2024. Net interest income increased $9.4 million to $36.6 million for the six months ended December 31, 2025, from $27.2 million for the six months ended December 31, 2024. The increase in net interest income for the three and six months ended December 31, 2025, was due to an increase in the average balance of interest-earning assets, which increased $241.1 million and $240.4 million when comparing the three and six months ended December 31, 2025 and 2024, respectively, an increase in interest rates earned on interest-earning assets, which increased 20 and 19 basis points when comparing the three and six months ended December 31, 2025 and 2024, respectively, and a decrease in interest rates earned on interest-bearing liabilities, which decreased 34 and 32 basis points when comparing the three and six months ended December 31, 2025 and 2024, respectively. The increase in net interest income was offset by an increase in the average balance of interest-bearing liabilities, which increased $220.1 million and $221.6 million when comparing the three and six months ended December 31, 2025 and 2024, respectively.
Net interest rate spread increased 54 basis points to 2.34% for the three months ended December 31, 2025 as compared to 1.80% for the three months ended December 31, 2024. Net interest rate spread increased 51 basis points to 2.29% for the six months ended December 31, 2025 as compared to 1.78% for the six months ended December 31, 2024.
Net interest margin increased 50 basis points to 2.54% for the three months ended December 31, 2025 as compared to 2.04% for the three months ended December 31, 2024. Net interest margin increased 47 basis points to 2.51% for the six months ended December 31, 2025 as compared to 2.04% for the six months ended December 31, 2024. The increase in net interest rate spread and margin during the three and six months ended December 31, 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, and the reduction in deposit rates.
45
Net interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if the Company’s investment in tax-exempt securities and loans had been subject to federal and New York State income taxes yielding the same after-tax income. Tax equivalent net interest margin was 2.83% and 2.31% for the three months ended December 31, 2025 and 2024, respectively, and was 2.81% and 2.30% for the six months ended December 31, 2025 and 2024, respectively.
The Company closely monitors its interest rate risk, and the Company will continue to monitor and prudently manage the asset and liability mix to address the risks or potential negative effects of changes in interest rates. Management attempts to mitigate the interest rate risk through balance sheet composition. Several strategies are used to help manage interest rate risk such as maintaining a high level of liquid assets such as short-term federal funds sold and various investment securities and maintaining a high concentration of less interest-rate sensitive and lower-costing core deposits.
PROVISION FOR CREDIT LOSSES
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 amounted to $199,000 and $478,000 for the three months ended December 31, 2025 and 2024, respectively, and $1.5 million and $1.1 million for the six months ended December 31, 2025 and 2024, respectively. The provision for the six months ended December 31, 2025, was primarily attributable to an increase in loan volume and growth in securities held-to-maturity that require an allowance. The allowance for credit losses on loans to total loans receivable was 1.26% at December 31, 2025 as compared to 1.24% at June 30, 2025.
NONINTEREST INCOME
| (Dollars in thousands)Noninterest income: | For the three monthsended December 31, 2025 | For the three monthsended December 31, 2024 | Change from prior yearAmount | Change from prior yearPercent | For the six monthsended December 31, 2025 | For the six monthsended December 31, 2024 | Change from prior yearAmount | Change from prior yearPercent |
|---|---|---|---|---|---|---|---|---|
| Service charges on deposit accounts | $1,306 | $1,273 | 33 | $2.6% | $2,604 | $2,499 | 105 | 4.2% |
| Debit card fees | 1,103 | 1,063 | 40 | 3.8 | 2,203 | 2,164 | 39 | 1.8 |
| Investment services | 271 | 252 | 19 | 7.5 | 548 | 500 | 48 | 9.6 |
| E-commerce fees | 29 | 34 | (5) | (14.7) | 56 | 71 | (15) | (21.1) |
| Bank-owned life insurance | 674 | 637 | 37 | 5.8 | 1,326 | 1,285 | 41 | 3.2 |
| Net loss on sale of securities available-for-sale | (576) | - | (576) | 100.0 | (576) | - | (576) | 100.0 |
| Other operating income | 349 | 616 | (267) | (43.3) | 981 | 1,093 | (112) | (10.2) |
| Total noninterest income | $3,156 | $3,875 | (719) | $(18.6 | $7,142 | $7,612 | (470) | (6.2 |
Noninterest income decreased $719,000, or 18.6%, to $3.2 million for the three months ended December 31, 2025 compared to $3.9 million for the three months ended December 31, 2024. The decrease during the three months ended December 31, 2025, was primarily due to a $576,000 loss on sales of securities available-for-sale, a decrease in income earned on customer interest rate swap contracts of $209,000 and a $99,000 decrease in loan fees, including in other operating income. Noninterest income decreased $470,000, or 6.2%, to $7.1 million for the six months ended December 31, 2025 as compared to $7.6 million for the six months ended December 31, 2024. The decrease during the six months ended December 31, 2025, was primarily due to a $576,000 loss on sales of securities available-for-sale and a decrease in loan fees of $103,000.
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NONINTEREST EXPENSE
| (Dollars in thousands)Noninterest expense: | For the three monthsended December 31, 2025 | For the three monthsended December 31, 2024 | Change from prior yearAmount | Change from prior yearPercent | For the six monthsended December 31, 2025 | For the six monthsended December 31, 2024 | Change from prior yearAmount | Change from prior yearPercent |
|---|---|---|---|---|---|---|---|---|
| Salaries and employee benefits | $6,223 | $5,653 | 570 | $10.1% | $12,379 | $11,531 | 848 | 7.4% |
| Occupancy expense | 656 | 615 | 41 | 6.7 | 1,309 | 1,251 | 58 | 4.6 |
| Equipment and furniture expense | 214 | 193 | 21 | 10.9 | 419 | 343 | 76 | 22.2 |
| Service and data processing fees | 781 | 773 | 8 | 1.0 | 1,568 | 1,540 | 28 | 1.8 |
| Computer software, supplies and support | 558 | 404 | 154 | 38.1 | 998 | 759 | 239 | 31.5 |
| Advertising and promotion | 147 | 127 | 20 | 15.7 | 247 | 204 | 43 | 21.1 |
| FDIC insurance premiums | 370 | 347 | 23 | 6.6 | 737 | 669 | 68 | 10.2 |
| Legal and professional fees | 479 | 245 | 234 | 95.5 | 885 | 609 | 276 | 45.3 |
| Other | 1,031 | 1,029 | 2 | 0.2 | 1,978 | 2,030 | (52) | (2.6) |
| Total noninterest expense | $10,459 | $9,386 | 1,073 | $11.4% | $20,520 | $18,936 | 1,584 | 8.4% |
Noninterest expense increased $1.1 million, or 11.4%, to $10.5 million for the three months ended December 31, 2025 compared to $9.4 million for the three months ended December 31, 2024. The increase during the three months ended December 31, 2025, was primarily due to an increase of $570,000 in salaries and employee benefits, an increase of $234,000 in legal and professional fees, an increase of $193,000 of defined benefit pension expense due to the Board approved termination of the Pension Plan, included in other expenses, and an increase of $154,000 in computer software, supplies and support expenses. This was partially offset by a $197,000 decrease in the unfunded commitment expense, due to a decrease in the Company’s contractual obligation to extend credit, included in other expenses. Noninterest expense increased $1.6 million, or 8.4%, to $20.5 million for the six months ended December 31, 2025 compared to $18.9 million for the six months ended December 31, 2024. The increase during the six months ended December 31, 2025, was primarily due to an increase of $848,000 in salaries and employee benefits costs, an increase of $276,000 in legal and professional fees, an increase of $252,000 in charitable contributions as the Bank made a $250,000 charitable donation to the Bank of Greene County Charitable Foundation, included in other expense, an increase of $239,000 in computer software, supplies and support fees, and an increase of $188,000 of defined benefit pension expense. This was partially offset by a $744,000 decrease in the unfunded commitment expense.
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 10.9% and 11.9% for the three and six months ended December 31, 2025, and 7.3% and 6.9% for the three and six months ended December 31, 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 during the three and six months ended December 31, 2025, is 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.
LIQUIDITY AND CAPITAL RESOURCES
Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates and/or prices such as interest rates, foreign currency exchange rates, commodity prices, and equity prices. The Company’s most significant form of market risk is interest rate risk since the majority of the Company’s assets and liabilities are sensitive to changes in interest rates. The Company’s primary sources of funds are deposits and proceeds from principal and interest payments on loans, mortgage-backed securities and debt securities, with lines of credit available through the Federal Home Loan Bank, Atlantic Community Bankers Bank and three other financial institutions, as needed. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit outflows, mortgage prepayments, and lending activities are greatly influenced by general interest rates, economic conditions and competition. At December 31, 2025, the Company had $124.1 million in cash and cash equivalents, representing 3.9% of total assets, and had $379.0 million available in unused lines of credit.
As needed, to enhance strong levels of liquidity and to fund loan demand, the Bank and Commercial Bank (the “Banks”) may accept brokered deposits, generally in denominations of less than $250,000, from national brokerage networks, custodial deposit networks or through IntraFi’s one-way CDARS and ICS products, including IntraFi’s Insured Network Deposits (“IND”). The Banks combined can place and obtain brokered deposits up to 30% of total deposits, in the amount of $760.7 million based on policy. Additionally, both Banks participate in the IntraFi reciprocal (“two-way”) CDARS and the ICS products, which provides for reciprocal two-way transactions among other institutions, facilitated by IntraFi, for the purpose of maximizing FDIC insurance for depositors.
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The Company had $31.6 million and $51.6 million brokered deposits as of December 31, 2025 and June 30, 2025, 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.
At December 31, 2025, liquidity measures were as follows:
Primary:
| Minute 1: (Cash and cash equivalents / non-contractual deposits) | 8.22% |
| Day 1: (Minute 1 liquidity plus same day borrowing capacity / non-contractual deposits) | 29.31% |
| Week 1: (Day 1 liquidity plus unpledged marketable investments and one-third brokered deposit capacity / non-contractual deposits) | 50.13% |
| Month 1: (Week 1 liquidity plus remaining borrowing capacity / non-contractual deposits) | 106.25% |
| Secondary: | |
| On-Balance Sheet: (Cash plus unpledged and unencumbered securities / non-contractual deposits) | 13.20% |
The Company’s off-balance sheet credit exposures at December 31, 2025:
| (In thousands) | |
|---|---|
| Unfunded loan commitments | $129,318 |
| Unused lines of credit | 128,903 |
| Standby letters of credit | 543 |
| Total commitments | $258,764 |
The Company anticipates that it will have sufficient funds available to meet current commitments and other funding needs based on the level of cash and cash equivalents as well as the investments available-for-sale portfolio and borrowing capacity.
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The Bank of Greene County and its wholly owned subsidiary, Greene County Commercial Bank, met all applicable regulatory capital requirements at December 31, 2025 and June 30, 2025.
| (Dollars in thousands) · The Bank of Greene CountyAs of December 31, 2025: | ActualAmount | ActualRatio | For capital adequacy purposesAmount | For capital adequacy purposesRatio | To be wellcapitalized underprompt corrective action provisionsAmount | To be wellcapitalized underprompt corrective action provisionsRatio | Capital conservation bufferActual | Capital conservation bufferRequired |
|---|---|---|---|---|---|---|---|---|
| Total risk-based capital | $315,317 | 16.9% | $149,393 | 8.0% | $186,742 | 10.0% | 8.89% | 2.50% |
| Tier 1 risk-based capital | 291,974 | 15.6 | 112,045 | 6.0 | 149,393 | 8.0 | 9.64 | 2.50 |
| Common equity tier 1 capital | 291,974 | 15.6 | 84,034 | 4.5 | 121,382 | 6.5 | 11.14 | 2.50 |
| Tier 1 leverage ratio | 291,974 | 9.4 | 124,667 | 4.0 | 155,834 | 5.0 | 5.37 | 2.50 |
| As of June 30, 2025: | ||||||||
| Total risk-based capital | $293,952 | 16.6% | $141,305 | 8.0% | $176,632 | 10.0% | 8.64% | 2.50% |
| Tier 1 risk-based capital | 271,869 | 15.4 | 105,979 | 6.0 | 141,305 | 8.0 | 9.39 | 2.50 |
| Common equity tier 1 capital | 271,869 | 15.4 | 79,484 | 4.5 | 114,811 | 6.5 | 10.89 | 2.50 |
| Tier 1 leverage ratio | 271,869 | 9.2 | 117,646 | 4.0 | 147,057 | 5.0 | 5.24 | 2.50 |
| Greene County Commercial Bank | ||||||||
| As of December 31, 2025: | ||||||||
| Total risk-based capital | $127,715 | 50.2% | $20,359 | 8.0% | $25,448 | 10.0% | 42.19% | 2.50% |
| Tier 1 risk-based capital | 127,715 | 50.2 | 15,269 | 6.0 | 20,359 | 8.0 | 44.19 | 2.50 |
| Common equity tier 1 capital | 127,715 | 50.2 | 11,452 | 4.5 | 16,541 | 6.5 | 45.69 | 2.50 |
| Tier 1 leverage ratio | 127,715 | 8.9 | 57,262 | 4.0 | 71,577 | 5.0 | 4.92 | 2.50 |
| As of June 30, 2025: | ||||||||
| Total risk-based capital | $122,243 | 46.9% | $20,871 | 8.0% | $26,089 | 10.0% | 38.86% | 2.50% |
| Tier 1 risk-based capital | 122,243 | 46.9 | 15,654 | 6.0 | 20,871 | 8.0 | 40.86 | 2.50 |
| Common equity tier 1 capital | 122,243 | 46.9 | 11,740 | 4.5 | 16,958 | 6.5 | 42.36 | 2.50 |
| Tier 1 leverage ratio | 122,243 | 9.1 | 53,543 | 4.0 | 66,929 | 5.0 | 5.13 | 2.50 |
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Not applicable to smaller reporting companies.
Item 4.
Controls and Procedures
Our management, under the supervision and with the participation of the Chief Executive Officer (who is our principal executive officer) and Chief Financial Officer (who is our principal financial and accounting officer), evaluated the effectiveness of the design and operation of its disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), at the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports, that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Because of its inherent limitations, management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system is based upon assumptions and can provide only reasonable, not absolute, assurance that its objective will be met. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No evaluation of control can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, with the Company have been detected.
Part II.
Other Information
Item 1.
Legal Proceedings
The Company, including its subsidiaries, are not currently the subject of any material pending legal proceedings, other than ordinary routine litigation occurring in the normal course of their business. On an ongoing basis, the Company is often the subject of, or a party to, various legal claims by other parties against the Company, by the Company against other parties, or involving the Company, which arise in the normal course of business.
Item 1A.
Risk Factors
Not applicable to smaller reporting companies.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
a)
Not applicable.
b)
Not applicable.
c)
On September 17, 2019, the Board of Directors of the Company adopted a stock repurchase program. Under the repurchase program, the Company is authorized to repurchase up to 400,000 shares of its common stock. Repurchases will be made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. There were no additional share repurchases during the quarter ended December 31, 2025.
Item 3.
Defaults Upon Senior Securities
Not applicable.
Item 4.
Mine Safety Disclosures
Not applicable.
Item 5.
Other Information
No director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non- Rule 10b5-1 trading arrangement, as each term is defined in Item 408 of regulation S-K, during the quarter ended December 31, 2025.
Item 6.
Exhibits
Exhibits
| | |
31.1 Certification of Chief Executive Officer, adopted pursuant to Rule 13a-14(a)/15d-14(a) 31.2 Certification of Chief Financial Officer, adopted pursuant to Rule 13a-14(a)/15d-14(a) 32.1 Statement of Chief Executive Officer, furnished pursuant to U.S.C. Section 1350 32.2 Statement of Chief Financial Officer, furnished pursuant to U.S.C. Section 1350 (101) The following materials from Greene County Bancorp, Inc. Form 10-Q for the quarter ended December 31, 2025, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows and (iv) Notes to Consolidated Financial Statements, (detail tagged). (104) Cover Page Integrative Data File (formatted in iXBRL and included in exhibit 101).
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