Overview of the Company's Activities and Risks

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

To operate successfully, the Company must manage various types of risk, including but not limited to, market or interest rate risk, credit risk, transaction risk, liquidity risk, security risk, strategic risk, reputation risk and compliance risk. While all of these risks are important, the risks of greatest significance to the Company relate to market or interest rate risk and credit risk.

Market risk is the risk of loss from adverse changes in market prices and/or interest rates. Since net interest income (the difference between interest earned on loans and investments and interest paid on deposits and borrowings) is the Company's primary source of revenue, interest rate risk is the most significant non-credit related market risk to which the Company is exposed. Net interest income is affected by changes in interest rates as well as fluctuations in the level and duration of the Company's assets and liabilities.

Interest rate risk is the exposure of the Company's net interest income to adverse movements in interest rates. In addition to directly impacting net interest income, changes in interest rates can also affect the amount of new loan originations, the ability of borrowers and debt issuers to repay loans and debt securities, the volume of loan repayments and refinancings, and the flow and mix of deposits.

Credit risk is the risk to the Company's earnings and shareholders' equity that results from customers, to whom loans have been made and to the issuers of debt securities in which the Company has invested, failing to repay their obligations. The magnitude of risk depends on the capacity and willingness of borrowers and debt issuers to repay and the sufficiency of the value of collateral obtained to secure the loans made or investments purchased.

Special Note Regarding Forward Looking Statements

This quarterly report contains forward-looking statements. Greene County Bancorp, Inc. desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and is including this statement for the express purpose of availing itself of the protections of the safe harbor with respect to all such forward-looking statements. These forward-looking statements, which are included in this Management's Discussion and Analysis and elsewhere in this quarterly report, describe future plans or strategies and include Greene County Bancorp, Inc.'s expectations of future financial results. The words "believe," "expect," "anticipate," "project," and similar expressions identify forward-looking statements. Greene County Bancorp, Inc.'s ability to predict results or the effect of future plans or strategies or qualitative or quantitative changes based on market risk exposure is inherently uncertain. Factors that could affect actual results include but are not limited to:
(a) changes in general market interest rates,

(b) general economic conditions, including unemployment rates and real estate values,

(c) legislative and regulatory changes,

(d) monetary and fiscal policies of the U.S. Treasury and the Federal Reserve,

(e) changes in the quality or composition of The Bank of Greene County's loan portfolio or the consolidated investment portfolios of The Bank of Greene County and Greene County Bancorp, Inc.,

(f) deposit flows,

(g) competition, and

(h) demand for financial services in Greene County Bancorp, Inc.'s market area.

These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements, since results in future periods may differ materially from those currently expected because of various risks and uncertainties.

Comparison of Financial Condition as of September 30, 2008 and June 30, 2008

ASSETS

Total assets of the Company were $438.6 million at September 30, 2008 as compared to $379.6 million at June 30, 2008, an increase of $59.0 million, or 15.5%. Securities available for sale amounted to $138.2 million, or 31.5% of assets, at September 30, 2008 as compared to $96.7 million, or 25.5% of assets, at June 30, 2008, an increase of $41.5 million or 42.9%. Securities purchases, including both available-for-sale and held-to-maturity issues, totaled $47.1 million between June 30, 2008 and September 30, 2008. These activities were partially offset by principal pay-downs and maturities of $5.2 million over the same time frame. Loans grew by $14.4 million or 6.0% to $254.6 million at September 30, 2008 as compared to $240.1 million at June 30, 2008.

CASH AND CASH EQUIVALENTS

Total cash and cash equivalents increased to $10.7 million at September 30, 2008 as compared to $8.7 million at June 30, 2008, an increase of $2.0 million or 23.0%. 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.

SECURITIES

Securities, including both available-for-sale and held-to-maturity issues, increased $41.5 million or 37.0% to $153.6 million at September 30, 2008 as compared to $112.1 million at June 30, 2008. Securities purchases totaled $47.1 million during the quarter ended September 30, 2008. Purchases consisted of $15.6 million of U.S. government agency bonds, $30.4 million of mortgage-backed securities, and $1.1 million of state and political subdivision securities. These purchases were funded through deposit growth, primarily from local municipalities. The deposits with municipalities require the Company to pledge securities as collateral for any uninsured balances. This increase was partially offset by principal pay-downs and maturities that amounted to $5.2 million, of which $2.3 million were mortgage-backed securities, $900,000 were state and political subdivision securities and $2.0 million were U.S. government agency securities. Additionally, during the quarter ended September 30, 2008, unrealized net losses on available for sale securities increased $247,000. Greene County Bancorp, Inc. holds 17.2% of the securities portfolio at September 30, 2008 in state and political subdivision securities to take advantage of tax savings and to promote Greene County Bancorp, Inc.'s participation in the communities in which it operates. Mortgage-backed securities and asset-backed securities held within the portfolio do not contain sub-prime loans and are not exposed to the credit risk associated with such lending.

                                                                 Carrying Value at
                                                September 30, 2008                  June 30, 2008
(Dollars in thousands)                                        Percentage                      Percentage
                                               Balance      of portfolio       Balance      of portfolio
Securities available-for-sale:
 U.S. government agencies                  $    29,632              19.3 %   $  16,146              14.4 %
 State and political subdivisions               11,039               7.2        10,850               9.7
 Mortgage-backed securities                     89,117              58.0        60,782              54.2
 Asset-backed securities                            53               0.1            49               0.1
 Corporate debt securities                       7,930               5.1         8,486               7.5
Total debt securities                          137,771              89.7        96,313              85.9
 Equity securities and other                       386               0.3           379               0.3
Total available-for-sale securities            138,157              90.0        96,692              86.2
Securities held-to-maturity:
 State and political subdivisions               15,429              10.0        15,457              13.8
Total securities                           $   153,586             100.0 %   $ 112,149             100.0 %

LOANS

Net loans receivable increased to $252.8 million at September 30, 2008 from $238.4 million at June 30, 2008, an increase of $14.4 million, or 6.0%. The loan growth experienced during the quarter primarily consisted of $6.2 million in residential mortgages, $5.1 million in commercial real estate loans, $1.6 million in construction and land loans, and $1.1 million in home equity loans. The continued low interest rate environment and strong customer satisfaction from personal service continued to enhance loan growth. If long term rates begin to rise, the Company anticipates some slow down in new loan demand as well as refinancing activities. It appears consumers continue to use the equity in their homes to fund financing needs for some activities, where in the past an installment loan may have been the choice. The Bank of Greene County continues to use a conservative underwriting policy in regard to all loan originations, and does not engage in sub-prime lending. It should be noted however that the Company is subject to the effects of any downturn, and especially, a significant decline in home values in the Company's markets could have a negative effect on the results of operations. A significant decline in home values would likely lead to a decrease in residential real estate loans and new home equity loan originations and increased delinquencies and defaults in both the consumer home equity loan and the residential real estate loan portfolios and result in increased losses in these portfolios. As of September 30, 2008, declines in home values have been modest in the Company's market area.

(Dollars in thousands)
                                               At
                                           Sept. 30,       Percentage             At             Percentage
                                              2008        of portfolio       June 30, 2008      of portfolio
Real estate mortgages
  Residential                              $  164,351              64.6 %   $       158,193              65.9 %
  Construction and land                        13,944               5.5              12,295               5.1
  Commercial                                   35,511              13.9              30,365              12.6
  Multifamily                                   1,032               0.4               1,094               0.5
Home equity loans                              25,075               9.8              23,957              10.0
Commercial loans                               10,217               4.0               9,669               4.0
Installment loans                               4,021               1.6               4,172               1.7
Passbook loans                                    400               0.2                 401               0.2
Total loans                                $  254,551             100.0 %   $       240,146             100.0 %
Deferred fees and discounts                       274                                   182
Less: Allowance for loan losses                (1,984 )                              (1,888 )
Net loans receivable                       $  252,841                       $       238,440

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is established through a provision for loan losses based on management's evaluation of the risk inherent in the loan portfolio, the composition of the loan portfolio, specific impaired loans and current economic conditions. Such evaluation, which includes a review of all loans on which full collectibility may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, historical loan loss experience and other factors that warrant recognition in providing for an allowance for loan losses. In addition, various regulatory agencies, as an integral part of their examination process, periodically review The Bank of Greene County's allowance for loan losses. Such agencies may require The Bank of Greene County to recognize additions to the allowance based on their judgment about information available to them at the time of their examination. The allowance for loan losses is increased by a provision for loan losses (which results in a charge to expense) and recoveries of loans previously charged off and is reduced by charge-offs. The level of the provision for the three months ended September 30, 2008, was driven by the continued growth of the loan portfolio and recent increases in loan delinquencies. Any future increase in the allowance for loan losses or loan charge-offs could have a material adverse effect on Greene County Bancorp, Inc.'s results of operations and financial condition.

Analysis of allowance for loan losses activity

(Dollars in thousands)                                                   Three months ended
                                                                   September 30,      September
                                                                       2008            30, 2007

Balance at the beginning of the period                             $       1,888     $      1,486
Charge-offs:
   Residential mortgage                                                       31              ---
   Installment loans to individuals                                           17               12
   Overdraft protection                                                       74               69
Total loans charged off                                                      122               81

Recoveries:
   Home equity loans                                                          --               27
   Installment loans to individuals                                            9                7
   Overdraft protection                                                       14               15
Total recoveries                                                              23               49

Net charge-offs                                                               99               32

Provisions charged to operations                                             195              143
Balance at the end of the period                                   $       1,984     $      1,597

Ratio of annualized net charge-offs to average loans outstanding            0.16 %           0.06 %
Ratio of annualized net charge-offs to nonperforming assets                20.08 %          15.80 %
Allowance for loan losses to nonperforming loans                          100.61 %         197.16 %
Allowance for loan losses to total loans receivable                         0.78 %           0.73 %

Nonaccrual Loans and Nonperforming Assets

Loans are reviewed on a regular basis. Management determines that a loan is impaired or nonperforming when it is probable at least a portion of the loan will not be collected in accordance with its contractual terms due to an irreversible deterioration in the financial condition of the borrower or the value of the underlying collateral. When a loan is determined to be impaired, the measurement of the loan impairment is based on the present value of estimated future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral. Management places loans on nonaccrual status once the loans have become 90 days or more delinquent. Nonaccrual is defined as a loan in which collectibility is questionable and therefore interest on the loan will no longer be recognized on an accrual basis. A loan does not have to be 90 days delinquent in order to be classified as nonperforming. Foreclosed real estate is considered nonperforming. The Bank of Greene County had no accruing loans delinquent more than 90 days at September 30, 2008 or June 30, 2008.

Analysis of Nonaccrual Loans and Nonperforming Assets

                                                               At September      At June 30,
(Dollars in thousands)                                           30, 2008           2008

Nonaccruing loans:
 Real estate mortgage loans
   Residential mortgages loans (one- to four-family)           $       1,391     $     1,123
   Construction and land                                                 ---              38
   Commercial mortgage loans                                              90              91
   Multifamily                                                            26              26
  Home equity                                                            331             493
  Commercial loans                                                        96             142
  Installment loans to individuals                                        38              26

Total nonaccruing loans                                                1,972           1,939

Foreclosed real estate                                                   ---             ---

Total nonperforming assets                                     $       1,972     $     1,939

Total nonperforming assets
  as a percentage of total assets                                       0.45 %          0.51 %

Total nonperforming loans to net total loans                            0.78 %          0.81 %

The Company identifies impaired loans and measures the impairment in accordance with Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan" (Statement 114), as amended. A loan is considered impaired when it is probable that the borrower will be unable to repay the loan according to the original contractual terms of the loan agreement or the loan is restructured in a troubled debt restructuring. There was $313,000 in impaired loans as of September 30, 2008 of which $122,000 were nonaccrual. The Company has allocated approximately $144,000 of the allowance for loan losses for these loans as of September 30, 2008. Interest income of $16,000 and $8,000 was recorded on nonaccrual loans based on cash payments received during the quarters ended September 30, 2008 and 2007, respectively.

DEPOSITS

Total deposits increased to $373.6 million at September 30, 2008 from $321.4 million at June 30, 2008, an increase of $52.2 million, or 16.2%. The Company has recently attracted new local municipalities including school districts to use the services of Greene County Commercial Bank, which is a limited purpose entity for such activities. Greene County Commercial Bank has sought core deposits from such entities rather than more expensive time accounts. The level of deposits held by such public entities can be cyclical and fluctuate significantly from quarter to quarter and are significantly dependent and affected by tax collection periods or special projects such as new buildings or renovations. These types of local municipal entities are also required to have certain forms of collateral pledged for amounts deposited over the FDIC insurance limits. Deposits at Greene County Commercial Bank increased $52.9 million to $99.7 million at September 30, 2008 compared to $46.8 million at June 30, 2008. This increase was primarily in NOW deposits. Interest bearing checking accounts (NOW accounts) increased $51.6 million or 64.9% to $131.1 million at September 30, 2008 as compared to $79.5 million at June 30, 2008. Savings deposits decreased $5.3 million or 7.3% to $67.4 million at September 30, 2008 as compared to $72.7 million at June 30, 2008. Money market deposits increased $6.3 million to $44.3 million at September 30, 2008. Certificates of deposit balances increased $1.8 million between June 30, 2008 and September 30, 2008. Noninterest bearing deposits decreased $2.3 million to $39.5 million at September 30, 2008.

(Dollars in thousands)
                                               At
                                           Sept. 30,       Percentage             At             Percentage
                                              2008        Of portfolio       June 30, 2008      Of portfolio

Noninterest bearing deposits               $   39,501              10.6 %   $        41,798              13.0 %
Certificates of deposit                        91,289              24.4              89,470              27.9
Savings deposits                               67,430              18.0              72,706              22.6
Money market deposits                          44,284              11.9              37,970              11.8
NOW deposits                                  131,053              35.1              79,487              24.7
Total deposits                             $  373,557             100.0 %   $       321,431             100.0 %

BORROWINGS

At September 30, 2008, The Bank of Greene County had available an Overnight Line of Credit and a One-Month Overnight Repricing Line of Credit, each in the amount of $31.8 million with the Federal Home Loan Bank. At September 30, 2008, there was a balance of $7.5 million outstanding under the Overnight Line of Credit. Interest rates on these lines is determined at the time of borrowing.

At September 30, 2008, The Bank of Greene County had term borrowings totaling $19.0 million from the FHLB, of which $14.0 million consisted of several fixed rate, fixed term advances with a weighted average rate of 3.34% and a weighted average maturity of 31 months. The remaining $5.0 million borrowing, which carried a 3.64% interest rate at September 30, 2008, is unilaterally convertible by the FHLB under certain market interest rate scenarios, including three-month LIBOR at or above 7.50%, into replacement advances for the same or lesser principal amount based on the then current market rates. If the Bank chooses not to accept the replacement funding, the Bank must repay this convertible advance, including any accrued interest, on the interest payment date.

Scheduled maturities of borrowings at September 30, 2008 were as follows:
(In thousands)
Fiscal year end

2010              $  4,000
2011                 5,000
2012                 3,000
2013                 1,000
2014                 6,000
                  $ 19,000

EQUITY

Shareholders' equity increased to $36.7 million at September 30, 2008 from $36.3 million at June 30, 2008, as net income of $809,000 was partially offset by dividends declared and paid of $305,000. Additionally, shareholders' equity decreased $151,000 as a result of unrealized losses, net of tax in the available-for-sale investment portfolio Other changes in equity, totaling an $86,000 increase, were the result of activities associated with the various stock-based compensation plans of the Company including the 2000 and 2008 Stock Option Plans and ESOP Plan.

Comparison of Operating Results for the Three Months Ended September 30, 2008 and 2007

Average Balance Sheet

The following table sets forth certain information relating to Greene County Bancorp, Inc. for the quarters ended September 30, 2008 and 2007. For the periods indicated, the total dollar amount of interest income from average interest earning assets and the resultant yields, as well as the interest expense on average interest bearing liabilities, are expressed both in dollars and rates. No tax equivalent adjustments were made. Average balances were based on daily averages. Average loan balances include non-performing loans. The loan yields include net amortization of certain deferred fees and costs that are considered adjustments to yields.

(Dollars in thousands)       2008             2008          2008            2007             2007          2007
                            Average         Interest       Average         Average         Interest       Average
                          Outstanding       Earned/        Yield/        Outstanding       Earned/        Yield/
                            Balance           Paid          Rate           Balance           Paid          Rate
Interest earning
assets:
  Loans receivable,
net1                     $     246,870     $    3,910          6.34 %   $     213,537     $    3,558          6.66 %
  Securities2                  119,921          1,377          4.59            87,251            912          4.18
  Federal funds                  2,307             11          1.91             5,958             75          5.04
  Interest bearing
bank balances                    3,006             15          2.00             4,565             52          4.56
  FHLB stock                     1,397             23          6.58               657             12          7.31
    Total interest
earning assets                 373,501          5,336          5.71 %         311,968          4,609          5.91 %
Cash and due from
banks                            6,340                                          5,718
Allowance for loan
losses                          (1,912 )                                       (1,509 )
Other non-interest
earning assets                  17,539                                         15,766
   Total assets          $     395,468                                  $     331,943

Interest bearing
liabilities:
  Savings and money
market deposits          $     115,154     $      360          1.25 %   $     111,929     $      557          1.99 %
  NOW deposits                  89,553            417          1.86            59,270            383          2.58
  Certificates of
deposit                         89,900            670          2.98            77,737            862          4.43
  Borrowings                    20,278            170          3.35             5,000             46          3.68
   Total interest
bearing liabilities            314,885          1,617          2.05 %         253,936          1,848          2.91 %
Non-interest bearing
deposits                        41,828                                         41,522
Other non-interest
bearing liabilities              2,287                                            927
Shareholders' equity            36,468                                         35,558
   Total liabilities
and equity               $     395,468                                  $     331,943

Net interest income                        $    3,719                                     $    2,761
. . .