(4) Securities

Securities at September 30, 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	$	8,633	$	211	$	-	$	8,844
State and political subdivisions		14,211		21		-		14,232
Mortgage-backed securities-residential		8,924		181		22		9,083
Mortgage-backed securities-multi-family		28,206		115		216		28,105
Asset-backed securities		14		-		1		13
Corporate debt securities		4,557		338		17		4,878
Total debt securities		64,545		866		256		65,155
Equity securities		62		98		-		160
Total securities available for sale		64,607		964		256		65,315
Securities held to maturity:
U.S. government sponsored enterprises		2,000		-		111		1,889
State and political subdivisions		95,411		835		132		96,114
Mortgage-backed securities-residential		21,467		1,016		-		22,483
Mortgage-backed securities-multi-family		64,451		781		1,993		63,239
Other securities		906		-		23		883
Total securities held to maturity		184,235		2,632		2,259		184,608
Total securities	$	248,842	$	3,596	$	2,515	$	249,923

Securities at June 30, 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	$	10,648	$	250	$	-	$	10,898
State and political subdivisions		1,324		23		-		1,347
Mortgage-backed securities-residential		9,345		213		13		9,545
Mortgage-backed securities-multi-family		29,268		89		339		29,018
Asset-backed securities		15		-		2		13
Corporate debt securities		4,811		375		16		5,170
Total debt securities		55,411		950		370		55,991
Equity securities		62		98		-		160
Total securities available for sale		55,473		1,048		370		56,151
Securities held to maturity:
U.S. government sponsored enterprises		2,000		-		102		1,898
State and political subdivisions		91,634		787		204		92,217
Mortgage-backed securities-residential		22,785		1,150		-		23,935
Mortgage-backed securities-multi-family		64,605		759		2,381		62,983
Other securities		922		1		24		899
Total securities held to maturity		181,946		2,697		2,711		181,932
Total securities	$	237,419	$	3,745	$	3,081	$	238,083

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 September 30, 2014 and June 30, 2014, 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 September 30, 2014.

	Less Than 12 Months						More Than 12 Months						Total
(In thousands, except number of securities)	Fair Value		Unrealized Losses		Number of Securities		Fair Value		Unrealized Losses		Number of Securities		Fair Value		Unrealized Losses		Number of Securities
Securities available for sale:
Mortgage-backed securities-residential	$	4,154	$	22		2	$	-	$	-		-	$	4,154	$	22		2
Mortgage-backed securities-multi-family		2,880		22		2		15,523		194		6		18,403		216		8
Asset-backed securities		-		-		-		13		1		1		13		1		1
Corporate debt securities		764		17		2		-		-		-		764		17		2
Total securities available for sale		7,798		61		6		15,536		195		7		23,334		256		13
Securities held to maturity:
U.S. government sponsored enterprises		1,889		111		1		-		-		-		1,889		111		1
State and political subdivisions		6,516		119		29		928		13		5		7,444		132		34
Mortgage-backed securities-multi-family		26,705		1,426		7		11,595		567		5		38,300		1,993		12
Other securities		130		2		2		402		21		2		532		23		4
Total securities held to maturity		35,240		1,658		39		12,925		601		12		48,165		2,259		51
Total securities	$	43,038	$	1,719		45	$	28,461	$	796		19	$	71,499	$	2,515		64

	Less Than 12 Months						More Than 12 Months						Total
(In thousands, except number of securities)	Fair Value		Unrealized Losses		Number of Securities		Fair Value		Unrealized Losses		Number of Securities		Fair Value		Unrealized Losses		Number of Securities
Securities available for sale:
Mortgage-backed securities-residential	$	4,302	$	13		2	$	-	$	-		-	$	4,302	$	13		2
Mortgage-backed securities-multi-family		4,448		5		3		19,404		334		7		23,852		339		10
Asset-backed securities		-		-		-		13		2		1		13		2		1
Corporate debt securities		767		16		2		-		-		-		767		16		2
Total securities available for sale		9,517		34		7		19,417		336		8		28,934		370		15
Securities held to maturity:
U.S. government sponsored enterprises		1,898		102		1		-		-		-		1,898		102		1
State and political subdivisions		6,693		175		34		1,815		29		11		8,508		204		45
Mortgage-backed securities-multi-family		26,522		1,617		7		15,440		764		6		41,962		2,381		13
Other securities		130		2		2		401		22		2		531		24		4
Total securities held to maturity		35,243		1,896		44		17,656		815		19		52,899		2,711		63
Total securities	$	44,760	$	1,930		51	$	37,073	$	1,151		27	$	81,833	$	3,081		78

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 September 30, 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 quarters ended September 30, 2014 and 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 quarters ended September 30, 2014 and 2013.

The estimated fair values of debt securities at September 30, 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	$	17,093	$	17,134
After one year through five years		5,686		6,025
After five years through ten years		4,622		4,795
After ten years		-		-
Total available for sale debt securities		27,401		27,954
Mortgage-backed and asset-backed securities		37,144		37,201
Equity securities		62		160
Total available for sale securities		64,607		65,315

Held to maturity debt securities
Within one year		28,754		28,788
After one year through five years		40,980		41,500
After five years through ten years		20,487		20,525
After ten years		8,096		8,073
Total held to maturity debt securities		98,317		98,886
Mortgage-backed		85,918		85,722
Total held to maturity securities		184,235		184,608
Total securities	$	248,842	$	249,923

As of September 30, 2014 and June 30, 2014, respectively, securities with an aggregate fair value of $205.4 million and $210.0 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 September 30, 2014 and June 30, 2014, securities with an aggregate fair value of $4.9 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 quarters ended September 30, 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 fiscal quarters ended September 30, 2014 or 2013.