Greene County Bancorp, Inc. Announces Earnings Increase

Business Wire, July 28, 2008

CATSKILL, N.Y. -- Greene County Bancorp, Inc. (the "Company") (NASDAQ: GCBC), the holding company for The Bank of Greene County and its subsidiary Greene County Commercial Bank, today reported net income for the fiscal year and quarter ended June 30, 2008. Net income for the fiscal year ended June 30, 2008 amounted to $2.7 million or $0.66 per basic and $0.65 per diluted share as compared to $2.3 million or $0.55 per basic and $0.54 per diluted share for the fiscal year ended June 30, 2007. During the fiscal year ended June 30, 2008, net interest income and noninterest income both increased compared to the fiscal year ended June 30, 2007, but were partially offset by increases in provision for loan losses and noninterest expense. Net income for the quarter ended June 30, 2008 amounted to $841,000 or $0.21 per basic and $0.20 per diluted share as compared to $369,000 or $0.09 per basic and diluted share for the quarter ended June 30, 2007, an increase of $472,000, or 127.9%. The increase reflected higher net interest income and noninterest income which were partially offset by an increased loan loss provision and higher noninterest expenses during the quarter ended June 30, 2008.

Net interest income increased $1.6 million to $12.2 million for the fiscal year ended June 30, 2008 compared to the fiscal year ended June 30, 2007 and increased $783,000 to $3.4 million for the quarter ended June 30, 2008 compared to the quarter ended June 30, 2007. Net interest spread increased 11 basis points to 3.18% from 3.07% for the fiscal years ended June 30, 2008 and 2007, respectively. Net interest margin increased 6 basis points to 3.64% from 3.58% for the same periods. Net interest spread increased 48 basis points to 3.43% from 2.95% for the quarters ended June 30, 2008 and 2007, respectively. Net interest margin increased 29 basis points to 3.78% from 3.49% for the same periods. These increases for the quarter were primarily due to the recent decreases in short-term interest rates implemented by the Federal Open Market Committee, resulting in repricing of many of the Company's interest-bearing liabilities, as well as a significant increase in total assets.

The provision for loan losses amounted to $581,000 and $279,000 for the fiscal years ended June 30, 2008 and 2007, respectively, an increase of $302,000. The provision for loan losses amounted to $132,000 and $85,000 for the quarters ended June 30, 2008 and 2007, respectively, an increase of $47,000. The increases in the level of provision were partially a result of growth in the loan portfolio and an increase in the amount of loan charge-offs, which was primarily associated with the overdraft protection program. Net charge-offs associated with the overdraft protection program increased $72,000, or 73.5% when comparing the fiscal years ended June 30, 2008 and 2007. The Company has not been an originator of "no documentation" mortgage loans and the loan portfolio does not include any mortgage loans that the Company classifies as sub-prime.

Noninterest income amounted to $4.6 million for the fiscal year ended June 30, 2008 as compared to $3.9 million for the fiscal year ended June 30, 2007, an increase of $636,000 or 16.1%. Noninterest income amounted to $1.2 million compared to $1.0 million for the quarters ended June 30, 2008 and 2007, respectively. During the fiscal year ended June 30, 2007, a pretax gain of approximately $257,000 related to the sale of the former Coxsackie branch building was recognized in noninterest income. There were no significant sales of assets during the fiscal year and quarter ended June 30, 2008. Service charges on deposit accounts increased $551,000 and $111,000 for the fiscal year and quarter ended June 30, 2008, respectively, due to higher levels of insufficient funds charges as a result of changes implemented in the Overdraft Privilege Program and an increase in the number of checking accounts. Debit card fees increased $191,000 and $46,000, respectively, for the same periods primarily due to a higher volume of transactions.

Noninterest expense amounted to $12.3 million for the fiscal year ended June 30, 2008 as compared to $11.0 million for the fiscal year ended June 30, 2007, an increase of $1.3 million or 11.8%. Noninterest expense amounted to $3.3 million for the quarter ended June 30, 2008 as compared to $3.0 million for the quarter ended June 30, 2007, an increase of $219,000 or 7.2%. Salaries and employee benefits increased $722,000 and $285,000 respectively, when comparing the fiscal years and quarters ended June 30, 2008 and 2007 due primarily to an increase in the number of employees resulting from the addition of three new branches (two branches which opened in the third quarter of fiscal 2007 and one branch which opened in January 2008) and expansion of commercial lending employees. In addition, we recognized higher expenses related to our defined benefit pension plan and our profit sharing plan. Occupancy expense and equipment and furniture expense, in the aggregate, increased approximately $127,000 when comparing the fiscal years ended June 30, 2008 and 2007 due to higher utility costs, building maintenance and increased depreciation expense associated with the opening of the new operations center in Catskill and the opening of three new branches in Catskill, Greenport, and Chatham. All other noninterest expenses, in the aggregate, increased approximately $415,000 when comparing the fiscal years ended June 30, 2008 and 2007 due to increased costs related to debit card transactions and the loyalty program, marketing costs related to deposit product promotions, and increased assessments resulting from the conversion of the Bank from a New York State-chartered financial institution to a Federally chartered institution. All other noninterest expenses, in the aggregate, decreased approximately $58,000 when comparing the quarters ended June 30, 2008 and 2007.