(4)	Securities

Securities at March 31, 2014 consisted of the following:


(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available for sale:
U.S. government sponsored enterprises	$	12,666	$	226	$	-	$	12,892
State and political subdivisions		1,327		24		5		1,346
Mortgage-backed securities-residential		5,293		187		-		5,480
Mortgage-backed securities-multi-family		26,633		154		582		26,205
Asset-backed securities		15		-		1		14
Corporate debt securities		4,815		390		23		5,182
Total debt securities		50,749		981		611		51,119
Equity securities		62		99		-		161
Total securities available for sale		50,811		1,080		611		51,280
Securities held to maturity:
U.S. government sponsored enterprises		3,000		3		115		2,888
State and political subdivisions		84,421		611		395		84,637
Mortgage-backed securities-residential		23,948		1,127		-		25,075
Mortgage-backed securities-multi-family		64,742		696		2,682		62,756
Other securities		978		-		31		947
Total securities held to maturity		177,089		2,437		3,223		176,303
Total securities	$	227,900	$	3,517	$	3,834	$	227,583

Securities at June 30, 2013 consisted of the following:

(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available for sale:
U.S. government sponsored enterprises	$	12,729	$	260	$	-	$	12,989
State and political subdivisions		1,849		29		20		1,858
Mortgage-backed securities-residential		7,340		193		-		7,533
Mortgage-backed securities-multi-family		42,096		289		466		41,919
Asset-backed securities		17		-		1		16
Corporate debt securities		4,827		380		31		5,176
Total debt securities		68,858		1,151		518		69,491
Equity securities		68		85		-		153
Total securities available for sale		68,926		1,236		518		69,644
Securities held to maturity:
U.S. treasury securities		5,500		17		-		5,517
U.S. government sponsored enterprises		2,999		16		113		2,902
State and political subdivisions		82,801		362		755		82,408
Mortgage-backed securities-residential		29,077		1,515		9		30,583
Mortgage-backed securities-multi-family		55,086		1,236		1,093		55,229
Other securities		1,056		-		35		1,021
Total securities held to maturity		176,519		3,146		2,005		177,660
Total securities	$	245,445	$	4,382	$	2,523	$	247,304

Greene County Bancorp, Inc.’s current policies generally limit securities investments to U.S. Government and securities of government sponsored enterprises, federal funds sold, municipal bonds, corporate debt obligations and certain mutual funds. In addition, the Company’s policies permit investments in mortgage-backed securities, including securities issued and guaranteed by Fannie Mae, Freddie Mac, and GNMA, and collateralized mortgage obligations. The Company’s investments in mortgage-backed securities include pass-through securities and collateralized mortgage obligations issued and guaranteed by Fannie Mae, Freddie Mac, and GNMA. As of March 31, 2014 and June 30, 2013, no private-label mortgage-backed securities or collateralized mortgage obligations were held in the securities portfolio. The Company’s investments in state and political subdivisions securities generally are municipal obligations that are general obligations supported by the general taxing authority of the issuer, and in some cases are insured. The obligations issued by school districts are supported by state aid. Primarily, these investments are issued by municipalities within New York State.

The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2014.

	Less Than 12 Months				More Than 12 Months				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Securities available for sale:
State and political subdivisions	$	803	$	5	$	-	$	-	$	803	$	5
Mortgage-backed securities-multi-family		21,358		520		963		62		22,321		582
Asset-backed securities		-		-		14		1		14		1
Corporate debt securities		761		23		-		-		761		23
Total securities available for sale		22,922		548		977		63		23,899		611
Securities held to maturity:
U.S. government sponsored enterprises		1,885		115		-		-		1,885		115
State and political subdivisions		14,310		390		64		5		14,374		395
Mortgage-backed securities-multi-family		31,952		1,842		9,377		840		41,329		2,682
Other securities		443		25		81		6		524		31
Total securities held to maturity		48,590		2,372		9,522		851		58,112		3,223
Total securities	$	71,512	$	2,920	$	10,499	$	914	$	82,011	$	3,834

	Less Than 12 Months				More Than 12 Months				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Securities available for sale:
State and political subdivisions	$	791	$	20	$	-	$	-	$	791	$	20
Mortgage-backed securities-multi-family		33,298		466		-		-		33,298		466
Asset-backed securities		-		-		16		1		16		1
Corporate debt securities		758		31		-		-		758		31
Total securities available for sale		34,847		517		16		1		34,863		518
Securities held to maturity:
U.S. government sponsored enterprises		1,887		113		-		-		1,887		113
State and political subdivisions		28,597		745		1,597		10		30,194		755
Mortgage-backed securities-residential		1,228		9		-		-		1,228		9
Mortgage-backed securities-multi-family		33,044		1,093		-		-		33,044		1,093
Other securities		753		35		-		-		753		35
Total securities held to maturity		65,509		1,995		1,597		10		67,106		2,005
Total securities	$	100,356	$	2,512	$	1,613	$	11	$	101,969	$	2,523

At March 31, 2014, there were 76 securities which have been in a continuous unrealized loss position for less than 12 months and 9 securities with a continuous unrealized loss position of more than 12 months. When the fair value of a held to maturity or available for sale security is less than its amortized cost basis, an assessment is made as to whether other-than-temporary impairment (“OTTI”) is present. The Company considers numerous factors when determining whether a potential OTTI exists and the period over which the debt security is expected to recover. The principal factors considered are (1) the length of time and the extent to which the fair value has been less than the amortized cost basis, (2) the financial condition of the issuer (and guarantor, if any) and adverse conditions specifically related to the security, industry or geographic area, (3) failure of the issuer of the security to make scheduled interest or principal payments, (4) any changes to the rating of the security by a rating agency, and (5) the presence of credit enhancements, if any, including the guarantee of the federal government or any of its agencies.

For debt securities, OTTI is considered to have occurred if (1) the Company intends to sell the security, (2) it is more likely than not the Company will be required to sell the security before recovery of its amortized cost basis, or (3) if the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. In determining the present value of expected cash flows, the Company discounts the expected cash flows at the effective interest rate implicit in the security at the date of acquisition. In estimating cash flows expected to be collected, the Company uses available information with respect to security prepayment speeds, default rates and severity. In determining whether OTTI has occurred for equity securities, the Company considers the applicable factors described above and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

For debt securities, credit-related OTTI is recognized in income while noncredit related OTTI on securities not expected to be sold is recognized in other comprehensive income (“OCI”). Credit-related OTTI is measured as the difference between the present value of an impaired security’s expected cash flows and its amortized cost basis. Noncredit-related OTTI is measured as the difference between the fair value of the security and its amortized cost less any credit-related losses recognized. For securities classified as held to maturity, the amount of OTTI recognized in OCI is accreted to the credit-adjusted expected cash flow amounts of the securities over future periods. For equity securities, the entire amount of OTTI is recognized in income. Management evaluated securities considering the factors as outlined above, and based on this evaluation the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2014. Management believes that the reasons for the decline in fair value are due to interest rates and widening credit spreads at the end of the quarter.

During the nine months ended March 31, 2014, $11.7 million of securities available-for-sale were transferred to held-to-maturity and included primarily mortgage-backed securities. These securities were transferred at fair value which reflected a net unrealized loss of $805,000. This unrealized loss is being accreted to other comprehensive income over the remaining average lives of these securities.

During the nine and three months ended March 31, 2014, there were no sales of securities and no gains or losses were recognized. During the nine months ended March 31, 2013, a gain on sale of $10,000 was recognized on a security that was previously written off as other-than-temporarily impaired. During the three months ended March 31, 2013, there were no sales of securities and no gains or losses were recognized. There was no other-than-temporary impairment loss recognized during the nine and three months ended March 31, 2014 and 2013.

The estimated fair values of debt securities at March 31, 2014, by contractual maturity are shown below. Expected maturities may differ from contractual maturities, because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

(In thousands)

Available for sale debt securities	Amortized Cost		Fair Value
Within one year	$	5,278	$	5,309
After one year through five years		8,615		9,050
After five years through ten years		4,915		5,061
After ten years		-		-
Total available for sale debt securities		18,808		19,420
Mortgage-backed and asset-backed securities		31,941		31,699
Equity securities		62		161
Total available for sale securities		50,811		51,280

Held to maturity debt securities
Within one year		19,440		19,464
After one year through five years		30,528		30,874
After five years through ten years		25,655		25,545
After ten years		12,776		12,589
Total held to maturity debt securities		88,399		88,472
Mortgage-backed		88,690		87,831
Total held to maturity securities		177,089		176,303
Total securities	$	227,900	$	227,583

As of March 31, 2014 and June 30, 2013, respectively, securities with an aggregate fair value of $197.5 million and $200.9 million were pledged as collateral for deposits in excess of FDIC insurance limits for various municipalities placing deposits with Greene County Commercial Bank. As of March 31, 2014 and June 30, 2013, securities with an aggregate fair value of $5.2 million were pledged as collateral for potential borrowings at the Federal Reserve Bank discount window. Greene County Bancorp, Inc. did not participate in any securities lending programs during the nine and three months ended March 31, 2014 or 2013.

Federal Home Loan Bank Stock

Federal law requires a member institution of the Federal Home Loan Bank (“FHLB”) system to hold stock of its district FHLB according to a predetermined formula. This stock is restricted in that it can only be sold to the FHLB or to another member institution, and all sales of FHLB stock must be at par. As a result of these restrictions, FHLB stock is carried at cost. FHLB stock is held as a long-term investment and its value is determined based on the ultimate recoverability of the par value. Impairment of this investment is evaluated quarterly and is a matter of judgment that reflects management’s view of the FHLB’s long-term performance, which includes factors such as the following: its operating performance; the severity and duration of declines in the fair value of its net assets related to its capital stock amount; its commitment to make payments required by law or regulation and the level of such payments in relation to its operating performance; the impact of legislative and regulatory changes on the FHLB, and accordingly, on the members of the FHLB; and its liquidity and funding position. After evaluating these considerations, Greene County Bancorp, Inc. concluded that the par value of its investment in FHLB stock will be recovered and, therefore, no other-than-temporary impairment charge was recorded during the nine and three months ended March 31, 2014 or 2013.