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,

(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, Greene County Commercial Bank 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 December 31, 2008 and June 30, 2008

ASSETS

Total assets of the Company were $441.0 million at December 31, 2008 as compared to $379.6 million at June 30, 2008, an increase of $61.4 million, or 16.2%. Securities classified as both available-for-sale and held-to-maturity amounted to $147.1 million, or 33.4% of assets, at December 31, 2008 as compared to $112.1 million, or 29.5% of assets, at June 30, 2008, an increase of $35.0 million or 31.2%. Securities purchases, including both available-for-sale and held-to-maturity, totaled $54.3 million between June 30, 2008 and December 31, 2008. These activities were partially offset by principal pay-downs and maturities of $15.0 million and sales of $4.6 million over the same time frame. Loans grew by $24.0 million or 10.0% to $264.1 million at December 31, 2008 as compared to $240.1 million at June 30, 2008.

SECURITIES

Securities, including both available-for-sale and held-to-maturity issues, increased $35.0 million or 31.2% to $147.1 million at December 31, 2008 as compared to $112.1 million at June 30, 2008. Securities purchases totaled $54.3 million during the six months ended December 31, 2008. Purchases consisted of $15.6 million of U.S. government sponsored enterprises bonds, $34.6 million of mortgage-backed securities, and $4.1 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 $15.0 million, of which $5.2 million were mortgage-backed securities, $4.2 million were state and political subdivision securities and $5.5 million were U.S. government sponsored enterprises securities, and sales of mortgage-backed securities of $4.6 million.

During the quarter ended December 31, 2008, $23.8 million of securities available-for-sale were transferred to held-to-maturity and included primarily mortgage-backed securities. These securities were transferred at fair value which reflected a net unrealized loss of $338,000. This unrealized loss is being accreted to other comprehensive income over the remaining average lives of these securities. Additionally, during the six months ended December 31, 2008, unrealized net gains on securities increased $605,000. Greene County Bancorp, Inc. holds 17.9% of the securities portfolio at December 31, 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
                                                December 31, 2008                  June 30, 2008
(Dollars in thousands)                                       Percentage                      Percentage
                                              Balance      of portfolio       Balance      of portfolio
Securities available-for-sale:
 U.S. government sponsored enterprises     $   26,494              18.0 %   $  16,146              14.4 %
 State and political subdivisions              10,907               7.4        10,850               9.7
 Mortgage-backed securities                    62,667              42.6        60,782              54.2
 Asset-backed securities                           48               0.1            49               0.1
 Corporate debt securities                      8,107               5.5         8,486               7.5
Total debt securities                         108,223              73.6        96,313              85.9
 Equity securities and other                       28               0.0           379               0.3
Total available-for-sale securities           108,251             73.60        96,692              86.2
Securities held-to-maturity:
 State and political subdivisions              15,410              10.5        15,457              13.8
 Mortgage-backed securities                    23,077              15.7           ---               ---
 Other                                            337               0.2           ---               ---
Total held-to-maturity securities              38,824              26.4        15,457              13.8
Total securities                           $  147,075             100.0 %   $ 112,149             100.0 %

LOANS

Net loans receivable increased to $262.2 million at December 31, 2008 from $238.4 million at June 30, 2008, an increase of $23.8 million, or 10.0%. The loan growth experienced during the six months primarily consisted of $13.0 million in residential mortgages, $6.6 million in commercial real estate loans, $1.0 million in construction and land loans, $2.2 million in home equity loans and $1.4 million in commercial 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 December 31, 2008, declines in home values have been modest in the Company's market area.

(Dollars in thousands)
                                               At
                                            December          Percentage           At               Percentage
                                            31, 2008        of portfolio      June 30, 2008       of portfolio
Real estate mortgages
  Residential                              $   171,156              64.8 %   $       158,193              65.9 %
  Construction and land                         13,256               5.0              12,295               5.1
  Commercial                                    36,993              14.0              30,365              12.6
  Multifamily                                    1,019               0.4               1,094               0.5
Home equity loans                               26,199               9.9              23,957              10.0
Commercial loans                                11,112               4.2               9,669               4.0
Installment loans                                3,889               1.5               4,172               1.7
Passbook loans                                     439               0.2                 401               0.2
Total loans                                $   264,063             100.0 %   $       240,146             100.0 %
Deferred fees and costs                            316                                   182
Less: Allowance for loan losses                 (2,208 )                              (1,888 )
Net loans receivable                       $   262,171                       $       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 loss. 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 net charge-offs. The level of the provision for the six months ended December 31, 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)                                                    Six months ended
                                                                    December 31,       December
                                                                        2008           31, 2007

Balance at the beginning of the period                              $       1,888     $     1,486
Charge-offs:
   Residential mortgage                                                        65             ---
   Commercial loan                                                             85              15
   Installment loans to individuals                                            49              16
   Overdraft protection                                                       139             115
Total loans charged off                                                       338             146

Recoveries:
   Residential mortgage                                                         1             ---
   Home equity loans                                                          ---              27
   Installment loans to individuals                                            18              19
   Overdraft protection                                                        26              30
Total recoveries                                                               45              76

Net charge-offs                                                               293              70

Provisions charged to operations                                              613             278
Balance at the end of the period                                    $       2,208     $     1,694

Ratio of net charge-offs to average loans outstanding, annualized            0.23 %          0.06 %
Ratio of net charge-offs to nonperforming assets, annualized                31.97 %          7.93 %
Allowance for loan loss to nonperforming loans                             127.41 %         95.92 %
Allowance for loan loss to total loans receivable                            0.84 %          0.76 %

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 90 days or more at December 31, 2008 or June 30, 2008.

Analysis of Nonaccrual Loans and Nonperforming Assets

                                                               At December      At June 30,
(Dollars in thousands)                                           31, 2008              2008
Nonaccruing loans:
 Real estate mortgage loans:
   Residential mortgages loans (one- to-four family)           $      1,082     $     1,123
   Construction and land loans                                           13              38
   Commercial mortgage loans                                             89              91
   Multifamily mortgage loans                                            26              26
  Home equity                                                           344             493
  Commercial loans                                                      142             142
  Installment loans to individuals                                       37              26
Total nonaccruing loans                                               1,733           1,939

Foreclosed real estate                                                  100             ---
Total nonperforming assets                                     $      1,833     $     1,939

Total nonperforming assets as a percentage of total assets             0.42 %          0.51 %
Total nonperforming loans to total loans                               0.66 %          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. Impaired loans totaled $248,000 as of December 31, 2008 of which $122,000 were nonaccrual. The Company has allocated approximately $80,000 of the allowance for loan losses for impaired loans as of December 31, 2008. Interest income of $32,000 and $46,000 was recorded on nonaccrual loans based on cash payments received during the six months ended December 31, 2008 and 2007, respectively.

DEPOSITS

Total deposits increased to $381.4 million at December 31, 2008 from $321.4 million at June 30, 2008, an increase of $60.0 million, or 18.7%. 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 $56.1 million to $102.9 million at December 31, 2008 compared to $46.8 million at June 30, 2008. This increase was primarily in NOW deposits. Interest bearing checking accounts (NOW accounts) increased $56.4 million or 70.9% to $135.9 million at December 31, 2008 as compared to $79.5 million at June 30, 2008. Savings deposits decreased $3.0 million or 4.1% to $69.7 million at December 31, 2008 as compared to $72.7 million at June 30, 2008. Money market deposits increased $6.8 million to $44.8 million at December 31, 2008. Certificates of deposit balances increased $5.0 million between June 30, 2008 and December 31, 2008. Noninterest bearing deposits decreased $5.3 million to $36.5 million at December 31, 2008.

(Dollars At Percentage At Percentage in thousands) December 31, 2008 of portfolio June 30, 2008 of portfolio

Noninterest           $36,494          9.6%        $41,798       13.0%
bearing deposits
Certificates of       94,454            24.8       89,470          27.9
deposit
Savings deposits      69,722            18.3       72,706          22.6
Money market          44,816            11.7       37,970          11.8
deposits
NOW deposits          135,915           35.6       79,487          24.7
Total deposits       $381,401         100.0%      $321,431       100.0%

BORROWINGS

At December 31, 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 $37.7 million with the Federal Home Loan Bank. At December 31, 2008, there were no balances outstanding under these facilities. Interest rates on these lines are determined at the time of borrowing.

At December 31, 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 28 months. The remaining $5.0 million borrowing, which carried a 3.64% interest rate at December 31, 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 December 31, 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 $38.1 million at December 31, 2008 from $36.3 million at June 30, 2008, as net income of $1.8 million was partially offset by dividends declared and paid of $611,000. Additionally, shareholders' equity increased $371,000 as a result of unrealized securities gains, net of tax. Other changes in equity, totaling an $185,000 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 Six Months and Quarter Ended December 31, 2008 and 2007

Average Balance Sheet

The following table sets forth certain information relating to Greene County Bancorp, Inc. for the six months and quarters ended December 31, 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 for the quarters and six months ended December 31, 2008 and 2007. 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.

                  Six Months Ended December 31, 2008 and 2007
(Dollars in              2008       2008    2008      2007       2007    2007
thousands)
                        Average   Interest Average   Average   Interest Average
                      Outstanding Earned/  Yield/  Outstanding Earned/  Yield/
                        Balance     Paid    Rate     Balance     Paid    Rate
Interest earning
assets:
  Loans receivable,    $253,327    $7,989   6.31%   $217,494    $7,214   6.63%
net1
  Securities2           137,074    3,084     4.50    89,330     1,885     4.22
  Federal funds          1,575       12      1.52     7,147      172      4.81
  Interest bearing       1,939       18      1.86     3,888       84      4.32
bank balances
  FHLB stock             1,449       35      4.83      663        26      7.84
    Total interest      395,364    11,138   5.63%    318,522    9,381    5.89%
earning assets
Cash and due from        6,058                        5,508
banks
Allowance for loan      (1,936)                      (1,564)
losses
Other non-interest      17,965                       15,071
earning assets
   Total assets        $417,451                     $337,537


Interest bearing
liabilities:
  Savings and money    $113,149     $684    1.21%   $108,192    $1,054   1.95%
market deposits
  NOW deposits          112,879    1,062     1.88    67,566      922      2.73
  Certificates of       91,360     1,354     2.96    79,694     1,750     4.39
deposit
  Borrowings            21,426      342      3.19     5,130       93      3.63
   Total interest       338,814    3,442    2.03%    260,582    3,819    2.93%
bearing liabilities
Non-interest bearing    39,601                       40,760
deposits
Other non-interest       2,255                         314
bearing liabilities
Shareholders' equity    36,781                       35,881
   Total liabilities   $417,451                     $337,537
and equity

Net interest income                $7,696                       $5,562

Net interest rate                           3.60%                        2.96%
spread

Net interest margin                         3.89%                        3.49%

Average interest
earning assets to
average interest                           116.69%                      122.23%
bearing liabilities

1 Calculated net of deferred loan fees and costs, loan discounts, and loans in process.
2 Includes tax-free securities, mortgage-backed securities and asset-backed securities.

                    Quarter Ended December 31, 2008 and 2007

(Dollars in                  2008     2008    2008        2007     2007    2007
thousands)
                          Average Interest Average     Average Interest Average
                      Outstanding  Earned/  Yield/ Outstanding  Earned/  Yield/
                          Balance     Paid    Rate     Balance     Paid    Rate
Interest earning
. . .