GREENE COUNTY BANCORP INC

Previous wording

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

Current wording

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

Previous wording

Total assets of the Company were $2.9 billion at September 30, 2024 and $2.8 billion at June 30, 2024, an increase of $48.8 million, or 1.7%. Securities available-for-sale and held-to-maturity increased $26.1 million, or 2.5%, to $1.1 billion at September 30, 2024 as compared to $1.0 billion at June 30, 2024. Net loans receivable remained at $1.5 billion at September 30, 2024 and June 30, 2024.

Current wording

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

Previous wording

Total cash and cash equivalents for the Company were $213.5 million at September 30, 2024 and $190.4 million at June 30, 2024, an increase of $23.0 million, or 12.1%. The level of cash and cash equivalents is a function of the daily account clearing needs and deposit levels as well as activities associated with securities transactions and loan funding. All of these items can cause cash levels to fluctuate significantly on a daily basis. The Company held excess cash balances for both quarter ends in response to the recent industry turmoil and has continued to maintain strong capital and liquidity positions as of September 30, 2024.

Current wording

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

Previous wording

Securities available-for-sale and held-to-maturity increased $26.1 million, or 2.5%, to $1.1 billion at September 30, 2024 as compared to $1.0 billion at June 30, 2024. Securities purchases totaled $115.2 million during the three months ended September 30, 2024, and consisted primarily of $77.4 million of state and political subdivision securities, $24.7 million of U.S. Treasury securities, $9.2 million of collateralized mortgage obligations and $3.9 million of mortgage-backed securities. Principal pay-downs and maturities during the three months ended September 30, 2024 amounted to $97.0 million, primarily consisting of $66.5 million of state and political subdivision securities, $25.0 million of U.S. Treasury securities, $4.5 million of mortgage-backed securities, and $683,000 of collateralized mortgage obligations. At September 30, 2024, 59.3% 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 29.3% of our securities portfolio at September 30, 2024, do not contain sub-prime loans and are not exposed to the credit risk associated with such lending.

Current wording

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

Previous wording

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

Current wording

The following table summarizes the securities portfolio by classification as a percentage of the portfolio. The values are reported at the balance sheet carrying value, as of December 31, 2024 and June 30, 2024. Refer to financial statements Note 3, Securitiesfor the complete fair value of securities.

Previous wording

Securities held-to-maturity are evaluated for credit losses on a quarterly basis under the CECL methodology. At September 30, 2024, the ACL on securities held-to-maturitywas $466,000 as compared to $483,000 at June 30, 2024.

Current wording

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

Previous wording

Net loans receivable increased $1.2 million, or 0.1%, to $1.5 billion at September 30, 2024 and June 30, 2024. The loan growth experienced during the three months ended September 30, 2024, consisted primarily of $15.3 million in commercial real estate loans and $1.7 million in home equity loans, partially offset by a decrease of $11.5 million in commercial loans, $3.8 million in residential real estate loans, and a $537,000 increase in the allowance for credit losses on loans. The Company continues to experience loan growth as a result of the continued growth in its customer base and its relationships with other financial institutions in originating loan participations. The Company continues to use a conservative underwriting policy in regards to all loan originations, and does not engage in sub-prime lending or other exotic loan products. Updated appraisals are obtained on loans when there is a reason to believe that there has been a change in the borrower’s ability to repay the loan principal and interest, generally, when a loan is in a delinquent status. Additionally, if an existing loan is to be modified or refinanced, generally, an appraisal is ordered to ensure continued collateral adequacy.

Current wording

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

Previous wording

Commercial real estate loans are the largest segment of the Company’s loan portfolio and are comprised of 82.6% in non-owner occupied loans and 17.4% 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 53.6%, and the Company’s owner occupied commercial real estate loans have a weighted average LTV of approximately 49.9%, as of September 30, 2024. The Company’s commercial real estate loans are primarily made within our market area in Greene, Columbia, Albany, Ulster and Rensselaer Counties of New York State. The Company actively monitors the economic and credit trends for borrower industries and manages our commercial real estate portfolio concentrations to mitigate its credit risk exposure.

Current wording

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

Previous wording

As of September 30, 2024, the Company’s largest commercial real estate concentration was non-owner occupied multi-family loans at $248.2 million, or 26.1% 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 September 30, 2024, the weighted average LTV was approximately 55.3% for the non-owner occupied multi-family loan segment.

Current wording

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

Previous wording

As of September 30, 2024, non-owner occupied construction loans were $85.7 million, or 9.0% 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 $1.1 million, or 1.0% of the Company’s construction exposure. Construction loans are primarily comprised of approximately 33.5% mixed use real estate, 23.1% multi-family buildings, 18.6% pre-construction and land loans, and 11.3% retail plaza.

Current wording

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

Previous wording

The Company’s outstanding balance of non-owner occupied commercial real estate office loans were $56.2 million, or 5.9% of total commercial real estate loans as of September 30, 2024. The office loans are primarily low-rise, non-metropolitan buildings, located within our geographic footprint. As of September 30, 2024, the weighted average LTV was approximately 62.9% for the non-owner occupied office loan segment.

Current wording

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

Previous wording

The ACL totaled $19.8 million at September 30, 2024, compared to $19.2 million at June 30, 2024. The ACL to total loans receivable was 1.32% at September 30, 2024 compared to 1.28% at June 30, 2024. The increase in the ACL from September 30, 2024 to June 30, 2024 was attributable to unfavorable changes in the economic forecasts used in the Company’s CECL modeling, primarily due to an increase in the Federal Reserve FOMC’s median forecasted year over year U.S. civilian unemployment rate and a decrease in the annual change in the U.S. GDP.

Current wording

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

Previous wording

The allowance for credit losses on unfunded commitments as of September 30, 2024 was $1.6 million as compared to $1.3 million at June 30, 2024, an increase of $310,000. The increase in the reserve was primarily due to an increase in the contractual obligations to extend credit.

Current wording

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

Previous wording

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

Current wording

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.

Previous wording

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 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 September 30, 2024 and June 30, 2024 there were three loans being monitored in the prior twelve months under ASU-2022-02 with a total amortized basis of $4.1 million.

Current wording

Generally, management places loans on non-accrual status once the loans have become 90 days or more delinquent. A non-accrual loan is defined as a loan in which collectability is questionable and therefore interest on the loan will no longer be recognized on an accrual basis. A loan is not placed back on accrual status until the borrower has demonstrated the ability and willingness to make timely payments on the loan. A loan does not have to be 90 days delinquent in order to be classified as non-performing and may be placed on non-accrual when circumstances indicate that the borrower may be unable to meet the contractual principal or interest payments. The threshold for evaluating classified and non-performing loans specifically evaluated for individual credit loss is $250,000. Foreclosed real estate represents property acquired through foreclosure and is valued at the lower of the carrying amount or fair value, less any estimated disposal costs. The Company monitors loan modifications made to borrowers experiencing financial difficulty. As of December 31, 2024, there were four loans being monitored in the prior twelve months, under ASU-2022-02 with a total amortized basis of $6.7 million. As of December 31, 2023 there were no loans being monitored in the prior twelve months, under ASU-2022-02.

Previous wording

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

Current wording

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

Previous wording

Non-performing assets amounted to $3.6 million at September 30, 2024 and $3.7 million at June 30, 2024. Loans on non-accrual status totaled $3.6 million at September 30, 2024, of which there were three residential loans totaling $395,000 and four commercial real estate loans totaling $1.7 million that were in process of foreclosure. Included in non-accrual loans were $1.4 million of loans which were less than 90 days past due at September 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. Loans on non-accrual status totaled $3.7 million at June 30, 2024, of which there were four residential real estate loans totaling $686,000 and three commercial real estate loans totaling $1.6 million in the process of foreclosure. Included in non-accrual loans were $1.5 million of loans which were less than 90 days past due at June 30, 2024, but have a recent history of delinquency greater than 90 days past due. These loans will be returned to accrual status once they have demonstrated a history of timely payments.

Current wording

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

Previous wording

Deposits totaled $2.5 billion at September 30, 2024 and $2.4 billion at June 30, 2024, an increase of $96.7 million, or 4.1%. The Company had zero brokered deposits at September 30, 2024 and June 30, 2024, respectively. NOW deposits increased $87.9 million, or 5.0%, certificates of deposits increased $17.9 million, or 12.9%, and noninterest-bearing deposits increased $7.4 million, or 5.9%, when comparing September 30, 2024 and June 30, 2024. Savings deposits decreased $7.9 million, or 3.2%, and money market deposits decreased $8.6 million, or 7.6%, when comparing September 30, 2024 and June 30, 2024.

Current wording

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

Previous wording

At September 30, 2024, the Bank had pledged approximately $604.8 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 $362.4 million at September 30, 2024, of which there were $4.8 million long-term fixed rate borrowings, $130.0 million irrevocable municipal letters of credit and $63.0 million in overnight borrowings outstanding at September 30, 2024. At June 30, 2024, the Bank had $115.3 million in overnight borrowings, and $9.2 million of long-term borrowings with the FHLB. Interest rates on overnight borrowings are determined at the time of borrowing. The irrevocable municipal letters of credit with the FHLB have been issued to secure municipal transactional deposit accounts, on behalf of Greene County Commercial Bank.

Current wording

At December 31, 2024, the Bank had pledged approximately $616.6 million of its residential and commercial mortgage portfolio as collateral for borrowing and irrevocable municipal letters of credit at the Federal Home Loan Bank of New York (“FHLB”). The maximum amount of funding available from the FHLB was $374.6 million at December 31, 2024, of which there were $7.0 million term fixed rate borrowings, $30.0 million irrevocable municipal letters of credit and $194.1 million of overnight borrowings outstanding at December 31, 2024. At June 30, 2024, the Bank had $115.3 million in overnight borrowings, and $9.2 million of long-term borrowings with the FHLB. Interest rates on overnight borrowings are determined at the time of borrowing. The irrevocable municipal letters of credit with the FHLB have been issued to secure municipal transactional deposit accounts, on behalf of Greene County Commercial Bank.

Previous wording

The FHLB term borrowings include long-term fixed rate borrowings from the “FHLB 0% Development Advance (ZDA) Program.” The Company receives a corresponding credit related to the FHLB term fixed rate borrowings, which effectively reduces the interest rate paid to zero percent. At September 30, 2024, the Bank had a FHLB long-term fixed rate borrowing of $4.8 million at a stated rate of 5.2%, maturing March 2025.

Current wording

The FHLB term borrowings include long-term fixed rate borrowings from the “FHLB 0% Development Advance (ZDA) Program.” The Company receives a corresponding credit related to the FHLB term fixed rate borrowings, which effectively reduces the interest rate paid to zero percent. At December 31, 2024, the Bank had a FHLB long-term fixed rate borrowing of $4.8 million at a stated rate of 5.2%, maturing March 2025 and $2.2 million at a stated rate of 3.8%, maturing October 2027.

Previous wording

The Bank also pledges securities and certificates of deposit as collateral at the Federal Reserve Bank discount window for overnight borrowings and the “Bank Term Funding Program” (“BTFP”). The BTFP was established by the Federal Reserve Bank to provide additional funding to eligible depository institutions to meet the needs of their depositors. At September 30, 2024, approximately $41.3 million of collateral was available to be pledged against potential borrowings at the Federal Reserve Bank discount window and the BTFP, of which there were zero overnight borrowings outstanding with the discount window and $25.0 million outstanding with the BTFP. At September 30, 2024, the BTFP consisted of a $25.0 million long-term borrowing at a stated rate of 4.8%, maturing in January 2025.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

At September 30, 2024, there were zero other long-term borrowings and therefore, no scheduled maturities of long-term borrowings.

Current wording

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

Previous wording

Shareholders’ equity increased to $216.3 million at September 30, 2024 compared to $206.0 million at June 30, 2024, resulting primarily from net income of $6.3 million and a decrease in accumulated other comprehensive loss of $5.6 million, partially offset by dividends declared and paid of $1.5 million.

Current wording

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

Previous wording

The Federal Reserve raised its target benchmark interest rate in 2022 and into the third quarter of calendar year 2023, resulting in subsequent prime lending rate increases of 525 basis points, and a significant increase in market rates between March 2022 and December 2023. If market interest rates rise, the fair value of the fixed income bond portfolio will decrease, resulting in additional unrealized losses, and depending on the extent of the rise in interest rates, the increase in unrealized losses could be significant. The non-credit portion of unrealized losses are recorded to Accumulated Other Comprehensive Income, a component of Shareholders' Equity. A significant increase in market rates may have a negative impact on book value per share. The Company's bond portfolio is expected to mature at par and therefore the unrealized losses in the portfolio that result from higher market interest rates will decrease as the bonds become closer to maturity. However, if the Company were required to sell investment securities with an unrealized loss for any reason, including liquidity needs, the unrealized loss would become realized and reduce both net income for the reported period and regulatory capital, which as currently reported, excludes unrealized losses on investment securities.

Current wording

When market interest rates rise, the fair value of the fixed income bond portfolio will decrease, resulting in additional unrealized losses, and depending on the extent of the rise in interest rates, the increase in unrealized losses could be significant. The non-credit portion of unrealized losses are recorded to Accumulated Other Comprehensive Income, a component of Shareholders' Equity. A significant increase in market rates may have a negative impact on book value per share. The Company's bond portfolio is expected to mature at par and therefore the unrealized losses in the portfolio that result from higher market interest rates will decrease as the bonds become closer to maturity. However, if the Company were required to sell investment securities with an unrealized loss for any reason, including liquidity needs, the unrealized loss would become realized and reduce both net income for the reported period and regulatory capital, which as currently reported, excludes unrealized losses on investment securities.

Previous wording

As of the quarter ended September 30, 2024, market rates decreased as compared to June 30, 2024 due to the Federal Reserve cutting its target benchmark by 50 basis points at the September 2024 meeting. This resulted in the fair value of the fixed income bond portfolio to increase, and improve the unrealized loss position as of September 30, 2024.

Current wording

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

Previous wording

On September 17, 2019, the Board of Directors of the Company adopted a stock repurchase program. Under the repurchase program, the Company may repurchase up to 400,000 shares of its common stock. Repurchases will be made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. For the three months ended September 30, 2024, the Company did not repurchase any shares.

Current wording

On September 17, 2019, the Board of Directors of the Company adopted a stock repurchase program. Under the repurchase program, the Company may repurchase up to 400,000 shares of its common stock. Repurchases will be made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. For the three and six months ended December 31, 2024, the Company did not repurchase any shares.

Previous wording

(3)Dividends declared divided by net income. The MHC waived its right to receive dividends declared during the three months September 30, 2022, December 31, 2022, March 31, 2023, June 30, 2023, December 31, 2023, March 31, 2024 and June 30, 2024. Dividends declared during the three months ended September 30, 2023 and September 30, 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.

Current wording

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

Previous wording

Comparison of Operating Results for the Three Months Ended September 30, 2024 and 2023

Current wording

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

Previous wording

The following table sets forth certain information relating to the Company for the three months ended September 30, 2024 and 2023. For the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, are expressed in both dollars and rates. There were no tax equivalent adjustments were 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.

Current wording

The following table sets forth certain information relating to the Company for the three and six months ended December 31, 2024 and 2023. For the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, are expressed in both dollars and rates. There were no tax equivalent adjustments made. Average balances were based on daily averages. Average loan balances include non-performing loans. The loan yields include net amortization of certain deferred fees and costs that are considered adjustments to yields.

Previous wording

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

Current wording

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

Previous wording

(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 September 30, 2024 and 2023, respectively.

Current wording

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

Previous wording

Return on average assets and return on average equity are common methods of measuring operating results. Annualized return on average assets decreased to 0.93% for the three months ended September 30, 2024 as compared to 0.99% for the three months ended September 30, 2023. Annualized return on average equity decreased to 11.86% for the three months ended September 30, 2024 as compared to 14.09% for the three months ended September 30, 2023. The decrease in return on average assets and return on average equity for the three months ended September 30, 2024 was primarily the result of the balance sheet growing at a faster rate than net income growth. Net income amounted to $6.3 million for the three months ended September 30, 2024 as compared to $6.5 million at September 30, 2023, a decrease of $208,000. Average assets increased $58.2 million, or 2.2%, to $2.7 billion for the three months ended September 30, 2024 as compared to $2.6 billion for the three months ended September 30, 2023. Average equity increased $27.5 million, or 15.0%, to $211.1 million for the three months ended September 30, 2024 as compared to $183.7 million for the three months ended September 30, 2023.

Current wording

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

Previous wording

Interest income amounted to $27.8 million for the three months ended September 30, 2024 as compared to $24.7 million for the three months ended September 30, 2023, an increase of $3.1 million, or 12.6%. The increase in yields earned on loans and securities had the greatest impact on the increases in interest income when comparing the 2024 and 2023 periods. The average balances of loans also increased during the comparative periods contributing to higher interest income.

Current wording

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

Previous wording

Average loan balances increased $60.4 million and the yield on loans increased 36 basis points when comparing the three months ended September 30, 2024 and 2023. The average balance of securities increased $13.7 million and the yield on such securities increased 45 basis points when comparing the three months ended September 30, 2024 and 2023. Average interest-bearing bank balances and federal funds decreased $19.4 million and the yield increased 43 basis points when comparing the three months ended September 30, 2024 and 2023.

Current wording

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

Previous wording

Interest expense amounted to $14.6 million for the three months ended September 30, 2024 as compared to $11.2 million for the three months ended September 30, 2023, an increase of $3.4 million, or 30.3%. The increase resulted from an increase of $64.1 million in the average balances of interest-bearing liabilities and increase in the average cost of funds. Increase in the cost of NOW deposits, certificates of deposits and insured cash sweep (“ICS”) deposits had the greatest impact on interest expense reflecting higher market interest rates when comparing the three months ended September 30, 2024 and 2023.

Current wording

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

Previous wording

The cost of NOW deposits increased 54 basis points, the cost of certificates of deposit increased 49 basis points, and the cost of savings and money market deposits increased 19 basis points when comparing the three months ended September 30, 2024 and 2023.

Current wording

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

Previous wording

The average balance of NOW deposits increased $47.7 million and the average balance of certificates of deposits increased $31.0 million, partially offset by a decrease in average savings and money market deposits of $39.3 million when comparing the three months ended September 30, 2024 and 2023. Average borrowings increased $24.7 million when comparing the three months ended September 30, 2024 and 2023. Yields on interest-earning assets and costs of interest-bearing deposits increased for the three months ended September 30, 2024, as the Company repriced assets and deposits due to the higher interest rate environment. The Company determines interest rates offered on deposit accounts based on current and future economic conditions, competition, liquidity needs, the asset-liability position of the Company and growing the retention of relationships.

Current wording

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

Previous wording

Net interest income decreased $303,000 to $13.1 million for the three months ended September 30, 2024 from $13.4 million for the three months ended September 30, 2023. The decrease in net interest income was due to an increase in the average balance of interest-bearing liabilities, which increased $64.1 million when comparing the three months ended September 30, 2024 and 2023, and increases in rates paid on interest-bearing liabilities, which increased 53 basis points when comparing the three months ended September 30, 2024 and 2023. The decrease in net interest income was partially offset by the increase in the average balance of interest-earning assets, which increased $54.7 million when comparing the three months ended September 30, 2024 and 2023, and increases in interest rates on interest-earning assets, which increased 40 basis points when comparing the three months ended September 30, 2024 and 2023.

Current wording

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

Previous wording

Net interest rate spread and margin both decreased when comparing the three months ended September 30, 2024 and 2023. Net interest rate spread decreased 13 basis points to 1.76% for the three months ended September 30, 2024 as compared to 1.89% for the three months ended September 30, 2023. Net interest margin decreased 9 basis points to 2.03%, for the three months ended September 30, 2024 as compared to 2.12% for the three months ended September 30, 2023. The decrease was due to the higher interest rate environment, which caused competitive pressure to increase rates paid on deposits, resulting in higher interest expense. This was partially offset by increases in interest income on securities and loans, as they reprice at higher yields and the interest rates earned on new balances were higher than the low levels from the prior periods.

Current wording

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