10-Q - GBNY - Equibles

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-39883

Generations Bancorp NY, Inc.

(Exact name of registrant as specified in its charter)

Maryland		85-3659943
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

20 East Bayard Street

Seneca Falls , New York **** 13148

(Address of principal executive offices)

(Zip Code)

( 315 ) 568-5855

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Ticker Symbol		Name of each exchange on which registered
Common Stock, $0.01 par value		GBNY		The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐

Non-accelerated filer ☒		Smaller reporting company ☒
		Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

2,341,152 shares of the Registrant’s common stock, par value $0.01 per share, were issued and outstanding as of May 5, 2023.

Table of Contents Index


	Page
PART I. FINANCIAL INFORMATION	1

Item 1. Condensed Consolidated Financial Statements	1

Condensed Consolidated Statements of Financial Condition – March 31, 2023 (Unaudited) and December 31, 2022	1

Condensed Consolidated Statements of Income – Three-month Periods Ended March 31, 2023 and 2022 (Unaudited)	2

Condensed Consolidated Statements of Comprehensive Income (Loss) – Three-month Periods Ended March 31, 2023 and 2022 (Unaudited)	3

Condensed Consolidated Statements of Changes in Shareholders’ Equity – Three-month Periods Ended March 31, 2023 and 2022 (Unaudited)	4

Condensed Consolidated Statements of Cash Flows – Three-month Periods Ended March 31, 2023 and 2022 (Unaudited)	5

Notes to Condensed Consolidated Financial Statements (Unaudited)	6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	49

Item 3. Quantitative and Qualitative Disclosures About Market Risk	57

Item 4. Controls and Procedures	57

PART II. OTHER INFORMATION	57

Item 1. Legal Proceedings	57

Item 1A. Risk Factors	57

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	58

Item 3. Defaults Upon Senior Securities	58

Item 4. Mine Safety Disclosures	58

Item 5. Other Information	58

Item 6. Exhibits	59

Signatures	60

Table of Contents PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Generations Bancorp NY, Inc.

Condensed Consolidated Statements of Financial Condition


	At March 31,		At December 31,
(In thousands, except share data)	2023		2022
	(Unaudited)
ASSETS:
Cash and due from banks	$	4,021	$	3,955
Interest earning deposits		2,020		4,049
Total cash and cash equivalents		6,041		8,004
Interest-earning time deposits in banks		680		—
Investment securities available-for-sale, at fair value		33,208		33,050
Investment securities held-to-maturity (fair value 2023-$1,309, 2022-$1,301)		1,552		1,587
Equity investment securities, at fair value		315		307
Federal Home Loan Bank stock, at cost		990		1,740
Loans		311,024		306,377
Less: Allowance for credit losses		(2,653)		(2,497)
Loans receivable, net		308,371		303,880
Premises and equipment, net		14,757		14,863
Bank-owned life insurance		7,379		7,351
Pension plan asset		11,240		10,697
Foreclosed real estate & repossessed assets		152		12
Goodwill		792		792
Intangible assets, net		702		718
Accrued interest receivable		1,319		1,304
Other assets		1,704		1,988
Total assets	$	389,202	$	386,293

LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Noninterest-bearing	$	52,518	$	54,609
Interest-bearing		284,515		263,069
Total deposits		337,033		317,678
Short-term borrowings		1,940		16,200
Long-term borrowings		8,357		10,334
Advances from borrowers for taxes and insurance		1,825		2,653
Other liabilities		2,526		2,100
Total liabilities		351,681		348,965
Shareholders' equity:
Preferred stock, par value $0.01; 1,000,000 shares authorized; none issued		—		—
Common stock, par value $0.01; 14,000,000 shares authorized in 2023 and 2022; 2,341,152 and 2,348,748 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively		23		24
Additional paid in capital		22,983		23,002
Retained earnings		22,353		22,512
Accumulated other comprehensive loss		(6,107)		(6,467)
Stock held in rabbi trust		(698)		(698)
Unearned ESOP shares, at cost		(1,033)		(1,045)
Total shareholders' equity		37,521		37,328
Total liabilities and shareholders' equity	$	389,202	$	386,293

The accompanying notes are an integral part of the condensed consolidated financial statements.

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Condensed Consolidated Statements of (Loss) Income (Unaudited)


	Three Months Ended March 31,
(In thousands, except per share data)	2023		2022

Interest and dividend income:
Loans, including fees	$	3,348	$	2,950
Debt and equity securities:
Taxable		239		162
Tax-exempt		101		112
Interest-earning deposits		45		16
Other		39		9
Total interest income		3,772		3,249
Interest expense:
Deposits		1,122		277
Short-term borrowings		88		—
Long-term borrowings		38		77
Total interest expense		1,248		354
Net interest income		2,524		2,895
Provision for loan losses		165		150
Provision for unfunded commitments		—		—
Provision for available-for-sale securities		—		—
Total provision for credit losses		165		150
Net interest income after provision for credit losses		2,359		2,745
Noninterest income:
Banking fees and service charges		364		375
Mortgage banking income, net		8		9
Insurance commissions		129		197
Earnings on bank-owned life insurance		28		27
Change in fair value on equity securities		8		(12)
Other charges, commissions & fees		39		20
Total noninterest income		576		616
Noninterest expense:
Compensation and benefits		1,408		1,235
Occupancy and equipment		513		485
Service charges		507		506
Regulatory assessments		64		63
Professional and other services		191		190
Advertising		107		108
Other expenses		337		303
Total noninterest expenses		3,127		2,890
(Loss) Income before income tax (benefit) expense		(192)		471
Income tax (benefit) expense		(40)		75
Net (loss) income	$	(152)	$	396
Net (loss) income available to common shareholders	$	(152)	$	396
Basic and diluted (losses) earnings per common share	$	(0.07)	$	0.17

The accompanying notes are an integral part of the condensed consolidated financial statements.

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Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)


	Three Months Ended March 31,
(In thousands)	2023		****	2022

Net (loss) income	$	(152)		$	396
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities available-for-sale:
Unrealized holding gains (losses) arising during the period		415			(2,245)
Net unrealized (gains) losses on securities available-for-sale		415			(2,245)
Defined benefit pension plan:
Reclassification of amortization of net losses recognized in net pension expense		40			—
Net change in defined benefit pension plan asset		40			—
Other comprehensive income (loss), before tax		455			(2,245)
Tax effect		(95)			471
Other comprehensive income (loss), net of tax	****	360		****	(1,774)
Total comprehensive income (loss)	$	208		$	(1,378)

The accompanying notes are an integral part of the condensed consolidated financial statements.

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Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)


	****			****			****			Accumulated			Stock			****			****
				Additional						Other			Held by			Unearned
	Common			Paid in			Retained			Comprehensive			Rabbi			ESOP
(In thousands, except share data)	Stock		****	Capital		****	Earnings		****	Loss		****	Trust		****	Shares		****	Total
Balance, December 31, 2022	$	24		$	23,002		$	22,512		$	(6,467)		$	(698)		$	(1,045)		$	37,328
Net loss		—			—			(152)			—			—			—			(152)
Other comprehensive income		—			—			—			360			—			—			360
Effect of stock repurchase plan		(1)			(73)			(7)			—			—			—			(81)
Stock-based compensation		—			53			—			—			—			—			53
ESOP shares committed to be released		—			1			—			—			—			12			13
Balance, March 31, 2023	$	23		$	22,983		$	22,353		$	(6,107)		$	(698)		$	(1,033)		$	37,521

Balance, December 31, 2021	$	26		$	24,494		$	21,669		$	(966)		$	(654)		$	(1,090)		$	43,479
Net income		—			—			396			—			—			—			396
Other comprehensive loss		—			—			—			(1,774)			—			—			(1,774)
ESOP shares committed to be released		—			2			—			—			—			12			14
Balance, March 31, 2022	$	26		$	24,496		$	22,065		$	(2,740)		$	(654)		$	(1,078)		$	42,115

The accompanying notes are an integral part of the condensed consolidated financial statements.

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Condensed Consolidated Statements of Cash Flows (Unaudited)


	Three Months Ended March 31,
(In thousands)	2023		2022
OPERATING ACTIVITIES
Net (loss) income	$	(152)	$	396
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		165		150
Deferred income tax benefit		(65)		(407)
Change in fair value on equity securities		(8)		12
Depreciation		238		235
Amortization of intangible asset		16		16
Amortization of fair value adjustment to purchased loan portfolio		(17)		(17)
ESOP expense		13		14
Stock-based compensation		53		—
Amortization of deferred loan costs		43		27
Earnings on bank-owned life insurance		(28)		(27)
Change in pension plan assets		(503)		(581)
Net amortization of premiums and discounts on investment securities		31		75
Net change in accrued interest receivable		(15)		(25)
Net change in other assets and liabilities		(148)		(464)
Net cash used in operating activities	****	(377)	****	(596)
INVESTING ACTIVITIES
Purchase of investment securities available-for-sale		(835)		(2,258)
Net change in interest-earning time deposits in banks		(680)		—
Net proceeds from the redemption of Federal Home Loan Bank stock		750		115
Proceeds from maturities and principal reductions of:
Available-for-sale investment securities		1,062		837
Held-to-maturity investment securities		34		62
Proceeds from sale of:
Real estate and repossessed assets acquired		112		27
Premises and equipment		15		—
Net change in loans		(4,934)		3,475
Purchase of premises and equipment		(147)		(72)
Net cash (used in) provided by investing activities	****	(4,623)	****	2,186
FINANCING ACTIVITIES
Net change in demand deposits, savings accounts, and money market accounts		(10,095)		2,156
Net change in time deposits		29,450		706
Net change in short-term borrowings		(14,260)		—
Payments on long-term borrowings		(1,977)		(1,782)
Effect of stock repurchase plan		(81)		—
Net cash provided by financing activities	****	3,037	****	1,080
Net change in cash and cash equivalents		(1,963)		2,670
Cash and cash equivalents at beginning of period		8,004		20,997
Cash and cash equivalents at end of period	$	6,041	$	23,667
Supplemental Cash Flows Information
Cash paid during the period for:
Interest	$	1,155	$	348
Transfer of loans to foreclosed real estate and repossessed assets		252		—

The accompanying notes are an integral part of the condensed consolidated financial statements.

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Generations Bancorp NY, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of Operations ****

Generations Bancorp NY, Inc. (“Generations Bancorp”) is a Maryland corporation that was organized in August 2020 as part of the Seneca-Cayuga Bancorp, Inc. (“Seneca-Cayuga”) conversion from the mutual holding company structure to a fully public stock holding company structure. Prior to the conversion, Generations Bank was the wholly owned subsidiary of Seneca-Cayuga and The Seneca Falls Savings Bank, MHC (“MHC”), which owned 60.1% of Seneca-Cayuga’s common stock. On January 13, 2021, Generations Bancorp sold 1,477,575 of its common stock in a stock offering, (which included 109,450 shares issued to the ESOP) representing the ownership interest of the MHC for gross proceeds of $14.8 million and net proceeds of $13.2 million. The exchange ratio of previously held shares by public shareholders (i.e., shareholders other than the MHC) of Seneca-Cayuga was 0.9980 as applied in the conversion offering. References herein to the “Company” include Generations Bancorp subsequent to the completion of the conversion and Seneca-Cayuga prior to the completion of the conversion.

Generations Bank (the “Bank”) is a federally chartered savings bank headquartered in Seneca Falls, New York. We were organized in 1870 and have operated continuously since that time in the northern Finger Lakes Region of New York State which is located in the central to northwestern portion of New York State.

Generations Commercial Bank (the “Commercial Bank”) is a New York State chartered limited-purpose commercial bank formed expressly to enable local municipalities to deposit public funds with the Bank in accordance with existing NYS municipal law and is a wholly owned subsidiary of the Bank.

The Bank maintains its executive offices and main retail location in Seneca Falls, New York, in addition to seven full-service offices and one drive-through facility located Auburn, Farmington, Geneva, Medina, Phelps, Union Springs, and Waterloo, New York. The Bank is a community-oriented savings institution whose business primarily consists of accepting deposits from customers within its market area and investing those funds in loans secured by one- to four-family residential real estate, commercial real estate, business or personal assets, and in investment securities.

In addition, Generations Agency, Inc. (the “Agency”) offers personal and commercial insurance products through licensed employees in the same market area. The Agency is the Bank’s wholly owned subsidiary.

Interim Financial Statements

The interim condensed consolidated financial statements as of March 31, 2023, and for the three months ended March 31, 2023 and 2022, are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. Such adjustments are the only adjustments contained in these unaudited consolidated financial statements. These unaudited condensed consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission, and therefore certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been omitted. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be achieved for the remainder of the year ending December 31, 2023, or any other period.

Certain prior period data presented in the consolidated financial statements has been reclassified to conform to current year presentation. The accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto of the Company for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Reference is made to the accounting policies of the Company described in the Notes to Financial Statements contained in the Annual Report on Form 10-K for the year ended December 31, 2022.

The Company's significant accounting policies followed in the preparation of the unaudited consolidated financial statements are disclosed in Note 2 of the audited financial statements and notes for the year ended December 31, 2022 6

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Generations Bancorp NY, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

and are contained in the Company's Annual Report on Form 10-K. There have been no significant changes to the application of significant accounting policies since December 31, 2022, except for the following:

Accounting Standards Adopted in 2023

On January 1, 2023, the Company adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASC 326). This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally applies to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities, and some off-balance sheet credit exposures such as unfunded commitments to extend credit. Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses. In addition, CECL made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities if management does not intend to sell and does not believe that it is more likely than not, they will be required to sell. The Company adopted ASC 326 and all related subsequent amendments thereto effective January 1, 2023 using the modified retrospective approach for all financial assets measured at amortized cost and off-balance sheet credit exposures. The Company adopted ASC 326 using the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior to January 1, 2023. As of December 31, 2022, the Company did not have any other-than-temporarily impaired investment securities. Therefore, upon adoption of ASC 326, the Company determined that an allowance for credit losses on available-for-sale securities was not deemed material.

Allowance for Credit Losses – Held-to-Maturity Securities

Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type. Accrued interest receivable on held-to-maturity debt securities totaled $1,000 at March 31, 2023 and was excluded from the estimate of credit losses. Management classifies the held-to-maturity portfolio into the following major security types: mortgage-backed securities or structured certificates of deposit. All the mortgage-backed securities held by the Company are issued by government-sponsored corporations. These securities are either explicitly or implicitly guaranteed by the U.S. government and have a long history of no credit losses. The structured certificates of deposit are all fully insured by the Federal Deposit Insurance Corporation as no one security exceeds the $250,000 insurance limit. As a result, no allowance for credit losses was recorded on held-to-maturity at March 31, 2023.

Allowance for Credit Losses – Available-for-Sale Securities

For available-for-sale securities, management evaluates all investments in an unrealized loss position on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security, the security is written down to fair value and the entire loss is recorded in earnings. If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost, performance on any underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments, and adverse conditions specifically related to the security. If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security and any excess is recorded as an allowance for credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any amount of unrealized loss that has not been recorded through an allowance for credit loss is recognized in other comprehensive income. Changes in the allowance for credit loss are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance for credit loss when management believes an available for sale security is confirmed to be uncollectible 7

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Generations Bancorp NY, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

or when either of the criteria regarding intent or requirement to sell is met. At March 31, 2023, there was no allowance for credit loss related to the available for sale portfolio. Accrued interest receivable on available for sale debt securities totaled $309,000 at March 31, 2023 and was excluded from the estimate of credit losses.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts and deferred fees and costs. Accrued interest receivable related to loans totaled $987,000 at March 31, 2023 and was reported in accrued interest receivable on the consolidated balance sheets. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using methods that approximate a level yield without anticipating prepayments. The accrual of interest is generally discontinued when a loan becomes 90 days past due and is not well collateralized and in the process of collection, or when management believes, after considering economic and business conditions and collection efforts, that the principal or interest will not be collectible in the normal course of business. Past due status is based on contractual terms of the loan. A loan is considered to be past due when a scheduled payment has not been received 30 days after the contractual due date. All accrued interest is reversed against interest income when a loan is placed on nonaccrual status. Interest received on such loans is accounted for using the cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, there is a sustained period of repayment performance, and future payments are reasonably assured.

Allowance for Credit Losses - Loans

The allowance for credit losses is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Accrued interest receivable is included in the estimate of credit losses. The allowance for credit losses represents management’s estimate of lifetime credit losses inherent in loans as of the balance sheet date. The allowance for credit losses is estimated by management using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The Company measures expected credit losses for loans on a pooled basis when similar risk characteristics exist. The Company has identified the following portfolio segments: multi-family, commercial business, nonresidential real estate, manufactured homes, home equity loans, and residential real estate, commercial lines of credit, direct automobile, indirect automobile, manufactured homes, other consumer, other consumer lines of credit, recreational vehicles, student loans, and residential construction loans. The Company utilizes the advanced vintage, probability of default, and weighted average remaining maturity methods considering relevant information about past events, current conditions, and reasonable and supportable forecasts. The Company utilizes a reasonable and supportable forecast period of 3 – 10 years depending upon the portfolio segment. Subsequent to this forecast period the Company reverts, on a straight-line basis over the applicable segment period, to historical loss experience to inform its estimate of losses for the remaining contractual life of each portfolio.

Additionally, the allowance for credit losses calculation includes subjective adjustments for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience. These qualitative adjustments may increase or reduce reserve levels and include adjustments for volume and loan mix, economics, and delinquency and loan quality. Loans that do not share risk characteristics are evaluated on an individual basis. When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the expected credit losses are based on the fair value of collateral at the reporting date adjusted for selling costs as appropriate.

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Generations Bancorp NY, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Allowance for Credit Losses – Unfunded Commitments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit issued to meet customer financing needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for unfunded commitments in the Company’s income statements. The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur as well as any third-party guarantees. The allowance for unfunded commitments is included in other liabilities on the Company’s consolidated balance sheets.

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Generations Bancorp NY, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

2. Accumulated Other Comprehensive Loss

The balances and changes in the components of accumulated other comprehensive loss, net of tax, are as follows:


	Unrealized			****			Accumulated
	(Losses) Gains			Defined			Other
Three Months Ended March 31,	on Securities			Benefit			Comprehensive
(In thousands)	Available-for-Sale		****	Pension Plan		****	Loss

Balance, December 31, 2022	$	(3,905)		$	(2,562)		$	(6,467)
Other comprehensive gain before reclassifications		328			—			328
Amounts reclassified from AOCI to the statements of (loss) income		—			32			32
Net current-period other comprehensive income		328			32			360
Balance, March 31, 2023	$	(3,577)		$	(2,530)		$	(6,107)

Balance, December 31, 2021	$	215		$	(1,181)		$	(966)
Other comprehensive loss before reclassifications		(1,774)			—			(1,774)
Net current-period other comprehensive loss		(1,774)			—			(1,774)
Balance, March 31, 2022	$	(1,559)		$	(1,181)		$	(2,740)

The following table presents the amounts reclassified out of each component of accumulated other comprehensive loss:




	Three months ended March 31,				Affected Line Item in the
(In thousands)	2023		2022		Statement of Income

Defined benefit pension plan:
Retirement plan net losses recognized in net periodic pension cost	$	40	$	—	Compensation and benefits
Tax effect		(8)		—	Income tax (benefit) expense
	$	32	$	—	Net (loss) income

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Generations Bancorp NY, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

3. Earnings Per Common Share

Basic earnings per common share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is calculated in a manner similar to that of basic earnings per share except that the weighted-average number of common shares outstanding is increased to include the number of incremental common shares that would have been outstanding under the treasury stock method if all potentially dilutive common shares (such as stock options) issued became vested during the period. Based on the calculation, there was no impact on earnings per share as the stock options were considered anti-dilutive for the three months ended March 31, 2023. On March 28, 2022, the Board of Directors authorized a stock repurchase program to repurchase approximately 83,300 shares, or approximately 3.4%, of the Company’s outstanding common stock. On May 19, 2022, the 2022 Equity Incentive Plan (the “Plan”) which includes initial grants of restricted stock and stock options to outside directors, was approved by the Company’s stockholders. On June 14, 2022, the Board of Directors of the Company approved restricted stock and stock option grants to senior management. An aggregate of 132,977 stock options and 53,191 shares of restricted stock were granted to directors and senior management during the period ended June 30, 2022. The grants to directors and senior management vest over a five-year period in equal annual installments, with the first installment vesting on the first anniversary date of the grant and succeeding installments on each anniversary thereafter, through 2027. On July 25, 2022, the Board of Directors authorized a second stock repurchase program to acquire up to 87,000 shares, or approximately 3.6%, of the Company’s outstanding common stock at the conclusion of the first stock repurchase program. Unallocated common shares held by the ESOP are not included in the weighted-average number of common shares outstanding for purposes of calculating basic earnings per common share until they are committed to be released.

The following table sets forth the calculation of basic and diluted earnings per share.


	Three Months Ended March 31,
(In thousands, except per share data)	2023		2022
Net (loss) income available to common stockholders	$	(152)	$	396
Weighted-average common shares outstanding		2,240		2,351
(Losses) Earnings per common share - basic and diluted	$	(0.07)	$	0.17

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**4.**Securities

Investments in securities available-for-sale, held-to-maturity, and equity are summarized as follows:


		At March 31, 2023
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
(in thousands)	****	Cost		****	Gains		****	Losses		****	Value
Securities available-for-sale:
Residential mortgage-backed - US agency and Government Sponsored Enterprise ("GSE")		$	24		$	—		$	(1)		$	23
Corporate bonds			20,789			21			(2,931)			17,879
State and political subdivisions			16,922			4			(1,620)			15,306
Total securities available-for-sale		$	37,735		$	25		$	(4,552)		$	33,208

Securities held-to-maturity:
Structured certificates of deposit		$	650		$	—		$	(215)		$	435
Residential mortgage-backed - US agency and GSEs			902			1			(29)			874
Total securities held-to-maturity		$	1,552		$	1		$	(244)		$	1,309

Equity securities:
Large cap equity mutual fund		$	40								$	40
Other mutual funds			275									275
Total of equity securities		$	315								$	315

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		At December 31, 2022
	****				Gross			Gross			****
	****	Amortized		****	Unrealized		****	Unrealized		****	Fair
(in thousands)	****	Cost		****	Gains		****	Losses		****	Value
Securities available-for-sale:
Residential mortgage-backed - US agency and GSEs		$	25		$	—		$	(1)		$	24
Corporate bonds			21,032			58			(2,896)			18,194
State and political subdivisions			16,935			2			(2,105)			14,832
Total securities available-for-sale		$	37,992		$	60		$	(5,002)		$	33,050

Securities held-to-maturity:
Structured certificates of deposit		$	650		$	—		$	(252)		$	398
Residential mortgage-backed - US agency and GSEs			937			1			(35)			903
Total securities held-to-maturity		$	1,587		$	1		$	(287)		$	1,301

Equity securities:
Large cap equity mutual fund		$	37								$	37
Other mutual funds			270									270
Total of equity securities		$	307								$	307

Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, is as follows:


		At March 31, 2023
		12 Months or Less						More than 12 Months						Total
					Gross						Gross						Gross
	****	Fair		****	Unrealized		****	Fair		****	Unrealized		****	Fair		****	Unrealized
(in thousands)	****	Value		****	Losses		****	Value		****	Losses		****	Value		****	Losses
Securities available-for-sale:
Residential mortgage-backed - US agency and GSEs		$	—		$	—		$	18		$	(1)		$	18		$	(1)
Corporate bonds			5,778			(278)			11,041			(2,653)			16,819			(2,931)
State and political subdivisions			8,640			(725)			5,794			(895)			14,434			(1,620)
Total securities available-for-sale		$	14,418		$	(1,003)		$	16,853		$	(3,549)		$	31,271		$	(4,552)
Securities held-to-maturity:
Structured certificates of deposit		$	435		$	(215)		$	—		$	—		$	435		$	(215)
Residential mortgage-backed - US agency and GSEs			607			(21)			196			(8)			803			(29)
Total securities held-to-maturity		$	1,042		$	(236)		$	196		$	(8)		$	1,238		$	(244)

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	At December 31, 2022
	12 Months or Less				More than 12 Months				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses
Securities available-for-sale:
Residential mortgage-backed - US agency and GSEs	$	—	$	—	$	19	$	(1)	$	19	$	(1)
Corporate bonds		7,028		(725)		8,105		(2,171)		15,133		(2,896)
State and political subdivisions		10,330		(1,421)		4,133		(684)		14,463		(2,105)
Total securities available-for-sale	$	17,358	$	(2,146)	$	12,257	$	(2,856)	$	29,615	$	(5,002)
Securities held-to-maturity:
Structured certificates of deposit	$	—	$	—	$	398	$	(252)	$	398	$	(252)
Residential mortgage-backed - US agency and GSEs		691		(26)		206		(9)		897		(35)
Total securities held-to-maturity	$	691	$	(26)	$	604	$	(261)	$	1,295	$	(287)

The Company conducts a formal review of investment securities on a quarterly basis for the presence of credit-related and non-credit-related losses. Management assesses whether a loss is present when the fair value of a debt security is less than its amortized cost basis at the statement of financial condition date. Unrealized losses on corporate bonds have not been recognized into income because the issuer(s) bonds are of high credit quality (rated AA or higher), management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The issuer(s) continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bond(s) approach maturity.

Seventeen government agency and government sponsored enterprise (“GSE”) residential mortgage-backed security holdings have an unrealized loss as of March 31, 2023. The securities were issued by the Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”), and the Government National Mortgage Association (“GNMA”). The government-backed securities that have unrealized losses are immaterial, with each of these securities having value deficiencies of $2,900 or less.

There are 107 bond issues held by the Company that have an unrealized loss as of March 31, 2023. The bonds are issued by well-established municipalities and corporate entities with semi-annual interest payments. All interest payments have historically been made timely. The value of the bonds held is closely correlated with long-term interest rates, and as interest rates increase, the bond values decrease. Within this portfolio are seven bonds issued by corporate entities that have an aggregate loss of $2.1 million. These bonds have variable rates and reprice based upon the spread between intermediate Treasury bond yields and long-term Treasury bond yields and will respond positively with the steepening of the Treasury yield curve. We anticipate full recovery of our investment over time and have no plans to sell the securities in the near term.

Market values of the securities fluctuate in reaction to the uncertainty of the economy. Principal and interest continue to be received on all securities as anticipated. The Company has the ability and intent to hold the securities through maturity or recovery of its amortized cost basis. With the government guarantees in place, management does not expect losses on these securities. No credit-related or non-credit-related losses are deemed present on these securities.

The Company monitors the credit quality of the debt securities held-to-maturity on a quarterly basis. At March 31, 2023 the amortized cost of debt securities held-to-maturity totaled $1.6 million. Structured certificates of deposit totaled $650,000 and are fully insured by the Federal Deposit Insurance Corporation as no one security exceeds the 14

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$250,000 insurance limit. Residential mortgage-backed securities totaled $902,000 and are backed by the full faith of the U.S. government. As a result, no credit-related or non-credit related losses are deemed present on these securities.

The following is a summary of the amortized cost and estimated fair values of debt securities at March 31, 2023, by remaining term to contractual maturity other than mortgage-backed securities. Actual maturities may differ from these amounts because certain issuers have the right to call or redeem their obligations prior to contractual maturity. The contractual maturities of mortgage-backed securities generally exceed 20 years; however, the effective average life is expected to be substantially shorter due to anticipated repayments and prepayments.


	At March 31, 2023
	Securities				Securities
	Available-for-Sale				Held-to-Maturity
	Amortized		Estimated		Amortized		Estimated
(in thousands)	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	1,265	$	1,261	$	—	$	—
Due over one year through five years		3,149		3,043		—		—
Due over five through ten years		4,339		3,721		—		—
Due after ten years		28,958		25,160		—		—
		37,711		33,185		—		—
Structured certificates of deposit		—		—		650		435
Residential mortgage-backed securities		24		23		902		874
Total	$	37,735	$	33,208	$	1,552	$	1,309

There were no gross realized gains or losses on sales and redemptions of available-for-sale securities for the three months ended March 31, 2023 and 2022. Gains and losses on the sales of securities are recognized in income when sold, using the specific identification method, on a trade date basis.

Securities with a fair value of $11,291,000 and $10,045,000 were pledged to collateralize certain deposit arrangements at March 31, 2023 and December 31, 2022 respectively.

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**5.**Loans Receivable

Major classifications of loans are as follows:


	At March 31,		At December 31,
(In thousands)	2023		2022

Originated Loans:
Residential mortgages:
One- to four-family	$	135,392	$	129,448
Construction		209		387
		135,601		129,835
Commercial loans:
Real estate - nonresidential		14,830		15,262
Multi-family		849		854
Commercial business		11,471		11,594
		27,150		27,710
Consumer:
Home equity and junior liens		10,781		11,027
Manufactured homes		51,826		50,989
Automobile		24,557		24,339
Student		1,740		1,803
Recreational vehicle		25,955		26,909
Other consumer		7,432		7,125
		122,291		122,192
Total originated loans		285,042		279,737
Net deferred loan costs		15,994		16,274
Less allowance for loan losses		(2,653)		(2,497)
Net originated loans	$	298,383	$	293,514

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	At March 31,		At December 31,
(In thousands)	2023		2022

Acquired Loans:
Residential mortgages:
One- to four-family	$	8,303	$	8,553
		8,303		8,553
Commercial loans:
Real estate - nonresidential		1,390		1,419
Commercial business		68		83
		1,458		1,502
Consumer:
Home equity and junior liens		438		535
Other consumer		42		47
		480		582
Total acquired loans		10,241		10,637
Net deferred loan costs		(52)		(53)
Fair value credit and yield adjustment		(201)		(218)
Net acquired loans	$	9,988	$	10,366


	At March 31,		At December 31,
(In thousands)	2023		2022

Total Loans:
Residential mortgages:
One- to four-family	$	143,695	$	138,001
Construction		209		387
		143,904		138,388
Commercial loans:
Real estate - nonresidential		16,220		16,681
Multi-family		849		854
Commercial business		11,539		11,677
		28,608		29,212
Consumer:
Home equity and junior liens		11,219		11,562
Manufactured homes		51,826		50,989
Automobile		24,557		24,339
Student		1,740		1,803
Recreational vehicle		25,955		26,909
Other consumer		7,474		7,172
		122,771		122,774
Total Loans		295,283		290,374
Net deferred loan costs		15,942		16,221
Fair value credit and yield adjustment		(201)		(218)
Less allowance for loan losses		(2,653)		(2,497)
Loans receivable, net	$	308,371	$	303,880

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The Company originates residential mortgage, commercial, and consumer loans to customers, principally located in the Finger Lakes Region of New York State and extending north to Orleans County. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ abilities to honor their contracts is dependent upon the counties’ employment and economic conditions. To further diversify the loan portfolio, the Company also purchases loans that have been originated outside of the region. High quality automobile loans, originated in the Northeastern United States, are purchased regularly from a Connecticut based company. In 2019, the Company also began to purchase modular home loans originated throughout the United States, the seller of which then services the loans for the Company. In 2020, the Company began to purchase automobile and recreational vehicle loans originated in New York State. In 2022, the Company began to purchase one- to four-family, owner-occupied residential real estate loans from a third-party originator. These loans are serviced by the Company and primarily located in Cayuga, Ontario, Orleans, and Seneca counties.

Loan Origination / Risk Management

The Company has lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by frequently providing management with reports related to loan production, loan quality, loan delinquencies, non-performing, and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

The loan portfolio is segregated into risk rating categories based on the borrower’s overall financial condition, repayment sources, guarantors, and value of collateral, if appropriate. The risk ratings are evaluated at least annually for commercial loans. Risk ratings are also reviewed when credit deficiencies arise, such as delinquent loan payments, for commercial, residential mortgage, or consumer loans. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful, and loss. Loans classified as loss are considered uncollectible and are charged to the allowance for loan loss. Loans not classified are rated as pass. 18

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The following table presents the classes of the loan portfolio summarized by the credit quality indicator:


	At March 31, 2023
				Special
(In thousands)	Pass		****	Mention		****	Substandard		****	Doubtful		****	Total
Originated Loans:
Residential mortgages:
One- to four-family	$	132,450		$	1,364		$	1,578		$	—		$	135,392
Construction		209			—			—			—			209
		132,659			1,364			1,578			—			135,601
Commercial loans:
Real estate - nonresidential		12,458			1,677			695			—			14,830
Multi-family		849			—			—			—			849
Commercial business		8,355			2,465			651			—			11,471
		21,662			4,142			1,346			—			27,150
Consumer:
Home equity and junior liens		10,669			18			94			—			10,781
Manufactured homes		51,433			25			368			—			51,826
Automobile		24,468			50			39			—			24,557
Student		1,681			—			59			—			1,740
Recreational vehicle		25,613			67			275			—			25,955
Other consumer		7,352			53			27			—			7,432
		121,216			213			862			—			122,291
Total originated loans	$	275,537		$	5,719		$	3,786		$	—		$	285,042

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	At March 31, 2023
				Special
(In thousands)	Pass		****	Mention		****	Substandard		****	Doubtful		****	Total
Acquired Loans:
Residential mortgages:
One- to four-family	$	8,089		$	89		$	125		$	—		$	8,303
		8,089			89			125			—			8,303
Commercial loans:
Real estate - nonresidential		1,390			—			—			—			1,390
Commercial business		68			—			—			—			68
		1,458			—			—			—			1,458
Consumer:
Home equity and junior liens		389			14			35			—			438
Other consumer		34			—			8			—			42
		423			14			43			—			480
Total acquired loans	$	9,970		$	103		$	168		$	—		$	10,241


	At March 31, 2023
				Special
(In thousands)	Pass		****	Mention		****	Substandard		****	Doubtful		****	Total
Total Loans:
Residential mortgages:
One- to four-family	$	140,539		$	1,453		$	1,703		$	—		$	143,695
Construction		209			—			—			—			209
		140,748			1,453			1,703			—			143,904
Commercial loans:
Real estate - nonresidential		13,848			1,677			695			—			16,220
Multi-family		849			—			—			—			849
Commercial business		8,423			2,465			651			—			11,539
		23,120			4,142			1,346			—			28,608
Consumer:
Home equity and junior liens		11,058			32			129			—			11,219
Manufactured homes		51,433			25			368			—			51,826
Automobile		24,468			50			39			—			24,557
Student		1,681			—			59			—			1,740
Recreational vehicle		25,613			67			275			—			25,955
Other consumer		7,386			53			35			—			7,474
		121,639			227			905			—			122,771
Total loans	$	285,507		$	5,822		$	3,954		$	—		$	295,283

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	At December 31, 2022
				Special
(In thousands)	Pass		****	Mention		****	Substandard		****	Doubtful		****	Total
Originated Loans:
Residential mortgages:
One- to four-family	$	125,949		$	1,066		$	2,433		$	—		$	129,448
Construction		387			—			—			—			387
		126,336			1,066			2,433			—			129,835
Commercial loans:
Real estate - nonresidential		12,870			1,691			701			—			15,262
Multi-family		854			—			—			—			854
Commercial business		8,349			2,529			716			—			11,594
		22,073			4,220			1,417			—			27,710
Consumer:
Home equity and junior liens		10,891			14			122			—			11,027
Manufactured homes		50,297			324			368			—			50,989
Automobile		24,188			130			21			—			24,339
Student		1,735			—			68			—			1,803
Recreational vehicle		26,445			329			135			—			26,909
Other consumer		7,004			121			—			—			7,125
		120,560			918			714			—			122,192
Total originated loans	$	268,969		$	6,204		$	4,564		$	—		$	279,737


	At December 31, 2022
				Special
(In thousands)	Pass		****	Mention		****	Substandard		****	Doubtful		****	Total
Acquired Loans:
Residential mortgages:
One- to four-family	$	8,335		$	45		$	173		$	—		$	8,553
		8,335			45			173			—			8,553
Commercial loans:
Real estate - nonresidential		1,419			—			—			—			1,419
Commercial business		83			—			—			—			83
		1,502			—			—			—			1,502
Consumer:
Home equity and junior liens		485			—			50			—			535
Other consumer		47			—			—			—			47
		532			—			50			—			582
Total acquired loans	$	10,369		$	45		$	223		$	—		$	10,637

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	At December 31, 2022
				Special
(In thousands)	Pass		****	Mention		****	Substandard		****	Doubtful		****	Total
Total Loans:
Residential mortgages:
One- to four-family	$	134,284		$	1,111		$	2,606		$	—		$	138,001
Construction		387			—			—			—			387
		134,671			1,111			2,606			—			138,388
Commercial loans:
Real estate - nonresidential		14,289			1,691			701			—			16,681
Multi-family		854			—			—			—			854
Commercial business		8,432			2,529			716			—			11,677
		23,575			4,220			1,417			—			29,212
Consumer:
Home equity and junior liens		11,376			14			172			—			11,562
Manufactured homes		50,297			324			368			—			50,989
Automobile		24,188			130			21			—			24,339
Student		1,735			—			68			—			1,803
Recreational vehicle		26,445			329			135			—			26,909
Other consumer		7,051			121			—			—			7,172
		121,092			918			764			—			122,774
Total loans	$	279,338		$	6,249		$	4,787		$	—		$	290,374

Management has reviewed its loan portfolio and determined that, to the best of its knowledge, little or no exposure exists to sub-prime or other high-risk residential mortgages. The Company is not in the practice of originating these types of loans.

Non-accrual and Past Due Loans

Loans are considered past due if the required principal and interest payments have not been received within thirty days of the payment due date.

For all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan may be currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on non-accrual status, unpaid interest is reversed and charged to interest income. Interest received on non-accrual loans, including impaired loans, generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after modification.

When future collectability of the recorded loan balance is expected, interest income may be recognized on a cash basis. In the case where a non-accrual loan had been partially charged off, recognition of interest on a cash basis is limited to that which would have been recognized on the recorded loan balance at the contractual interest rate. Cash interest receipts in excess of that amount are recorded as recoveries to allowance for loan losses until prior charge-offs have been fully recovered. 22

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An age analysis of past due loans, segregated by class of loans, as are as follows:


	At March 31, 2023
							90 Days
	30-59 Days		****	60-89 Days		****	or More		****	Total		****	Total Loans			Total Loans
(In thousands)	Past Due		****	Past Due		****	Past Due		****	Past Due		****	Current		****	Receivable
Originated Loans:
Residential mortgage loans:
One- to four-family	$	3,062		$	—		$	1,578		$	4,640		$	130,752		$	135,392
Construction		—			—			—			—			209			209
		3,062			—			1,578			4,640			130,961			135,601
Commercial loans:
Real estate - nonresidential		428			—			412			840			13,990			14,830
Multi-family		391			—			—			391			458			849
Commercial business		536			—			116			652			10,819			11,471
		1,355			—			528			1,883			25,267			27,150
Consumer loans:
Home equity and junior liens		182			—			94			276			10,505			10,781
Manufactured homes		819			25			368			1,212			50,614			51,826
Automobile		368			50			40			458			24,099			24,557
Student		—			—			59			59			1,681			1,740
Recreational vehicle		537			67			275			879			25,076			25,955
Other consumer		94			53			27			174			7,258			7,432
		2,000			195			863			3,058			119,233			122,291
Total originated loans	$	6,417		$	195		$	2,969		$	9,581		$	275,461		$	285,042

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Notes to Condensed Consolidated Financial Statements

(Unaudited)


	At March 31, 2023
							90 Days
	30-59 Days			60-89 Days			or More			Total			Total Loans			Total Loans
(In thousands)	Past Due		****	Past Due		****	Past Due		****	Past Due		****	Current		****	Receivable
Acquired Loans:
Residential mortgage loans:
One- to four-family	$	158		$	—		$	125		$	283		$	8,020		$	8,303
		158			—			125			283			8,020			8,303
Commercial loans:
Real estate - nonresidential		—			—			—			—			1,390			1,390
Commercial business		—			—			—			—			68			68
		—			—			—			—			1,458			1,458
Consumer loans:
Home equity and junior liens		—			—			35			35			403			438
Other consumer		—			—			8			8			34			42
		—			—			43			43			437			480
Total acquired loans	$	158		$	—		$	168		$	326		$	9,915		$	10,241


	At March 31, 2023
							90 Days
	30-59 Days			60-89 Days			or More			Total			Total Loans			Total Loans
(In thousands)	Past Due		****	Past Due		****	Past Due		****	Past Due		****	Current		****	Receivable
Total Loans:
Residential mortgage loans:
One- to four-family	$	3,220		$	—		$	1,703		$	4,923		$	138,772		$	143,695
Construction		—			—			—			—			209			209
		3,220			—			1,703			4,923			138,981			143,904
Commercial loans:
Real estate - nonresidential		428			—			412			840			15,380			16,220
Multi-family		391			—			—			391			458			849
Commercial business		536			—			116			652			10,887			11,539
		1,355			—			528			1,883			26,725			28,608
Consumer loans:
Home equity and junior liens		182			—			129			311			10,908			11,219
Manufactured homes		819			25			368			1,212			50,614			51,826
Automobile		368			50			40			458			24,099			24,557
Student		—			—			59			59			1,681			1,740
Recreational vehicle		537			67			275			879			25,076			25,955
Other consumer		94			53			35			182			7,292			7,474
		2,000			195			906			3,101			119,670			122,771
Total loans	$	6,575		$	195		$	3,137		$	9,907		$	285,376		$	295,283

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Notes to Condensed Consolidated Financial Statements

(Unaudited)


	At December 31, 2022
							90 Days
	30-59 Days		****	60-89 Days		****	or More		****	Total		****	Total Loans			Total Loans
(In thousands)	Past Due		****	Past Due		****	Past Due		****	Past Due		****	Current		****	Receivable
Originated Loans:
Residential mortgage loans:
One- to four-family	$	2,967		$	1,158		$	2,432		$	6,557		$	122,891		$	129,448
Construction		—			—			—			—			387			387
		2,967			1,158			2,432			6,557			123,278			129,835
Commercial loans:
Real estate - nonresidential		254			—			416			670			14,592			15,262
Multi-family		—			—			—			—			854			854
Commercial business		129			—			158			287			11,307			11,594
		383			—			574			957			26,753			27,710
Consumer loans:
Home equity and junior liens		193			85			122			400			10,627			11,027
Manufactured homes		696			324			368			1,388			49,601			50,989
Automobile		402			130			21			553			23,786			24,339
Student		—			—			68			68			1,735			1,803
Recreational vehicle		1,005			329			135			1,469			25,440			26,909
Other consumer		95			122			—			217			6,908			7,125
		2,391			990			714			4,095			118,097			122,192
Total originated loans	$	5,741		$	2,148		$	3,720		$	11,609		$	268,128		$	279,737


	At December 31, 2022
							90 Days
	30-59 Days			60-89 Days			or More			Total			Total Loans			Total Loans
(In thousands)	Past Due		****	Past Due		****	Past Due		****	Past Due		****	Current		****	Receivable
Acquired Loans:
Residential mortgage loans:
One- to four-family	$	268		$	103		$	173		$	544		$	8,009		$	8,553
		268			103			173			544			8,009			8,553
Commercial loans:
Real estate - nonresidential		—			—			—			—			1,419			1,419
Commercial business		—			—			—			—			83			83
		—			—			—			—			1,502			1,502

Consumer loans:
Home equity and junior liens		—			—			50			50			485			535
Other consumer		8			—			—			8			39			47
		8			—			50			58			524			582
Total acquired loans	$	276		$	103		$	223		$	602		$	10,035		$	10,637

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Notes to Condensed Consolidated Financial Statements

(Unaudited)


	At December 31, 2022
							90 Days
	30-59 Days			60-89 Days			or More			Total			Total Loans			Total Loans
(In thousands)	Past Due		****	Past Due		****	Past Due		****	Past Due		****	Current		****	Receivable
Total Loans:
Residential mortgage loans:
One- to four-family	$	3,235		$	1,261		$	2,605		$	7,101		$	130,900		$	138,001
Construction		—			—			—			—			387			387
		3,235			1,261			2,605			7,101			131,287			138,388
Commercial loans:
Real estate - nonresidential		254			—			416			670			16,011			16,681
Multi-family		—			—			—			—			854			854
Commercial business		129			—			158			287			11,390			11,677
		383			—			574			957			28,255			29,212
Consumer loans:
Home equity and junior liens		193			85			172			450			11,112			11,562
Manufactured homes		696			324			368			1,388			49,601			50,989
Automobile		402			130			21			553			23,786			24,339
Student		—			—			68			68			1,735			1,803
Recreational vehicle		1,005			329			135			1,469			25,440			26,909
Other consumer		103			122			—			225			6,947			7,172
		2,399			990			764			4,153			118,621			122,774
Total loans	$	6,017		$	2,251		$	3,943		$	12,211		$	278,163		$	290,374

Non-accrual loans, segregated by class of loan, were as follows:


	At March 31,			At December 31,
(In thousands)	2023		****	2022

Residential mortgage loans:
One- to four-family	$	1,703		$	2,605
		1,703			2,605
Commercial loans:
Real estate - nonresidential		412			416
Commercial business		537			587
		949			1,003
Consumer loans:
Home equity and junior liens		129			172
Manufactured homes		368			368
Automobile		40			21
Student		59			68
Recreational vehicle		275			135
Other consumer		35			—
		906			764
Total non-accrual loans	$	3,558		$	4,372

There were no loans past due more than ninety days and still accruing interest at March 31, 2023 and December 31, 2022. 26

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

Loan Modifications

Prior to January 1, 2023, the Company was required to disclose certain activities related to Troubled Debt Restructuring (“TDR”) in accordance with accounting guidance. Certain loans were modified in a TDR where economic concessions have been granted to a borrower who is experiencing, or is expected to experience, financial difficulties. These economic concessions could include a reduction in the loan interest rate, extension of payment terms, reduction of principal amortization, or other actions that the Company would not otherwise consider for a new loan with similar risk characteristics. The recorded investment for each TDR loan is determined by the outstanding balance less the allowance associated with the loan.

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a probability of default/loss given default model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies loans by providing principal forgiveness on certain of its real estate loans. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses. In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

There were no loans that had been modified as a TDR during the year ended December 31, 2022.

At December 31, 2022, the Company had seven TDR loans, with an outstanding balance of $2.5 million, in the portfolio that had been modified by making concessions to maturity dates and, in some cases, lowering the interest rate from the original contract. At January 1, 2023, as part of the adoption of the CECL standard, two of these loans totaling $270,000 were returned to the general pool to be collectively reviewed as a result of making regularly scheduled payments as agreed. The remaining five loans totaling $2.2 million will continue to be individually reviewed although regularly scheduled payments have been made as agreed. There were no loans modified to borrowers experiencing financial difficulties during the three months ended March 31, 2023.

Impaired Loans

Prior to January 1, 2023, a loan is considered impaired when based on current information and events it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower including the length of the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral-dependent. 27

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Generations Bancorp NY, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company designates individually evaluated loans on nonaccrual status as collateral-dependent loans, as well as other loans that management of the Company designates as having higher risk. Collateral-dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. Under CECL, for collateral-dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

The following table presents an analysis of collateral-dependent loans of the Company as of March 31, 2023:


	Residential		Business				Commercial				Total
(In thousands)	properties		assets		Land		property		Other		Loans
One- to four-family	$	1,520	$	—	$	—	$	—	$	—	$	1,520
Real estate - nonresidential		29		—		—		—		—		29
Total loans	$	1,549	$	—	$	—	$	—	$	—	$	1,549

The following table summarizes collateral-dependent loan information by portfolio class:


		At March 31, 2023
		Average		Interest
		recorded		income
(In thousands)	****	investment		recognized

One- to four-family residential mortgages		$	1,704	$	5
Commercial real estate - nonresidential			698		3
Commercial business			683		3
Home equity and junior liens			128		—
		$	3,213	$	11

The following table summarizes impaired loan information by portfolio class:


	At December 31, 2022
			Unpaid
	Recorded		principal		Related
(In thousands)	investment		balance		allowance
With no related allowance recorded:
One- to four-family residential mortgages	$	2,560	$	2,641	$	—
Commercial real estate - nonresidential		701		801		—
Commercial business		717		729		—
Home equity and junior liens		181		191		—

Total:
One- to four-family residential mortgages		2,560		2,641		—
Commercial real estate - nonresidential		701		801		—
Commercial business		717		729		—
Home equity and junior liens		181		191		—
	$	4,159	$	4,362	$	—

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following table presents the amortized cost information of loans on non-accrual status:


						Interest income		Non-accrual loans
						recognized on		with no allowance
		Amortized cost of loans on				non-accrual loans		for credit losses
		non-accrual status				as of		as of
(In thousands)	****	January 1, 2023		March 31, 2023		March 31,2023		March 31, 2023

Residential mortgage loans:
One- to four-family		$	2,605	$	1,738	$	2	$	1,581

Commercial loans:
Real estate - nonresidential			416		412		—		412
Commercial business			587		537		—		537

Consumer loans:
Home equity and junior liens			172		128		—		129
Manufactured homes			368		368		—		368
Automobile			21		38		—		40
Student			68		59		—		59
Recreational vehicle			135		205		5		275
Other consumer			—		31		1		35
		$	4,372	$	3,516	$	8	$	3,436

Income recognized on a cash basis was not materially different than interest income recognized on an accrual basis for the periods.

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following tables present the loans to customers as of March 31, 2023 based on year of origination within each credit quality indicator:


	At March 31, 2023
		2023		2022		2021		2020		2019		Prior		Total
Originated Loans:
Residential mortgage loans:
4 Internal grade	$	5,942	$	42,955	$	11,040	$	11,993	$	12,135	$	48,594	$	132,659
5 Internal grade		—		—		28		—		140		1,196		1,364
6 Internal grade		—		—		—		118		—		1,460		1,578
	$	5,942	$	42,955	$	11,068	$	12,111	$	12,275	$	51,250	$	135,601
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries		—		—		—		—		—		—		—
Current period net writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial loans:
2 Internal grade	$	—	$	—	$	—	$	—	$	—	$	387	$	387
3 Internal grade		—		175		618		297		995		6,711		8,796
4 Internal grade		10		2,897		752		205		97		8,518		12,479
5 Internal grade		—		—		—		—		2,180		1,962		4,142
6 Internal grade		—		—		—		—		42		1,304		1,346
	$	10	$	3,072	$	1,370	$	502	$	3,314	$	18,882	$	27,150
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries		—		—		—		—		—		2		2
Current period net writeoffs	$	—	$	—	$	—	$	—	$	—	$	2	$	2

Consumer loans:
4 Internal grade	$	4,048	$	27,836	$	30,792	$	35,818	$	10,404	$	12,318	$	121,216
5 Internal grade		—		—		79		61		30		43		213
6 Internal grade		—		45		254		402		2		159		862
	$	4,048	$	27,881	$	31,125	$	36,281	$	10,436	$	12,520	$	122,291
Current period gross writeoffs	$	—	$	—	$	(1)	$	—	$	—	$	(18)	$	(19)
Current period recoveries		—		—		—		—		—		7		7
Current period net writeoffs	$	—	$	—	$	(1)	$	—	$	—	$	(11)	$	(12)

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Notes to Condensed Consolidated Financial Statements

(Unaudited)


	At March 31, 2023
		2023		2022		2021		2020		2019		Prior		Total
Acquired Loans:
Residential mortgage loans:
4 Internal grade	$	—	$	—	$	—	$	—	$	—	$	8,089	$	8,089
5 Internal grade		—		—		—		—		—		89		89
6 Internal grade		—		—		—		—		—		125		125
	$	—	$	—	$	—	$	—	$	—	$	8,303	$	8,303
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries		—		—		—		—		—		1		1
Current period net writeoffs	$	—	$	—	$	—	$	—	$	—	$	1	$	1

Commercial loans:
4 Internal grade	$	—	$	—	$	—	$	—	$	—	$	1,458	$	1,458
5 Internal grade		—		—		—		—		—		—		—
6 Internal grade		—		—		—		—		—		—		—
	$	—	$	—	$	—	$	—	$	—	$	1,458	$	1,458
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries		—		—		—		—		—		—		—
Current period net writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer loans:
4 Internal grade	$	—	$	—	$	—	$	—	$	—	$	423	$	423
5 Internal grade		—		—		—		—		—		14		14
6 Internal grade		—		—		—		—		—		43		43
	$	—	$	—	$	—	$	—	$	—	$	480	$	480
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries		—		—		—		—		—		—		—
Current period net writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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Notes to Condensed Consolidated Financial Statements

(Unaudited)


	At March 31, 2023
		2023		2022		2021		2020		2019		Prior		Total
Total Loans:
Residential mortgage loans:
4 Internal grade	$	5,942	$	42,955	$	11,040	$	11,993	$	12,135	$	56,683	$	140,748
5 Internal grade		—		—		28		—		140		1,285		1,453
6 Internal grade		—		—		—		118		—		1,585		1,703
	$	5,942	$	42,955	$	11,068	$	12,111	$	12,275	$	59,553	$	143,904
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries		—		—		—		—		—		1		1
Current period net writeoffs	$	—	$	—	$	—	$	—	$	—	$	1	$	1

Commercial loans:
2 Internal grade	$	—	$	—	$	—	$	—	$	—	$	387	$	387
3 Internal grade		—		175		618		297		995		6,711		8,796
4 Internal grade		10		2,897		752		205		97		9,976		13,937
5 Internal grade		—		—		—		—		2,180		1,962		4,142
6 Internal grade		—		—		—		—		42		1,304		1,346
	$	10	$	3,072	$	1,370	$	502	$	3,314	$	20,340	$	28,608
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries		—		—		—		—		—		2		2
Current period net writeoffs	$	—	$	—	$	—	$	—	$	—	$	2	$	2

Consumer loans:
4 Internal grade	$	4,048	$	27,836	$	30,792	$	35,818	$	10,404	$	12,741	$	121,639
5 Internal grade		—		—		79		61		30		57		227
6 Internal grade		—		45		254		402		2		202		905
	$	4,048	$	27,881	$	31,125	$	36,281	$	10,436	$	13,000	$	122,771
Current period gross writeoffs	$	—	$	—	$	(1)	$	—	$	—	$	(18)	$	(19)
Current period recoveries		—		—		—		—		—		7		7
Current period net writeoffs	$	—	$	—	$	(1)	$	—	$	—	$	(11)	$	(12)

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

**6.**Allowance for Loan Loss

The following table summarizes the activity related to the allowance for credit losses for the three months ended March 31, 2023:



					Additional
					Allowance
					Recognized			Credit
					Due to			Loss			Writeoffs
					Adoption			Expense			During			Recoveries
		Beginning			of			for the			the			During			Ending
(In thousands)	****	Balance		****	Topic 326		****	Period		****	Period		****	the Period		****	Balance
Residential mortgage loans:
One- to four-family		$	787		$	—		$	155		$	—		$	1		$	943
Construction			2			—			(1)			—			—			1

Commercial loans:
Real estate - nonresidential			319			—			281			—			—			600
Multi-family			4			—			(4)			—			—			—
Commercial business			248			—			29			—			2			279

Consumer loans:
Home equity and junior liens			65			—			16			(11)			—			70
Manufactured homes			110			—			(110)			—			—			—
Automobile			135			—			119			—			5			259
Student			55			—			(34)			(7)			1			15
Recreational vehicle			646			—			(512)			—			—			134
Other consumer			126			—			226			(1)			1			352
		$	2,497		$	—		$	165		$	(19)		$	10		$	2,653

At March 31, 2023 there was no liability recorded for unfunded loan commitments.

Prior to the adoption of ASC 326 on January 1, 2023, the Company calculated the allowance for loan losses under the incurred loss methodology. The following tables are disclosures related to the allowance for loan losses in prior periods.

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		Three Months Ended March 31, 2022
		One- to four-			Construction
		family			residential			Real estate						Construction			Commercial
(In thousands)	****	residential		****	mortgage		****	nonresidential		****	Multi-family		****	commercial		****	business
Allowance for loan losses:
Beginning balance		$	688		$	—		$	630		$	2		$	—		$	161
Charge-offs			(10)			—			—			—			—			—
Recoveries			15			—			—			—			—			—
Provision for loan losses			46			—			14			1			—			48
Ending balance		$	739		$	—		$	644		$	3		$	—		$	209
Ending balance: related to loans individually evaluated for impairment		$	—		$	—		$	—		$	—		$	—		$	12
Ending balance: related to loans collectively evaluated for impairment		$	739		$	—		$	644		$	3		$	—		$	197
Loans receivable:
Ending balance		$	111,291		$	—		$	20,857		$	452		$	—		$	12,298
Ending balance: individually evaluated for impairment		$	2,158		$	—		$	416		$	—		$	—		$	128
Ending balance: collectively evaluated for impairment		$	109,133		$	—		$	20,441		$	452		$	—		$	12,170


	Three Months Ended March 31, 2022 (cont'd)
	Home equity			Manufactured								Recreational			Other
(In thousands)	and junior liens		****	homes		****	Automobile		****	Student		vehicle		****	consumer		****	Unallocated		****	Total
Allowance for loan losses:
Beginning balance	$	39		$	102		$	107		$	64	$	—		$	48		$	—		$	1,841
Charge-offs		—			—			(40)			—		—			—			—			(50)
Recoveries		—			—			17			1		—			—			—			33
Provision (credit) for loan losses		4			14			23			(1)		—			1			—			150
Ending balance	$	43		$	116		$	107		$	64	$	—		$	49		$	—		$	1,974
Ending balance: related to loans individually evaluated for impairment	$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	12
Ending balance: related to loans collectively evaluated for impairment	$	43		$	116		$	107		$	64	$	—		$	49		$	—		$	1,962
Loans receivable:
Ending balance	$	10,433		$	48,116		$	22,025		$	2,102	$	28,692		$	5,309		$	—		$	261,575
Ending balance: individually evaluated for impairment	$	112		$	—		$	—		$	—	$	—		$	—		$	—		$	2,814
Ending balance: collectively evaluated for impairment	$	10,321		$	48,116		$	22,025		$	2,102	$	28,692		$	5,309		$	—		$	258,761

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	Year Ended December 31, 2022
	One- to four-			Construction
	family		****	residential		****	Real estate		****			****	Construction		****	Commercial
(In thousands)	residential		****	mortgage		****	nonresidential		****	Multi-family		****	commercial		****	business
Allowance for loan losses:
Beginning balance	$	688		$	—		$	630		$	2		$	—		$	161
Charge-offs		(37)			—			—			—			—			(14)
Recoveries		18			—			—			—			—			2
Provision (credit) for loan losses		118			2			(311)			2			—			99
Ending balance	$	787		$	2		$	319		$	4		$	—		$	248
Ending balance: related to loans individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—
Ending balance: related to loans collectively evaluated for impairment	$	787		$	2		$	319		$	4		$	—		$	248
Loans receivable:
Ending balance	$	138,001		$	387		$	16,681		$	854		$	—		$	11,677
Ending balance: individually evaluated for impairment	$	2,560		$	—		$	701		$	—		$	—		$	717
Ending balance: collectively evaluated for impairment	$	135,441		$	387		$	15,980		$	854		$	—		$	10,960


	Year Ended December 31, 2022 (cont'd)
	Home equity			Manufactured									Recreational			Other
(In thousands)	and junior liens		****	homes		****	Automobile		****	Student		****	vehicle		****	consumer		****	Unallocated		****	Total
Allowance for loan losses:
Beginning balance	$	39		$	102		$	107		$	64		$	—		$	48		$	—		$	1,841
Charge-offs		(10)			—			(59)			(29)			(1)			(2)			—			(152)
Recoveries		—			—			149			3			1			4			—			177
Provision (credit) for loan losses		36			8			(62)			17			646			76			—			631
Ending balance	$	65		$	110		$	135		$	55		$	646		$	126		$	—		$	2,497
Ending balance: related to loans individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Ending balance: related to loans collectively evaluated for impairment	$	65		$	110		$	135		$	55		$	646		$	126		$	—		$	2,497
Loans receivable:
Ending balance	$	11,562		$	50,989		$	24,339		$	1,803		$	26,909		$	7,172		$	—		$	290,374
Ending balance: individually evaluated for impairment	$	181		$	—		$	—		$	—		$	—		$	—		$	—		$	4,159
Ending balance: collectively evaluated for impairment	$	11,381		$	50,989		$	24,339		$	1,803		$	26,909		$	7,172		$	—		$	286,215

The risk characteristics within the loan portfolio vary depending on the loan segment. Consumer loans generally are repaid from personal sources of income. Risks associated with consumer loans primarily include general economic risks such as declines in the local economy creating higher rates of unemployment. Those conditions may also lead to 35

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a decline in collateral values should the Company be required to repossess the collateral securing consumer loans. These economic risks also impact the commercial loan segment, however, commercial loans are considered to have greater risk than consumer loans as the primary source of repayment is from the cash flow of the business customer. Loans secured by real estate provide the best collateral protection and thus significantly reduce the inherent risk in the portfolio.

**7.**Employee Benefit Plans

The Company provides pension benefits for eligible employees through two defined benefit pension plans (the “Plans”). The following tables set forth the changes in the Plans’ net periodic pension benefit:


Generations Bank Plan:	Three Months Ended March 31,
(In thousands)	2023		2022
Net periodic expenses recognized in income:
Service cost	$	60	$	108
Interest cost		118		102
Expected return on plan assets		(307)		(384)
Amortization of net losses		40		-
Net periodic pension benefit	$	(89)	$	(174)


Medina Savings and Loan Plan:	Three Months Ended March 31,
(In thousands)	2023		2022
Net periodic expenses recognized in income:
Service cost	$	3	$	8
Interest cost		34		28
Expected return on plan assets		(90)		(115)
Net periodic pension benefit	$	(53)	$	(79)

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8. Stock-Based Compensation

A summary of the Company’s stock option activity and **** related information for its option plans for the three months ended March 31, 2023 is as follows:


	Three Months Ended March 31, 2023
			Weighted Average
			Exercise Price Per
	Options		Share
Outstanding at beginning of year	132,977	$	11.61
Grants	—		—
Exercised	—		—
Outstanding at quarter end	132,977	$	11.61

Exercisable at quarter end	—	$	—

There were no stock options granted for the three-month period ended March 31, 2022.

The grants to senior management and directors vest over a five-year period in equal annual installments, with the first installment vesting on the first anniversary date of the grant and succeeding installments on each anniversary thereafter, through 2027.

The compensation expense of the awards is based on the fair value of the instruments on the date of grant. The Company recorded compensation expense in the amount of $22,000 for the three months ended March 31, 2023.

An aggregate of 53,191 shares of restricted stock were granted to directors and senior management during the year ended December 31, 2022. These shares of restricted stock vest in the same manner as the stock options described above. The Company recorded compensation expense in the amount of $31,000 for the three months ended March 31, 2023.

**9.**Regulatory Capital

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain amounts and ratios (set forth in the table below) of total core and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to total adjusted assets (as defined).

Under applicable regulation, the Bank must hold a 2.50% capital conservation buffer above the adequately capitalized risk-based capital ratios. The net unrealized gain or loss on available-for-sale securities is not included in computing regulatory capital. Management believes as of March 31, 2023 and December 31, 2022, the Bank meets all capital adequacy requirements to which it is subject. 37

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The Bank’s actual capital amounts and ratios are as follows:


									Minimum
									To Be "Well-
					Minimum				Capitalized"
					For Capital				Under Prompt
	Actual				Adequacy Purposes				Corrective Provisions
(in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of March 31, 2023
Common Equity Tier 1 Capital	$	39,965	13.46	%	$	13,362	4.50	%	$	19,301	6.50	%
Total Capital (to Risk-Weighted Assets)	$	42,618	14.35	%	$	23,755	8.00	%	$	29,694	10.00	%
Tier 1 Capital (to Risk-Weighted Assets)	$	39,965	13.46	%	$	17,816	6.00	%	$	23,755	8.00	%
Tier 1 Capital (to Total Adjusted Assets)	$	39,965	10.32	%	$	15,498	4.00	%	$	19,372	5.00	%
As of December 31, 2022:
Common Equity Tier 1 Capital	$	41,127	13.87	%	$	13,347	4.50	%	$	19,278	6.50	%
Total Capital (to Risk-Weighted Assets)	$	43,624	14.71	%	$	23,727	8.00	%	$	29,659	10.00	%
Tier 1 Capital (to Risk-Weighted Assets)	$	41,127	13.87	%	$	17,795	6.00	%	$	23,727	8.00	%
Tier 1 Capital (to Total Adjusted Assets)	$	41,127	10.98	%	$	14,989	4.00	%	$	18,736	5.00	%

The Company’s goal is to maintain a strong capital position, consistent with the risk profile of its subsidiary bank that supports growth and expansion activities while at the same time exceeding regulatory standards. At March 31, 2023 and December 31, 2022, Generations Bank exceeded all regulatory required minimum capital ratios and met the regulatory definition of a “well-capitalized” institution, i.e. Tier 1 Capital (to Total Adjusted Asset) exceeding 5.00%, a common equity Tier 1 capital ratio exceeding 6.50%, a Tier 1 risk-based capital ratio exceeding 8.00%, and a total risk-based capital ratio exceeding 10.00%.

By letter dated September 10, 2020, based on its supervisory profile, the Office of the Comptroller of the Currency (“OCC”) established higher individual minimum capital ratios for Generations Bank. Specifically, effective September 10, 2020, Generations Bank is required to maintain a leverage ratio of 8.00% and a total capital ratio of 12.00%. The individual minimum capital ratios will remain in effect until terminated, modified, or suspended in writing by the OCC.

10.Commitments and Contingencies

Credit Commitments

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business in order to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit, which involve, to varying degrees, elements of credit, interest rate, or liquidity risk in excess of the amount recognized in the consolidated statements of financial condition. The Bank’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amounts of those instruments. The Bank has experienced minimal credit losses to date on its financial instruments with off-balance sheet risk and management does not anticipate any significant losses on its commitments to extend credit outstanding at March 31, 2023.

Financial instruments whose contract amounts represent credit risk consist of the following:


		At March 31,			At December 31,
(In thousands)	****	2023		****	2022

Commitments to grant loans		$	1,381		$	6,400
Unfunded commitments under lines of credit			14,459			14,789

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Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitment amounts are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the counter party. Collateral held varies but may include residential real estate and income-producing commercial properties. Loan commitments, including unused lines of credit and standby letters of credit, outstanding at March 31, 2023 with fixed interest rates amounted to approximately $5.1 million. Loan commitments, including unused lines of credit and standby letters of credit, outstanding at March 31, 2023 with variable interest rates amounted to approximately $10.7 million. Loan commitments, including unused lines of credit and standby letters of credit, outstanding at December 31, 2022 with fixed interest rates amounted to approximately $9.6 million. Loan commitments, including unused lines of credit and standby letters of credit, outstanding at December 31, 2022 with variable interest rates amounted to approximately $11.6 million.

Unfunded commitments under revolving credit lines and overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines of credit usually do not contain a specified maturity date and may not be drawn upon to the total extent to which the Company is committed.

Letters of credit written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Generally, all letters of credit, when issued have expiration dates. The credit risk involved in issuing letters of credit is essentially the same as those that are involved in extending loan facilities to customers. The Company generally holds collateral and/or personal guarantees supporting these commitments. Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees.

The Company maintains a separate reserve for credit losses on off-balance sheet credit exposures, including unfunded loan commitments, which is included in other liabilities on the consolidated balance sheet. The reserve for credit losses on off-balance sheet credit exposures is adjusted as a provision for credit losses in the income statement. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life, utilizing the same models and approaches for the Company's other loan portfolio segments described above, as these unfunded commitments share similar risk characteristics as its loan portfolio segments. The Company has identified the unfunded portion of certain lines of credit as unconditionally cancellable credit exposures, meaning the Company can cancel the unfunded commitment at any time. No credit loss estimate is reported for off-balance sheet credit exposures that are unconditionally cancellable by the Company or for undrawn amounts under such arrangements that may be drawn prior to the cancellation of the arrangement. On January 1, 2023, the Company did not record an adjustment for unfunded commitments for the adoption of ASC Topic 326. For the three months ended March 31, 2023, the Company recorded a provision for credit losses for unfunded commitments of $0. At March 31, 2023, the liability for credit losses on off-balance sheet credit exposures included in other liabilities was $0.

Commitments to Originate and Sell One- to four-family Residential Mortgages

The Bank has sold and funded $68.6 million of loans to the Federal Home Loan Bank of New York as part of its mortgage partnership finance program (“MPF Program”), inclusive of USDA loans, to date. The principal outstanding balance on loans sold under the MPF Program is $8.0 million at March 31, 2023. The Bank continues to service loans sold under the MPF Program.

Under the terms of the MPF Program, there is limited recourse to the Bank for loans that do not perform in accordance with the terms of the loan agreement. Each loan that is sold under the program is “credit enhanced” such that the 39

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individual loan’s rating is raised to “AA,” as determined by the Federal Home Loan Bank of New York. The sum of each individual loan’s credit enhancement represents the total recourse back to the Bank. The total recourse back to the Bank for loans sold was $707,000 at March 31, 2023. A portion of the recourse is offset by a “first loss account” to which funds are allocated by the Federal Home Loan Bank of New York annually in January. The balance of the “first loss account” allocated to the Bank was $93,000 at March 31, 2023. In addition, many of the loans sold under the MPF Program have primary mortgage insurance, which reduces the Bank’s overall exposure. The potential liability for the recourse is considered when the Bank determines its allowance for loan losses.

11.Revenue from Contracts with Customers

The majority of the Company’s revenue-generating transactions are not subject to ASC Topic 606, including revenue generated from financial instruments, such as loans and investment securities, which are presented in our consolidated statements of operations as components of net interest income. All of the Company’s revenue from contracts with customers in the scope of Topic 606 is recognized within non-interest income.

The following table presents revenues subject to Topic 606:



		Three Months Ended March 31,
(In thousands)	****	2023		****	2022

Service charges on deposit accounts		$	134		$	150
Debit card interchange and surcharge income			183			188
Insurance commissions			129			197
Loan servicing fees			45			35
		$	491		$	570

Service charges on deposit accounts: The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as stop payment charges, wire transfers, and official check charges, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance and inactivity fees, which relate primarily to monthly maintenance and servicing, are recognized at the end of the month in which maintenance occurs. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposit accounts are withdrawn from the customer’s account balance.

Debit card interchange and surcharge income: The Company earns interchange income from debit cardholder transactions conducted through the MasterCard International Inc. payment network. Additionally, ATM surcharges are also assessed on foreign (non-customer) users who use the Company’s ATM network of machines. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and foreign surcharges are a fixed fee per transaction. Both are recognized daily, concurrently with the transaction processing services provided to the cardholder.

Insurance commissions: Regular commissions are earned upon the effective date of bound insurance coverage. They are paid by the insurance carrier and recorded by the Company through a monthly remittance which are subject to the Management Agreement with the Northwoods Corporation (“Northwoods”) which became effective on April 1, 2022. Contingent commissions are based on a contract but are dependent, not only on the level of policies bound with the carrier, but also on loss claim levels experienced through the last day of the year, volume growth, or shrinkage. The Agency’s business is not considered to be significant to the carriers, and many of our insurance carriers are combined under an umbrella with other independent agents, making the contingent commission earned dependent on a calculation that includes the experience of others. As such, the level of contingent commissions is not readily determinable until it is paid, but does not have a significant impact on the Company’s financial results. 40

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Loan servicing fees: The majority of income derived from loans is excluded from the scope of the amended guidance on accounting for revenue from contracts with customers. However, servicing fee revenue is generated in the form of late charges on customer loans. Late fees are transaction-based and are recognized at the point in time that the customer has exceeded the loan payment grace-period and the Company has earned the fee based on loan note. Fees are assessed as a percentage of the past-due loan payment amount.

12.Fair Value Disclosures

Management uses its best judgment in estimating the fair value of the Company’s financial assets and liabilities; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial assets and liabilities, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sale transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective reporting dates and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial assets and liabilities subsequent to the respective reporting dates may be different from the amounts reported at each reporting date.

The Company uses fair value measurements to record fair value adjustments to certain financial assets and liabilities and to determine fair value disclosures. The fair value of a financial asset or liability is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in some instances, there may be no quoted market prices for the Company’s various financial assets and liabilities. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the financial asset or liability.

Fair value measurement guidance established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date of identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs that are observable directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported with little or no market activity).

An asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. There have been no changes in valuation techniques during the periods ended March 31, 2023 and December 31, 2022.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparison between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s assets and liabilities at March 31, 2023 and December 31, 2022.

Cash and due from banks: The carrying amounts of cash and due from banks approximate fair values. 41

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Interest-earning deposits: The carrying amounts of interest-earning term deposits held in banks approximate fair values.

Investment securities: The fair values of trading, available-for-sale, held-to-maturity, and equity securities are obtained from an independent third party and are based on quoted prices on a nationally recognized exchange (Level 1), where available. At this time, only the equity securities qualify as a Level 1 valuation. If quoted prices are not available, fair values are measured by utilizing matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2). Management made no adjustment to the fair value quotes that were received from the independent third party pricing service.

Sensitivity of significant unobservable inputs: The following is a description of the sensitivity of significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement and how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement.

Municipal bonds: The significant unobservable inputs used in the fair value measurement of the Company’s municipal bonds are premiums for unrated securities and marketability discounts. Significant increases (decreases) in either of those inputs in isolation would result in a significantly lower (higher) fair value measurement. In general, changes in either of those inputs will not affect the other input. The Company receives scheduled principal and interest payments from the municipalities based on the terms of the bonds. Management receives valuations on these investments on a quarterly basis from an outside party. As such, the carrying value is deemed to approximate fair value (Level 3).

Federal Home Loan Bank (“FHLB”) stock: The carrying value of FHLB stock approximates fair value based on the redemption provisions of the FHLB, resulting in a Level 2 classification. There have been no identified events or changes in circumstances that may have a significant adverse effect on the FHLB stock.

Loans receivable: The fair values of loans, excluding impaired loans, are estimated using discounted cash flow analyses, using market rates at the statement of financial condition date that reflect the credit and interest rate risk inherent in the loans, resulting in a Level 3 classification. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Future cash flows are then discounted using the Bank’s weighted average rate on new loans and thus the resulting fair value represents exit pricing. Generally, for variable rate loans that reprice frequently and with no significant changes in credit risk, fair values are based on carrying values.

Collateral-dependent and impaired loans: Impaired loans are those loans in which the Company has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties or discounted cash flows based upon expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. The fair value consists of loan balances less their valuation allowances.

Deposits: The fair values disclosed for demand deposits (e.g., interest and non-interest checking) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts), and are therefore classified as Level 1. Savings and money market account fair values are based on estimated decay rates and current costs. Fair values for fixed rate certificates of deposit, including brokered deposits, are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits. Due to the inputs necessary to calculate the fair value, savings and time deposits are considered Level 3 valuations that estimate exit pricing.

Accrued interest: The carrying amounts of accrued interest receivable and payable approximate fair value, and due to the short-term (30 days or less) nature of the balances, are considered Level 1. 42

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Borrowings: Fair values of FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity, resulting in a Level 2 classification. These prices obtained from this active market represent a fair value that is deemed to represent the transfer price if the liability were assumed by a third party.

The following table presents a comparison of the carrying amount and estimated fair value of the Company’s financial instruments:


		At March 31, 2023
		Carrying												Fair
(In thousands)	****	Amount		****	Level 1		****	Level 2		****	Level 3		****	Value
Financial assets:
Cash and cash equivalents		$	6,041		$	6,041		$	—		$	—		$	6,041
Interest-earning time deposits in banks			680			—			680			—			680
Securities available-for-sale			33,208			—			31,463			1,745			33,208
Securities held-to-maturity			1,552			—			1,309			—			1,309
Equity securities			315			315			—			—			315
Loans receivable, net			308,371			—			—			287,669			287,669
FHLB stock			990			—			990			—			990
Accrued interest receivable			1,319			1,319			—			—			1,319

Financial liabilities:
Deposits		$	337,033		$	87,724		$	—		$	235,657		$	323,381
Short-term borrowings			1,940			—			1,940			—			1,940
Long-term borrowings			8,357			—			7,286			—			7,286
Accrued interest payable			255			255			—			—			255


		At December 31, 2022
		Carrying												Fair
(In thousands)	****	Amount		****	Level 1		****	Level 2		****	Level 3		****	Value
Financial assets:
Cash and cash equivalents		$	8,004		$	8,004		$	—		$	—		$	8,004
Securities available-for-sale			33,050			—			31,335			1,715			33,050
Securities held-to-maturity			1,587			—			1,301			—			1,301
Equity securities			307			307			—			—			307
Loans receivable, net			303,880			—			—			294,897			294,897
FHLB stock			1,740			—			1,740			—			1,740
Accrued interest receivable			1,304			1,304			—			—			1,304

Financial liabilities:
Deposits		$	317,678		$	92,745		$	—		$	211,598		$	304,343
Short-term borrowings			16,200			—			16,311			—			16,311
Long-term borrowings			10,334			—			15,081			—			15,081
Accrued interest payable			162			162			—			—			162

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Generations Bancorp NY, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following tables summarize assets measured at fair value on a recurring basis, segregated by the level of valuation inputs within the hierarchy utilized to measure fair value:


		At March 31, 2023
											Total Fair
(In thousands)	****	Level 1		****	Level 2		****	Level 3		****	Value
Securities available-for-sale:
Debt investment securities:
Residential mortgage-backed - US agency and GSEs		$	—		$	23		$	—		$	23
Corporate bonds			—			17,879			—			17,879
Municipal bonds			—			13,561			1,745			15,306
Equity investment securities:
Large cap equity mutual fund			40			—			—			40
Other mutual funds			275			—			—			275
Total investment securities		$	315		$	31,463		$	1,745		$	33,523


		At December 31, 2022
											Total Fair
(In thousands)	****	Level 1		****	Level 2		****	Level 3		****	Value
Securities available-for-sale:
Debt investment securities:
Residential mortgage-backed - US agency and GSEs		$	—		$	24		$	—		$	24
Corporate bonds			—			18,194			—			18,194
Municipal bonds			—			13,117			1,715			14,832
Equity investment securities:
Large cap equity mutual fund			37			—			—			37
Other mutual funds			270			—			—			270
Total investment securities		$	307		$	31,335		$	1,715		$	33,357

The changes in Level 3 assets measured at estimated fair value on a recurring basis during the periods noted:


	****	Investment
(In thousands)		Securities

Balance - December 31, 2022		$	1,715
Total gains realized/unrealized:
Included in other comprehensive income			38
Principal payments/maturities			(8)
Balance - March 31, 2023		$	1,745


	****	Investment
(In thousands)		Securities
Balance - December 31, 2021		$	3,010
Total gains realized/unrealized:
Included in other comprehensive income			329
Principal payments/maturities			(834)
Balance - March 31, 2022		$	2,505

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Generations Bancorp NY, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

The following tables summarize assets measured at fair value on a nonrecurring basis segregated by the level of valuation inputs within the hierarchy utilized to measure fair value:


		At March 31, 2023
											Total Fair
(In thousands)	****	Level 1		****	Level 2		****	Level 3		****	Value
Collateral-dependent loans		$	—		$	—		$	102		$	102
Foreclosed real estate & repossessed assets			—			—			152			152


		At December 31, 2022
											Total Fair
(In thousands)	****	Level 1		****	Level 2		****	Level 3		****	Value
Impaired loans		$	—		$	—		$	—		$	—
Foreclosed real estate & repossessed assets			—			—			12			12

There have been no transfers of assets in or out of any fair value measurement level. 45

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Generations Bancorp NY, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following table presents additional quantitative information about assets measured at fair value on a recurring basis and for which Level 3 inputs were used to determine fair value:


		Quantitative Information about Level 3 Fair Value Measurements
	****	Valuation	****	Unobservable	Range
	****	Techniques	****	Input	(Weighted Avg.)
Investment type-
Other Investments		Scheduled principal		Cost to Sell	0%
		and interest payments
		Carrying value			100%

The following table presents quantitative information about Level 3 fair value measurements for assets measured at fair value on a nonrecurring basis at March 31, 2023 and December 31, 2022:


		Quantitative Information about Level 3 Fair Value Measurements
		Valuation		Unobservable	Range
	****	Techniques	****	Input	(Weighted Avg.)
Collateral-dependent and impaired loans -		Appraisal of collateral		Appraisal Adjustments	5% - 35% (20)%
One-to four-family residential				Costs to Sell	5% - 15% (10)%

Collateral-dependent and impaired loans -		Appraisal of collateral		Appraisal Adjustments	5% - 35% (25)%
Commercial business				Changes in property condition	10% - 20% (15)%
				Costs to Sell	5% - 15% (10)%

Foreclosed real estate and repossessed assets		Appraisal of collateral		Appraisal Adjustments	5% - 35% (25)%
				Changes in property condition	10% - 20% (15)%
				Costs to Sell	5% - 15% (10)%

Collateral-dependent loans: Collateral-dependent loans carried at fair value have been partially charged-off or receive specific allocations of the allowance for credit losses. The Company evaluates and values collateral-dependent impaired loans at the time the loan is identified as impaired, and the fair values of such loans are estimated using Level 3 inputs in the fair value hierarchy. Each loan’s collateral value has a unique appraisal and management’s discount of the value is based on the factors unique to each impaired loan. The significant unobservable input in determining the fair value is management’s subjective discount on appraisals of the collateral securing the loan. In addition, a discount is typically applied to account for estimated costs to sell. These real estate appraisals may include up to three approaches to value: the sales comparison approach, the income approach (for income-producing property) and the cost approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available, if applicable. Although the fair value of the property normally will be based on an appraisal, the valuation should be consistent with the price that a market participant will pay to purchase the property at the measurement date. Circumstances may exist that indicate that the appraised value is not an accurate measurement of the property’s current fair value. Examples of such circumstances include changed economic conditions since the last appraisal, stale appraisals, or imprecision and subjectivity in the appraisal process. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuations, and management’s expertise and knowledge of the client and client’s business. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. 46

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Generations Bancorp NY, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Foreclosed real estate & repossessed assets: Assets acquired through foreclosure, transfers in lieu of foreclosure or repossession are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Similar to the impaired loan disclosures above, fair value is commonly based on recent real estate appraisals, or estimated value from auction house or qualified dealer, and adjusted as deemed necessary by independent appraisers and management and estimated costs to sell resulting in a level 3 fair value classification. Foreclosed and repossessed assets are evaluated on a monthly basis to determine whether an additional reduction in the fair value less estimated costs to sell should be recorded.

13.Segment Information

The Company has three primary business segments, its community banking franchise, its insurance agency, and a limited-purpose commercial bank.

The community banking segment provides financial services to consumers and businesses principally in the Finger Lakes Region and Orleans County of New York State. These services include providing various types of loans to customers, accepting deposits, mortgage banking, and other traditional banking services. Parent company and treasury function income is included in the community-banking segment, as the majority of effort for these functions is related to this segment. Major revenue sources include net interest income and service fees on deposit accounts. Expenses include personnel and branch-network support charges.

The insurance agency segment offers insurance coverage to businesses and individuals in the Finger Lakes Region. The insurance activities consist of those conducted through the Bank’s wholly owned subsidiary, Generations Agency. The primary revenue source is commissions. Pursuant to a Management Agreement, which became effective on April 1, 2022, personnel and office support charges were assumed by Northwoods.

The municipal banking segment is a New York State chartered limited-purpose commercial bank formed expressly to enable local municipalities, primarily within the Finger Lakes Region and Northwest New York State, to deposit public funds with the Commercial Bank in accordance with existing NYS municipal law. The Commercial Bank is a wholly owned subsidiary of the Bank. The major revenue source is net interest income. Expenses include rent and support charges for using the assets and technology of the Bank. 47

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Generations Bancorp NY, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Information about the segments is presented in the following tables as of and for the periods as noted:


		Three Months Ended March 31,
		2023												2022
		Community						Municipal						Community						Municipal
		Banking			Insurance			Banking						Banking			Insurance			Banking
(In thousands)	****	Activities		****	Activities		****	Activities		****	Total		****	Activities		****	Activities		****	Activities		****	Total
Net interest income		$	2,465		$	—		$	59		$	2,524		$	2,835		$	—		$	60		$	2,895
Provision for loan losses			165			—			—			165			150			—			—			150
Net interest income after provision for loan losses			2,300			—			59			2,359			2,685			—			60			2,745
Total noninterest income			449			127			—			576			421			195			—			616
Compensation and benefits			(1,408)			—			—			(1,408)			(1,149)			(86)			—			(1,235)
Other noninterest expense			(1,699)			—			(20)			(1,719)			(1,604)			(30)			(21)			(1,655)
Income before income tax expense			(358)			127			39			(192)			353			79			39			471
Income tax (benefit) expense			(48)			—			8			(40)			68			—			7			75
Net (loss) income		$	(310)		$	127		$	31		$	(152)		$	285		$	79		$	32		$	396

The following represents a reconciliation of the Company’s reported segment assets:


				****
		At March 31,			At December 31,
(In thousands)	****	2023		****	2022

Total assets for reportable segments		$	407,556		$	402,776
Elimination of intercompany balances			(18,354)			(16,483)
Consolidated total assets		$	389,202		$	386,293

The accounting policies of each segment are the same as those described in the summary of significant accounting policies.

14. Recently Issued Accounting Pronouncements

There are no new accounting pronouncements applicable to the Company at March 31, 2023.

15. Subsequent Events

The Company has evaluated subsequent events through May 8, 2023, which is the date the consolidated financial statements were issued.

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ITEM 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Management’s discussion and analysis of the financial condition and results of operations at and for the three months ended March 31, 2023 and 2022 is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto, appearing on Part I, Item 1 of this quarterly report on Form 10-Q.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning. These forward-looking statements include, but are not limited to:

●	statements of our goals, intentions and expectations;
●	statements regarding our business plans, prospects, growth and operating strategies;
---	---
●	statements regarding the asset quality of our loan and investment portfolios; and
---	---
●	estimates of our risks and future costs and benefits.
---	---

These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

●	general economic conditions, either nationally or in our market areas, that are worse than expected;
●	changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses;
---	---
●	government-imposed limitations on our ability to foreclose on or repossess collateral for our loans;
---	---
●	government-mandated forbearance programs;
---	---
●	the success of our consumer loan portfolio, much of which is purchased from third-party originators, and is secured by collateral outside of our market area, including in particular, automobile, recreational vehicle and manufactured home loans,
---	---
●	our ability to access cost-effective funding, including by increasing core deposits and reducing reliance on wholesale funds;
---	---
●	fluctuations in real estate values in both residential and commercial real estate market conditions;
---	---
●	demand for loans and deposits in our market area;
---	---
●	our ability to implement and change our business strategies;
---	---

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●	the performance and availability of purchased loans;
●	competition among depository and other financial institutions;
---	---
●	inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments, or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make;
---	---
●	adverse changes in the securities or secondary mortgage markets;
---	---
●	changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements, including as a result of Basel III;
---	---
●	the impact of the Dodd-Frank Act and the implementing regulations;
---	---
●	changes in the quality or composition of our loan or investment portfolios;
---	---
●	technological changes that may be more difficult or expensive than expected;
---	---
●	the inability of third-party providers to perform as expected, including third-party loan originators;
---	---
●	our ability to manage market risk, credit risk, and operational risk in the current economic environment;
---	---
●	our ability to enter new markets successfully and capitalize on growth opportunities;
---	---
●	our ability to successfully integrate into our operations any assets, liabilities, customers, systems, and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames, and any goodwill charges related thereto;
---	---
●	changes in consumer spending, borrowing, and savings habits;
---	---
●	changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission, or the Public Company Accounting Oversight Board;
---	---
●	our ability to retain key employees;
---	---
●	our compensation expense associated with equity allocated or awarded to our employees; and
---	---
●	changes in the financial condition, results of operations, or future prospects of issuers of securities that we own.
---	---

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

Critical Accounting Policies

There are no material changes to the critical accounting policies disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022 except as noted in Note 1 to this Form 10-Q for the adoption of the CECL accounting standard.

Table of Contents The information for the three months ended March 31, 2023 and 2022 is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be achieved for the remainder of the year ending December 31, 2023 or any other period. ****

Emerging Growth Company Status

The Company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as the Company is an emerging growth company, it may choose to take advantage of exemptions from various reporting requirements applicable to other public companies. An emerging growth company may elect to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, but must make such election when the company is first required to file a registration statement. The Company has elected to use the extended transition period described above and intends to maintain its emerging growth company status as allowed under the JOBS Act.

Comparison of Financial Condition at March 31, 2023 and December 31, 2022

Total Assets. Total assets increased $2.9 million, or 0.8%, to $389.2 million at March 31, 2023 from $386.3 million at December 31, 2022. The increase resulted primarily from increases in net loans of $4.5 million and pension plan assets of $543,000, partially offset by a decrease in cash and cash equivalents of $2.0 million.

Net Loans. Net loans increased $4.5 million, or 1.5%, to $308.4 million at March 31, 2023 from $303.9 million at December 31, 2022. The increase resulted from increases in one- to four-family residential real estate loans of $5.7 million, or 4.1%, manufactured home loans of $837,000, or 1.6%, other consumer loans of $302,000, or 4.2%, and automobile loans of $218,000, or 0.9%, partially offset by decreases in recreational vehicle loans of $954,000, or 3.6%, nonresidential loans of $461,000, or 2.8%, and home equity loans and lines of credit of $343,000, or 3.0%.

Net deferred fees decreased $279,000, or 1.7%, during the three months ended March 31, 2023, representing primarily fees paid for purchased loans net of amortization, which is over the estimated loan lives.

Consistent with our business strategy, we intend to continue the purchase and origination of residential mortgage, automobile, and manufactured home loans. During the three months ended March 31, 2023, we purchased $6.7 million of residential mortgage loans, $2.7 million of automobile loans, and $1.9 million of manufactured home loans.

Pension Plan Assets. Pension plan assets increased $543,000, or 5.1%, to $11.2 million at March 31, 2023 from $10.7 million at December 31, 2022. The increase resulted from estimated returns on pension assets of $397,000 and employer contributions of $361,000, partially offset by estimated benefits paid of $63,000 and interest costs of $152,000.

Cash and Cash Equivalents. Cash and cash equivalents decreased $2.0 million, or 24.5%, to $6.0 million at March 31, 2023 from $8.0 million at December 31, 2022 as a result of increased loan originations along with repayments of our FHLB advances.

Deposits. Deposits increased $19.4 million, or 6.1%, to $337.0 million at March 31, 2023 from $317.7 million at December 31, 2022. Interest-bearing accounts increased $21.4 million, or 8.2%, to $284.5 million at March 31, 2023 from $263.1 million at December 31, 2022. The largest increase in interest-bearing deposits was in certificates of deposit which increased $29.5 million, or 27.8%, to $135.3 million at March 31, 2023 from $105.8 million at December 31, 2022 as customers shifted funds from lower yielding core deposit accounts into higher yielding certificate of deposit specials. Interest-bearing checking accounts decreased $2.9 million, or 7.7%, to $35.2 million at March 31, 2023 from $38.1 million at December 31, 2022. Savings accounts decreased $2.7 million, or 2.9%, to $90.0 million at March 31, 2023 from $92.6 million at December 31, 2022. Money market accounts decreased $2.4 million, or 9.0%, to $24.1 million at March 31, 2023 from $26.5 million at December 31, 2022. Noninterest-bearing deposits decreased $2.1 million, or 3.8%, to $52.5 million at March 31, 2023 from $54.6 million at December 31, 2022.

Table of Contents Municipal deposits held at Generations Commercial Bank increased $1.1 million, or 14.9%, to $8.8 million at March 31, 2023 from $7.6 million at December 31, 2022.

Federal Home Loan Bank Advances. Short-term Federal Home Loan Bank advances decreased $14.3 million, or 88.0%, to $1.9 million at March 31, 2023 from $16.2 million at December 31, 2022 as a result of repayments. Long-term Federal Home Loan Bank advances decreased $2.0 million, or 19.1%, to $8.4 million at March 31, 2023 from $10.3 million at December 31, 2022 as a result of repayments.

Total Equity. Total equity increased $193,000, or 0.5%, to $37.5 million at March 31, 2023 from $37.3 million at December 31, 2022. The increase was primarily due to a decrease in accumulated other comprehensive loss of $360,000 as a result of an increase in the fair market value of our investment securities available-for-sale, offset in part by a net loss of $152,000 during the three months ended March 31, 2023.

Comparison of Operating Results for the Three Months Ended March 31, 2023 and 2022

General. Net loss for the three months ended March 31, 2023 was $152,000 as compared to net income of $396,000 for the three months ended March 31, 2022, a decrease of $548,000, or 138.4%. The decrease was due to a $371,000 decrease in net interest income and a $40,000 decrease in noninterest income along with a $237,000 increase in noninterest expense and a $15,000 increase in provision for credit losses, partially offset by a $115,000 decrease in income tax expense.

Interest and Dividend Income. Interest and dividend income increased $523,000, or 16.1%, to $3.8 million for the three months ended March 31, 2023 from $3.2 million for the three months ended March 31, 2022. This increase was primarily attributable to a $398,000 increase in interest on loans receivable, a net increase of $66,000 in interest on investment securities, and an increase in interest on interest-earning deposits of $29,000. The average balance of loans increased $30.4 million, or 11.0%, to $307.2 million for the three months ended March 31, 2023 from $276.8 million for the three months ended March 31, 2022. The average yield on loans increased 10 basis points to 4.36% for the three months ended March 31, 2023 from 4.26% for the three months ended March 31, 2022, reflecting an increase in higher-yielding loans quarter over quarter. The average balance of investment securities decreased $4.4 million, or 11.2%, to $34.8 million for the three months ended March 31, 2023 from $39.2 million for the three months ended March 31, 2022. The average yield on investment securities increased 111 basis points to 3.91% for the 2023 period from 2.80% for the 2022 period due to rising interest rates and lower premium amortization expense during the three months ended March 31, 2023.

Interest Expense. Total interest expense increased $894,000, or 252.5%, to $1.2 million for the three months ended March 31, 2023 from $354,000 for the three months ended March 31, 2022. Interest expense on total interest-bearing deposits increased $845,000, or 305.1%, to $1.1 million for the three months ended March 31, 2023 from $277,000 for the three months ended March 31, 2022. The increase was attributable to an increase of $49.9 million, or 64.8%, in the average balance of certificate of deposit accounts to $127.0 million for the three months ended March 31, 2023 from $77.1 million for the three months ended March 31, 2022, in addition to an increase in the average cost of 250 basis points to 3.12% for the three months ended March 31, 2023 from 0.62% for the same period in 2022. Interest expense on borrowings increased $49,000, or 63.6%, to $126,000 for the three months ended March 31, 2023 from $77,000 for the three months ended March 31, 2022, as a result of an increase in the average borrowing costs of 115 basis points to 3.01% for the three months ended March 31, 2023 from 1.86% for the three months ended March 31, 2022 due to rising interest rates. The average balance of borrowings increased $199,000, or 1.2%, to $16.8 million for the three months ended March 31, 2023 from $16.6 million for the three months ended March 31, 2022.

Net Interest Income. Net interest income decreased $371,000, or 12.8%, to $2.5 million for the three months ended March 31, 2023 from $2.9 million for the three months ended March 31, 2022. Our net interest rate spread decreased 75 basis points to 2.63% for the three months ended March 31, 2023 from 3.38% for the three months ended March 31, 2022. Our net interest margin decreased 56 basis points to 2.90% for the three months ended March 31, 2023 from 3.46% for the same period in 2022. Net interest rate spread and net interest margin were affected primarily by the increase in the cost of our interest-bearing liabilities between the comparable periods.

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Provision for Credit Losses. Based on management’s analysis of the allowance for credit losses described in Note 6 of our interim consolidated financial statements “Allowance for Credit Losses,” we recorded a provision for credit losses of $165,000 for the three months ended March 31, 2023 as compared to a provision for loan losses of $150,000 for the three months ended March 31, 2022. The allowance for credit losses was $2.7 million, or 0.90%, of total loans at March 31, 2023 as compared to $2.5 million, or 0.86%, of total loans at December 31, 2022. The increase in provision for credit losses for the 2023 period was primarily due to overall growth in the loan portfolio.

Noninterest Income. Noninterest income decreased $40,000, or 6.5%, to $576,000 for the three months ended March 31, 2023 from $616,000 for the three months ended March 31, 2022. The decrease was primarily due to a decrease in insurance commissions, partially offset by increases in change in fair value on equity securities and other charges, commissions, and fees. Insurance commissions decreased $68,000, or 34.5%, to $129,000 for the three months ended March 31, 2023 from $197,000 for the three months ended March 31, 2022 as a result of the Management Agreement with Northwoods whereby Northwoods assumed customer service responsibilities for Generations Insurance Agency, Inc. effective April 1, 2022. Change in fair value on equity securities increased $20,000, or 166.7%, to $8,000 for the three months ended March 31, 2023 from a loss of $12,000 for the three months ended March 31, 2022 due to an increase in the fair market value of our equity securities. Other charges, commissions, and fees increased $19,000, or 95.0%, to $39,000 for the three months ended March 31, 2023 from $20,000 for the three months ended March 31, 2022 primarily due to a gain recognized on the sale of a foreclosed property.

Noninterest Expense. Noninterest expense increased $237,000, or 8.2%, to $3.1 million for the three months ended March 31, 2023 from $2.9 million for the three months ended March 31, 2022 primarily due to an increase in compensation and benefits. Compensation and benefits increased $173,000, or 14.0%, to $1.4 million for the three months ended March 31, 2023 from $1.2 million for the three months ended March 31, 2022 as a result of annual merit increases for our employees as well as a decrease in pension expense benefit.

Income Taxes. Income tax expense decreased $115,000, or 153.3%, to an income tax benefit of $40,000 for the three months ended March 31, 2023 as compared to income tax expense of $75,000 for the three months ended March 31, 2022. The effective tax rate was 20.8% for the three months ended March 31, 2023 as compared to 15.9% for the three months ended March 31, 2022. The statutory tax rate was impacted by the benefits derived from tax-exempt bond income, as well as income received on bank-owned life insurance. The increase in the current quarter’s effective tax rate was a result of an increase in permanent tax differences and state tax expense proportional to total income, which was a loss for the three months ended March 31, 2023.

Table of Contents Average Balances and Yields. The following table sets forth average balance sheets, average yield and costs, and certain other information at the dates and for the periods indicated. No tax-equivalent yield adjustments have been made. Any adjustments necessary to present yields on a tax-equivalent basis are insignificant. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or interest expense. Net deferred loan costs amortized totaled approximately $482,000 and $443,000 for the three months ended March 31, 2023 and 2022, respectively.


	Three Months Ended March 31,
	2023							2022
	Average							Average
	Balance							Balance
	Outstanding			Interest		Yield/ Rate		Outstanding			Interest		Yield/ Rate
Interest-earning assets:
Loans	$	307,222		$	3,348	4.36	%	$	276,800		$	2,950	4.26	%
Securities		34,803			340	3.91			39,201			274	2.80
Interest-earning deposits		5,356			45	3.36			17,392			16	0.37
Other		1,287			39	12.12			1,384			9	2.60
Total interest-earning assets		348,668			3,772	4.33			334,777			3,249	3.88
Non-interest-earning assets		41,013							41,549
Total assets	$	389,681						$	376,326

Interest-bearing liabilities:
Demand deposits	$	32,999		$	25	0.30	%	$	46,352		$	14	0.12	%
Money market accounts		25,401			22	0.35			32,007			28	0.35
Savings accounts		91,735			86	0.37			112,171			115	0.41
Certificates of deposit		127,010			989	3.12			77,076			120	0.62
Total interest-bearing deposits		277,145			1,122	1.62			267,606			277	0.41
Borrowings		16,768			126	3.01			16,569			77	1.86
Total interest-bearing liabilities		293,913			1,248	1.70			284,175			354	0.50
Other non-interest bearing liabilities		58,499							49,153
Total liabilities		352,412							333,328
Equity		37,269							42,998
Total liabilities and equity	$	389,681						$	376,326

Net interest income				$	2,524						$	2,895
Interest rate spread						2.63	%						3.38	%
Net interest-earning assets	$	54,755						$	50,602
Net interest margin						2.90	%						3.46	%
Average interest-earning assets to average
interest-bearing liabilities		118.63	%						117.81	%

Table of Contents Loan and Asset Quality and Allowance for Credit Losses. The following table represents information concerning the aggregate amount of non-performing assets at the indicated dates:


	At March 31,		At December 31,
(In thousands)	2023		2022

Non-accrual loans:
Residential:
One- to four-family	$	1,703	$	2,605
Commercial:
Real estate - nonresidential		412		416
Commercial business		537		587
Consumer:
Home equity and junior liens		129		172
Manufactured homes		368		368
Automobile		40		21
Student		59		68
Recreational vehicle		275		135
Other consumer		35		—
Total non-accrual loans	$	3,558	$	4,372

Real estate owned:
Residential:
One- to four-family	$	152	$	12
Total real estate owned	$	152	$	12

Total non-performing assets	$	3,710	$	4,384

Ratios:
Total non-performing loans to total loans		1.20%		1.51%
Total non-performing loans to total assets		0.91%		1.13%
Total non-performing assets to total assets		0.95%		1.13%

Non-performing assets include non-accrual loans, non-accruing TDRs (prior to January 1, 2023), and foreclosed real estate. The Company generally places a loan on non-accrual status and ceases accruing interest when loan payment performance is deemed unsatisfactory and the loan is past due 90 days or more. At March 31, 2023 there were no loans that were past due 90 days or more and still accruing interest.

As indicated in the table above, non-performing assets were $3.7 million at March 31, 2023 and $4.4 million at December 31, 2022. At March 31, 2023, the Bank had 29 non-performing one- to four-family residential mortgage loans for $1.7 million, two non-performing nonresidential loans for $412,000, three non-performing commercial business loans for $537,000, six home equity loans and lines of credit for $129,000, three non-performing manufactured home loans for $368,000, four non-performing automobile loans for $40,000, five non-performing student loans for $59,000, five non-performing recreational vehicle loans for $275,000, and two non-performing other consumer loans for $35,000. At December 31, 2022, the Bank had 37 non-performing one- to four-family residential mortgage loans for $2.6 million, two non-performing nonresidential loans for $416,000, four non-performing commercial business loans for $587,000, eight home equity loans and lines of credit for $172,000, three non-performing manufactured home loans for $368,000, two non-performing automobile loans for $21,000, six non-performing student loans for $68,000, and two non-performing recreational vehicle loans for $135,000. The Bank had $152,000 in real estate owned at March 31, 2023 and $12,000 in real estate owned at December 31, 2022.

The allowance for credit losses represents management’s estimate of losses inherent in the loan portfolio as of the date of the consolidated statement of financial condition. The allowance for credit losses was $2.7 million at March 31, 2023 and $2.5 million at December 31, 2022. The Company reported an increase in the ratio of the allowance for 55

Table of Contents credit losses to gross loans to 0.90% at March 31, 2023 as compared to 0.86% at December 31, 2022. Management performs a quarterly evaluation of the allowance for credit losses based on quantitative and qualitative factors and has determined that the current level of the allowance for credit losses is adequate to absorb the losses in the loan portfolio as of March 31, 2023.

The Company had no loans which were deemed to be impaired at December 31, 2022.

Management has identified potential credit problems which may result in the borrowers not being able to comply with the current loan repayment terms and which may result in it being included in future impaired loan reporting. Management has identified potential problem loans totaling $9.8 million as of March 31, 2023 as compared to $11.0 million at December 31, 2022. These loans have been internally classified as special mention or substandard, yet are not currently considered impaired. The decrease of $1.2 million was primarily driven by a decrease in residential mortgage loans classified as substandard as a result of loan upgrades and loan payoffs. Based on current information available at March 31, 2023, these loans were re-evaluated for their range of potential losses and reclassified accordingly.

Liquidity and Capital Resources. Liquidity is the ability to meet financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. The Bank’s primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from the sale of loans, and proceeds from the sale or maturities of securities. In addition, the Bank may borrow from the FHLB. At March 31, 2023, the Bank had $10.3 million outstanding in advances from the FHLB and had the ability to borrow approximately $58.3 million based on our collateral capacity. At March 31, 2023, the Bank had an additional $15.5 million in lines of credit available with other financial institutions and as such no advances received can exceed 50% of the Bank’s capital. At March 31, 2023 and December 31, 2022, there were no outstanding advances on these lines.

On March 12, 2023, in response to liquidity concerns in the banking system, the Federal Deposit Insurance Corporation, Federal Reserve Board, and U.S. Department of Treasury, collaboratively approved certain actions with a stated intention to reduce stress across the financial system, support financial stability, and minimize any impact on businesses, households, taxpayers, and the broader economy. Among other actions, the Federal Reserve Board has created a new Bank Term Funding Program (“BTFP”) to make additional funding available to eligible depository institutions to help ensure institutions can meet the needs of their depositors. Eligible institutions may obtain liquidity against a wide range of collateral. BTFP advances can be requested through at least March 11, 2024. The Company has not requested funding through the BTFP as of March 31, 2023, but has an established relationship with the Federal Reserve to take advantage of this program.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and equity and available-for-sale investments. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash used in operating activities was $377,000 for the three months ended March 31, 2023 and $596,000 for the three months ended March 31, 2022. Net cash used in investing activities, which consists primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on loans and proceeds from the sale of and maturing securities, was $4.6 million for the three months ended March 31, 2023 and net cash provided by investing activities was $2.2 million for the three months ended March 31, 2022. Net cash provided by financing activities, consisting primarily of the activity in deposit accounts and FHLB advances, was $3.0 million for the three months ended March 31, 2023 and $1.1 million for the three months ended March 31, 2022.

We are committed to maintaining a satisfactory liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments.

Table of Contents Generations Bancorp is a separate corporate entity from Generations Bank and it must provide for its own liquidity to pay any dividends to its stockholders, to repurchase any shares of its common stock, and for other corporate purposes. Generations Bancorp’s primary source of liquidity is any dividend payments it may receive from Generations Bank. Generations Bank paid a dividend of $1.0 million to Generations Bancorp during the three months ended March 31, 2023. Generations Bank paid a dividend of $1.3 million to Generations Bancorp for the year ended December 31, 2022. At March 31, 2023, Generations Bancorp (on an unconsolidated, stand-alone basis) had cash and investment securities totaling $2.7 million.

At March 31, 2023 and December 31, 2022, Generations Bank exceeded all its regulatory capital requirements and was categorized as well capitalized. See Note 9 to the interim condensed consolidated financial statements. Management is unaware of any conditions or events since the most recent notification that would change our category.

ITEM 3. Quantitative and Qualitative Disclosures About Market R isk

Not applicable, as the Registrant is a smaller reporting company.

ITEM 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2023. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Registrant’s disclosure controls and procedures were effective.

During the quarter ended March 31, 2023, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1.Legal Proceedings

We are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on our financial condition or results of operations.

ITEM 1A.Risk Factor

Not applicable, as the Registrant is a smaller reporting company.

Table of Contents

ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides certain information with regard to shares repurchased by the Company in the first quarter of 2023**.**


				Total
				Number of
				Shares	Maximum
				Purchased as	Number of
				Part of	Shares that
	Total			Publicly	May Yet Be
	Number of		Average	Announced	Purchased under the
	Shares		Price Paid	Plans or	Plans or
Period	Purchased		per Share	Programs	Programs
January 1 - January 31, 2023	5,819	$	10.98	5,819	1,777
February 1 - February 28, 2023	689	$	10.90	689	1,088
March 1 - March 31, 2023	1,088	$	10.75	1,088	—
Total	7,596	$	10.94	7,596

The Company’s Board of Directors authorized its first stock repurchase program on March 28, 2022 to acquire up to 83,300 shares, or 3.4 %, of the Company’s then outstanding common stock. On July 25, 2022, the Board of Directors authorized a second stock repurchase program to acquire up to 87,000 shares, or approximately 3.6%, of the Company’s outstanding common stock at the conclusion of the first stock repurchase program. As of August 11, 2022, all 83,300 shares from the Company’s first repurchase program had been repurchased. As of March 31, 2023, all 87,000 shares from the Company’s second repurchase program had been repurchased. All of the repurchases were made pursuant to a publicly announced plan and were made from time to time depending on market conditions and other factors, and were conducted through open market or private transactions, through block trades, and pursuant to any trading plan that may have been adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission.

ITEM 3.Defaults Upon Senior Securities

None.

ITEM 4.Mine Safety Disclosures

None.

ITEM 5.Other Information

None.

Table of Contents

ITEM 6.Exhibits

Exhibit Index

Exhibit Number	****	Description
10.1		Employment Agreement by and between Generations Bank and Anthony G. Cutrona
<br><br>31.1		<br><br>Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002<br><br>
31.2<br><br>		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002<br><br>
32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101)

Table of Contents SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		GENERATIONS BANCORP NY, INC.


Date: May 8, 2023		/s/ Menzo D. Case
		Menzo D. Case
		Chief Executive Officer


Date: May 8, 2023		/s/ Angela M. Krezmer
		Angela M. Krezmer
		Chief Financial Officer

Exhibit 10.1

GENERATIONS BANK

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is made effective as of January 31, 2022 (the “Effective Date”), by and between Generations Bank, a federally chartered savings bank with its principal office in Seneca Falls, New York (the “Bank”), and Anthony G. Cutrona (“Executive”). References to the “Company” mean Generations Bancorp NY, Inc., a Maryland corporation that owns 100% of the common stock of the Bank. The Company shall be a signatory to this Agreement for the sole purpose of guaranteeing the Bank’s performance hereunder.

WHEREAS, Anthony G. Cutrona (the “Executive”) is currently employed as a Senior Vice President of Generations Bank; and

WHEREAS, the Executive is willing to serve the Bank on the terms and conditions hereinafter set forth; and

WHEREAS, the Compensation Committee of the Bank and the Executive believe it is in the best interests of the Bank to enter into this Agreement in order to reinforce and reward the Executive for his service and dedication to the continued success of the Bank.

**** NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

1.	POSITION AND RESPONSIBILITIES.

During the period of his employment hereunder, Executive agrees to continue to serve as Senior Vice President of the Bank (the “Executive Position”). During said period, Executive also agrees to continue to serve as an officer of the Bank. Failure to re-appoint Executive to Executive Position without the consent of Executive during the term of this Agreement (except for any termination for Cause, as defined herein) shall constitute a breach of this Agreement.

2.	TERM AND DUTIES.
(a)	The period of Executive’s employment under this Agreement shall begin as of the date first above written and shall continue for a period of 24 full calendar months thereafter. Commencing on the first anniversary date of this Agreement, and continuing at each anniversary date thereafter, the Agreement shall renew for an additional year such that the remaining term shall be 24 full calendar months; provided, however, if written notice of nonrenewal is provided to Executive at least ten days and not more than 30 days prior to any anniversary date, the term of this Agreement shall not so renew. On an annual basis prior to the deadline for the notice period referenced above, the President and CEO of the Company (“CEO”) shall conduct a performance review of Executive for purposes of determining whether to provide notice of nonrenewal.
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(b)	During the period of his employment hereunder, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence approved by the CEO, Executive shall devote substantially all his business time, attention, skill, and efforts to the faithful performance of his duties hereunder including activities and services related to the organization, operation and management of the Bank; provided, however, that, with the approval of the CEO, from time to time, Executive may serve, or continue to serve, on the boards of directors of, and hold any other offices or positions in, business companies or business organizations, which, in the CEO’s judgment, will not present any conflict of interest with the Bank, or materially affect the performance of Executive’s duties pursuant to this Agreement it being understood that membership in and service on boards or committees of social, religious, charitable or similar organizations does not require the CEO’s approval pursuant to this Section 2(b). For purposes of this Section 2(b), CEO approval shall be deemed to have been granted as to service with any such business company or organization that Executive was serving as of the date of this Agreement.
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3.	COMPENSATION, BENEFITS AND REIMBURSEMENT.
---	---
(a)	The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2(b). The Bank shall pay Executive as compensation a salary of not less than $142,564 per year (“Base Salary”). Such Base Salary shall be payable biweekly, or with such other frequency as officers and employees are generally paid. During the period of this Agreement, Executive’s Base Salary shall be reviewed at least annually. Such review will be conducted by the CEO, and the Bank may increase, but not decrease (except a decrease that is generally applicable to all employees) Executive’s Base Salary (with any increase in Base Salary to become “Base Salary” for purposes of this Agreement). In addition to the Base Salary provided in this Section 3(a), the Bank shall provide Executive at no cost to Executive with all such other benefits as are provided uniformly to permanent full-time employees of the Bank. Base Salary shall include any amounts of compensation deferred by Executive under qualified and nonqualified plans maintained by the Bank.
---	---
(b)	The Bank will provide Executive with employee benefit plans, arrangements and perquisites substantially equivalent to those in which Executive was participating or otherwise deriving benefit from immediately prior to the beginning of the term of this Agreement, and the Bank will not, without Executive’s prior written consent, make any changes in such plans, arrangements or perquisites which would adversely affect Executive’s rights or benefits thereunder, except as to any changes that are applicable to all participating employees or as reasonably or customarily available. Without limiting the generality of the foregoing provisions of this Subsection (b), Executive will be entitled to participate in or receive benefits under any employee benefit plans including, but not limited to, retirement plans, supplemental retirement plans, pension plans, profit-sharing plans, health-and-accident insurance plans, medical coverage or any other employee benefit plan or arrangement made available by the Bank or the Company in the future to its senior executives and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. Executive will be entitled to incentive compensation and bonuses as provided in any plan of the Bank or the Company in which Executive is eligible to participate. Nothing paid to Executive under any such plan or arrangement will be deemed to be in lieu of other compensation to which Executive is entitled under this Agreement.
---	---
(c)	In addition to the Base Salary provided for by paragraph (a) of this Section 3, the Bank or the Company shall pay or reimburse Executive for all reasonable travel and other reasonable expenses incurred by Executive performing his obligations under this Agreement and may provide such additional compensation in such form and such amounts as the Board may from time to time determine. The Bank shall reimburse Executive for his ordinary and necessary business expenses, including travel and entertainment expenses, including in connection with the performance of his duties under this Agreement, upon presentation to the Bank of an itemized account of such expenses in such form as the Bank may reasonably require. All reimbursements shall be paid promptly by the Bank and in any event no later than March 15 of the year immediately following the year in which the expense was incurred.
---	---
4.	PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
---	---
(a)	Upon the occurrence of an Event of Termination (as herein defined) during Executive’s term of employment under this Agreement, the provisions of this section shall apply. As used in this Agreement, an “Event of Termination” shall mean and include any one or more of the following: (i) the termination by the Bank of Executive’s full-time employment hereunder for any reason other than a termination for Cause, as defined in Section 8 hereof, or a termination upon Retirement as defined in Section 7 hereof, or a termination for Disability as set forth in Section 6(a) hereof; and (ii) to the extent permitted under Code Section 409A, Executive’s resignation from the Bank’s employ for “Good Reason.” Good Reason shall mean any of the following: (A) failure to elect or reelect or to appoint or reappoint Executive to Executive Position, unless consented to by Executive, (B) a material change in Executive’s function, duties, or responsibilities, which change would cause Executive’s position to become one of lesser responsibility, importance, or scope from the position and attributes thereof described in Sections 1 and 2 above, to which Executive has not agreed in writing (and any such material change shall be deemed a
---	---
continuing breach of this Agreement), (C) a relocation of Executive’s principal place of employment to a location that is more than 25 miles from the location of the Bank’s principal executive offices as of the date of this Agreement, or a material reduction in Base Salary (except for any reduction that is part of an employee-wide reduction in pay or benefits), or (D) material breach of this Agreement by the Bank. Upon the occurrence of any event described in clauses (ii) (A), (B), (C), or (D) above, Executive shall have the right to elect to terminate his employment under this Agreement by resignation within ninety (90) days) after the event giving rise to said right to elect, which termination by Executive shall be an Event of Termination. The Bank shall have at least (30) days to remedy any condition set forth in clause (ii) (A) through (D), provided, however, that the Bank shall be entitled to waive such period and make an immediate payment hereunder. If the Bank remedies the condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition. If the Bank does not remedy the condition within such thirty (30) day cure period, then Executive may deliver a Notice of Termination, as defined in Section 9(c) below, for Good Reason at any time within sixty (60) days following the expiration of such cure period. No payments or benefits shall be due to Executive under this Agreement upon the termination of Executive’s employment except as provided in Section 4 or 5 hereof.
---
(b)	Upon the occurrence of an Event of Termination, the Bank shall pay Executive, or, in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, as severance pay or liquidated damages, or both, a lump sum cash amount equal to one and one-half times the sum of the highest annual rate of Base Salary paid to Executive at any time under the Agreement. Such payments shall not be reduced in the event Executive obtains other employment following termination of employment, and shall be payable within thirty (30) days following the Executive’s Event of Termination. Notwithstanding the foregoing, in the event the Executive is a Specified Employee (as defined herein), then, solely, to the extent required to avoid penalties under Code Section 409A, the Executive’s payment under this Section 4(b) shall be delayed until the first day of the seventh month following the Executive ‘s Event of Termination. A “Specified Employee” shall be interpreted to comply with Code section 409A and shall mean a key employee within the meaning of Code Section 416(i) (without regard to paragraph 5 thereof) but an individual shall be a “Specified Employee” only if the Bank or Company is or becomes a publicly traded company.
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(c)	Upon the occurrence of an Event of Termination, the Bank will provide at the Bank’s expense, life insurance and non-taxable medical and dental coverage substantially comparable, as reasonably or customarily available, to the coverage maintained by the Bank for Executive prior to his termination, except to the extent such coverage may be changed in its application to all Bank employees. Such coverage shall cease 18 months following the Event of Termination. Notwithstanding the foregoing, if applicable law (including, but not limited to, laws prohibiting discriminating in favor of highly compensated employees), or, if participation by the Executive is not permitted under the terms of the applicable health plans, or if providing such benefits would subject the Bank to penalties, then the Bank shall pay the Executive a cash lump sum payment reasonably estimated to be equal to the cost of such nontaxable life, medical and dental insurance, with such payment to be made by lump sum within thirty (30) business days of the Event of Termination, or if later, the date on which the Bank determines that such insurance coverage (or the remainder of such insurance coverage) cannot be provided for the foregoing reasons.
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(d)	Upon the occurrence of an Event of Termination, any non-vested stock options granted to Executive under any stock option plan or restricted stock plan of the Bank will fully vest.
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(e)	For purposes of this Agreement, “Event of Termination” as used herein shall mean “Separation from Service” as defined in Code Section 409A and the Treasury Regulations promulgated thereunder, such that the Bank and Executive reasonably anticipate that the level of bona fide services Executive would perform after termination would permanently decrease to a level that is less than 50% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 24-month period.
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5.	CHANGE IN CONTROL.
---	---
(a)	“Change in Control” shall mean any of the following:
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(1)“Change in Control” shall mean (i) a change in the ownership of the Bank or Company, (ii) a change in the effective control of the Bank or Company, or (iii) a change in the ownership of a substantial portion of the assets of the Bank or Company, as described below.

(2)A change in the ownership of a corporation occurs on the date that any one person, or more than one person acting as a group (as defined in Final Regulations section 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Bank or Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of such corporation. For these purposes, a change in ownership will not be deemed to have occurred if no stock of the Bank or Company is outstanding.

(3)A change in the effective control of the Bank or Company occurs on the date that either (i) any one person, or more than one person acting as a group (as defined in Final Regulations section 1.409A-3(i)(5)(vi)(D)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Bank or Company possessing 30 percent or more of the total voting power of the stock of such Bank or Company, or (ii) a majority of the members of the Bank’s or Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Bank’s or Company’s board of directors prior to the date of the appointment or election, provided that this subsection “(ii)” is inapplicable where a majority shareholder of the Bank or Company is another corporation.

(4)A change in a substantial portion of the Bank’s or Company’s assets occurs on the date that any one person or more than one person acting as a group (as defined in Final Regulations section 1.409A-3(i)(5)(vii)(C)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Bank or Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of (i) all of the assets of the Bank or Company, or (ii) the value of the assets being disposed of, either of which is determined without regard to any liabilities associated with such assets. For all purposes hereunder, the definition of Change in Control shall be construed to be consistent with the requirements of Final Regulations section 1.409A3(i)(5), except to the extent that such final regulations are superseded by subsequent guidance.

(5)Notwithstanding anything herein to the contrary, a minority stock offering or mutual to stock conversion of the Bank’s mid-tier mutual holding company to fully converted stock holding company shall not be considered a “Change in Control” of the Bank or the mid-tier mutual holding company.

(b)	If any of the events described in Section 5(a) hereof constituting a Change in Control shall have occurred or the Board has determined that a Change in Control has occurred, Executive shall be entitled to the benefits provided in paragraphs (c) and (d) of this Section 5 regardless of whether he has terminated employment in connection with the Change in Control.
(c)	Upon the occurrence of a Change in Control, Executive, or, in the event of his death following a Change in Control, his beneficiary or beneficiaries, or his estate, as the case may be, shall receive as severance pay or liquidated damages, or both, an amount equal to two times the highest annual rate of Base Salary paid to Executive at any time under the Agreement or Prior Agreement which shall be paid in a lump sum distribution on the effective date of the Change in Control.
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(d)	If the Executive is entitled to payments and benefits under this Section 5(c), the Executive will not be entitled to payments and benefits under Section 4 of this Agreement.
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(e)	Upon the occurrence of a Change in Control, any non-vested stock options granted to Executive under any stock option plan or restricted stock plan of the Bank will fully vest.
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6.	TERMINATION FOR DISABILITY OR DEATH.
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(a)	Termination of Executive’s employment based on “Disability” shall be construed to comply with Code section 409A and shall be deemed to have occurred if (i) the Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death, or last for a continuous period of not less than 12 months; (ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death, or last for a continuous period of not less than 12 months, the Executive is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Bank or Company; or (iii) the Executive is determined to be totally disabled by the Social Security Administration. The provisions of paragraph 6(b) and (c) shall apply upon the termination of the Executive’s employment for Disability.
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(b)	The Bank will pay Executive, as Disability pay, a bi-weekly payment equal to seventy-five percent (75%) of Executive’s bi-weekly rate of Base Salary commencing on the date the Executive is determined to be Disabled. These Disability payments will be paid bi-weekly and will end on the earlier (i) the date Executive returns to the full-time employment of the Bank in the same capacity as he was employed prior to his termination for Disability; (ii) Executive’s full-time employment by another employer; (iii) Executive attains the age of 65; or (iv) Executive’s death. The Disability pay shall be reduced by the amount, if any, paid to Executive under any plan of the Bank or the Company providing disability benefits to Executive.
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(c)	The Bank will cause to be continued life insurance and non-taxable medical and dental coverage substantially comparable, as reasonable or customarily available, to the coverage maintained by the Bank for Executive prior to his termination for Disability, except to the extent such coverage may be changed in its application to all Bank employees or not available on an individual basis to an employee termination for Disability. This coverage shall cease upon the earlier of (i) the date Executive returns to the full-time employment of the Bank in the same capacity as he was employed prior to his termination for Disability; (ii) Executive’s full-time employment by another employer; (iii) Executive attaining the age of 65; or (iv) Executive’s death.
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(d)	In the event of Executive’s death during the term of the Agreement, his estate, legal representatives or named beneficiaries (as directed by executive in writing) shall be paid Executive’s Base Salary as defined in paragraph 3(a) at the rate in effect at the time of Executive’s death for a period of one (1) year from the date of Executive’s death in accordance with regular payroll practices, and the Bank will continue to provide medical, dental and other insurance benefits normally provided for Executive’s family (in accordance with its customary co-pay percentages) for one year after Executive’s death.
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7.	TERMINATION UPON RETIREMENT.
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Termination of Executive’s employment based on “Retirement” shall mean termination of Executive’s employment at age 65 or in accordance with any retirement policy established by the Board with Executive’s consent with respect to him. Upon termination of Executive based on Retirement, no amounts or benefits shall be due to the Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Bank and other plans to which Executive is a party.

8.	TERMINATION FOR CAUSE.

The term “Termination for Cause” shall mean termination because of Executive’s personal dishonesty, incompetence, willful misconduct, any breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of this Agreement. Executive’s employment shall not be terminated in

accordance with this paragraph for any act or action or failure to act which is undertaken or omitted in accordance with a resolution of the Board or upon advice of the Bank’s counsel. Notwithstanding the foregoing, Executive shall not be deemed to have been Terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the members of the Board at a meeting of the Board called and held for that purpose (after reasonable notice to Executive and an opportunity for him, together with counsel, to be heard before the Board), finding that in the good faith opinion of the Board, Executive was guilty of conduct justifying Termination for Cause and specifying the particulars thereof in detail. Executive shall not have the right to receive compensation or other benefits for any period after Termination for Cause. Any non-vested stock options granted to Executive under any stock option plan of the Bank, the Company or any subsidiary or affiliate thereof, shall become null and void effective upon Executive’s receipt of Notice of Termination for Cause pursuant to Section 9 hereof, and shall not be exercisable by Executive at any time subsequent to such Termination for Cause (unless it is determined in arbitration that grounds for Termination for Cause did not exist, in which event all terms of the options as of the date of termination shall apply, and any time periods for exercising such options shall commence from the date of resolution in arbitration).

9.	NOTICE.

Any purported termination by the Bank for Cause shall be communicated by Notice of Termination to Executive. If, within 30 days after any Notice of Termination for Cause is given, Executive notifies the Bank that a dispute exists concerning the termination, the parties shall promptly proceed to arbitration. Notwithstanding the pendency of any such dispute, the Bank may discontinue to pay Executive compensation until the dispute is finally resolved in accordance with this Agreement. If it is determined that Executive is entitled to compensation and benefits under Section 4 or 5 of this Agreement, the payment of such compensation and benefits by the Bank shall commence immediately following the date of resolution by arbitration, with interest due Executive on the cash amount that would have been paid pending arbitration (at the prime rate as published in The Wall Street Journal from time to time).

(b)Any other purported termination by the Bank or by Executive shall be communicated by a Notice of Termination to the other party. If, within 30 days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the parties shall promptly proceed to arbitration as provided in Section 19 of this Agreement. Notwithstanding the pendency of any such dispute, the Bank shall continue to pay Executive his Base Salary, and other compensation and benefits in effect when the notice giving rise to the dispute was given (except as to termination of Executive for Cause). In the event the voluntary termination by Executive of his employment is disputed by the Bank, and if it is determined in arbitration that Executive is not entitled to termination benefits pursuant to this Agreement, he shall return all cash payments made to him pending resolution by arbitration, with interest thereon at the prime rate as published in The Wall Street Journal from time to time if it is determined in arbitration that Executive’s voluntary termination of employment was not taken in good faith and not in the reasonable belief that grounds existed for his voluntary termination.

(c)For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and “Date of Termination” shall mean the date of the Notice of termination.

10.	NON-COMPETITION AND POST-TERMINATION OBLIGATIONS.
(a)	All payments and benefits to Executive under this Agreement shall be subject to Executive’s compliance with paragraph (b), (c) and (d) of this Section 10.
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(b)	Executive shall, upon reasonable notice, furnish such information and assistance to the Bank as may reasonably be required by the Bank in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between the Executive and the Bank or any of its subsidiaries or affiliates.
(c)	Executive recognizes and acknowledges that the knowledge of the business activities and plans for business activities of the Bank, the Company and affiliates thereof, as it may exist from time to time, is a valuable, special and unique asset of the business of the Employers. Executive will not, during or after the term of his employment, disclose any knowledge of the past, present, planned or considered business activities of the Employers or affiliates thereof to any person, film, corporation, or other entity for any reason or purpose whatsoever (except for such disclosure as may be required to be provided to either the Office of the Comptroller of the Currency or the Board of Governors of the Federal Reserve System (together, the “Regulator”), the Federal Deposit Insurance Corporation (“FDIC”), or other regulatory agency with jurisdiction over the Bank, the Company, or Executive). Notwithstanding the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Bank, and Executive may disclose any information regarding the Bank which is otherwise publicly available or which Executive is otherwise legally required to disclose. In the event of a breach or threatened breach by Executive of the provisions of this Section 10, the Bank and the Company will be entitled to an injunction restraining Executive from disclosing, in whole or in part, his knowledge of the past, present, planned or considered business activities of the Bank or the Company or any of their affiliates, or from rendering any services to any person, firm, corporation, other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing herein will be construed as prohibiting the Bank and the Company from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.
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(d)	Upon any termination of Executive’s employment hereunder pursuant to Section 4 of this Agreement, Executive agrees not to compete with the Bank and the Company and any of their subsidiaries for a period of one year following such termination in any city, town or county in which the Bank has an office or has filed an application for regulatory approval to establish an office, determined as of the effective date of such termination, except as agreed to pursuant to a resolution duly adopted by the Board. Executive agrees that during such period and within said cities, towns and counties, Executive shall not work for or advise, consult or otherwise serve with, directly or indirectly, any entity whose business materially competes with the depository, lending or other business activities of the Bank. The parties hereto, recognizing that irreparable injury will result to the Bank, its business and property in the event of Executive’s breach of this Section l0(d) agree that in the event of any such breach by Executive, the Bank will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by Executive, Executive’s partners, agents, servants, employers, employees and all persons acting for or with Executive. Executive represents and admits that Executive’s experience and capabilities are such that Executive can obtain employment in a business engaged in other lines and/or of a different nature than the Bank, and that the enforcement of a remedy by way of injunction will not prevent Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Bank and the Company from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.
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11.	SOURCE OF PAYMENTS.
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All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank. The Company, however, guarantees payment and provision of all amounts and benefits due hereunder to Executive, and if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company.

12.	EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor of the Bank and Executive, including the Prior Agreement, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement.

13.	NO ATTACHMENT; BINDING ON SUCCESSORS.
(a)	Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assigtm1en,t encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void, and of no effect.
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(b)	This Agreement shall be binding upon, and inure to the benefit of, Executive and the Bank and their respective successors and assigns.
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14.	MODIFICATION AND WAIVER.
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(a)	This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.
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(b)	No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived.
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15.	REQUIRED PROVISIONS.
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(a)	The Bank may terminate Executive’s employment at any time, but any termination by the Bank’s Board other than Termination for Cause as defined in Section 8 hereof shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall have no right to receive compensation or other benefits for any period after Termination for Cause.
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(b)	If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) [12 USC §1818(e)(3)] or 8(g)(l) [12 USC §l 818(g)(l )] of the Federal Deposit Insurance Act, the Bank’s obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended.
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(c)	If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) [12 USC §1818(e)(4)] or 8(g)(l) [12 USC §1818(g)(l)] of the Federal Deposit Insurance Act, all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.
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(d)	If the Bank is in default as defined in Section 3(x)(l) [12 USC §1813(x)(l)] of the Federal Deposit Insurance Act, all obligations of the Bank under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.
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(e)	All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank, (i) by the Regulator, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) [12 USC §1823(c)] of the Federal Deposit Insurance Act; or (ii) by the Director or his or her designee at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action.
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(f)	Notwithstanding anything herein contained to the contrary, any payments to Executive by the Company, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.
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16.	SEVERABILITY.
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If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

17.	HEADINGS FOR REFERENCE ONLY.

The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

18.	GOVERNING LAW.

This Agreement shall be governed by the laws of the State of New York but only to the extent not superseded by federal law.

19.	ARBITRATION.

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators sitting in a location selected by the Executive within twenty-five miles of Seneca Falls, New York in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of his right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

20.	PAYMENT OF LEGAL FEES.

All reasonable legal fees paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, provided that the dispute or interpretation has been settled by Executive and the Bank or resolved in Executive’s favor, and that such reimbursement shall occur as soon as practicable but not later than two and one-half months after the dispute is settled or resolved in Executive’s favor.

21.	INDEMNIFICATION.

The Bank shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense, and shall indemnify Executive (and his heirs, executors and administrators) for the term of the Agreement and for a period of six years thereafter to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his having been a director or officer of the Bank (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and the cost of reasonable settlements (such settlements must be approved by the Board), provided, however, the Bank shall not be required to indemnify or reimburse Executive for legal expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive. Any such indemnification shall be made consistent with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. §1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359.

22.	NOTICE.

For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:

	<br><br><br><br>
To the Company:	Generations Bancorp NY, Inc.<br><br>20 E Bayard St<br><br>Seneca Falls, New York 13148

To the Bank:<br><br>	Generations Bank<br><br>20 E Bayard St<br><br>Seneca Falls, New York 13148

To Executive:<br><br>	Anthony G. Cutrona<br><br>At the address last appearing on the personnel records of the Bank

SIGNATURES

IN WITNESS WHEREOF, the Company and the Bank have caused this Agreement to be executed by their duly authorized representatives, and Executive has signed this Agreement, on the day and date first above written. The Company has become a party to this Agreement for the sole purpose of binding itself to the duties and obligations set forth in Section 11 hereof.

GENERATIONS BANCORP NY, INC.

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January 31, 2022 By: /s/ Menzo D. Case

Date Menzo D. Case, President & CEO

GENERATIONS BANK

****

January 31, 2022 By: /s/ Menzo D. Case

Date Menzo D. Case, President & CEO

EXECUTIVE

****

January 31, 2022 /s/ Anthony G. Cutrona

Date Anthony G. Cutrona, Senior Vice President

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Menzo D. Case, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Generations Bancorp NY, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

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Date: May 8, 2023		/s/ Menzo D. Case
		Menzo D. Case
		Chief Executive Officer

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Angela M. Krezmer, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Generations Bancorp NY, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

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Date: May 8, 2023		/s/ Angela M. Krezmer
		Angela M. Krezmer
		Chief Financial Officer

Exhibit 32

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Menzo D. Case, Chief Executive Officer and Angela M. Krezmer, Chief Financial Officer of Generations Bancorp NY, Inc., (the “Company”) certify in their capacity as officers of the Company that they have reviewed the quarterly report on Form 10-Q for the quarter ended March 31, 2023 (the “Report”) and that to the best of their knowledge:

1.	the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: May 8, 2023		/s/ Menzo D. Case
		Menzo D. Case
		Chief Executive Officer


Date: May 8, 2023		/s/ Angela M. Krezmer
		Angela M. Krezmer
		Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.