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Securities
9 Months Ended
Mar. 31, 2016
Securities [Abstract]  
Securities
(4)
Securities

Securities at March 31, 2016 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
 
$
4,592
  
$
293
  
$
-
  
$
4,885
 
  State and political subdivisions
  
63,238
   
8
   
-
   
63,246
 
  Mortgage-backed securities-residential
  
6,738
   
159
   
13
   
6,884
 
  Mortgage-backed securities-multi-family
  
22,933
   
959
   
1
   
23,891
 
  Asset-backed securities
  
5
   
-
   
1
   
4
 
  Corporate debt securities
  
4,033
   
154
   
6
   
4,181
 
Total debt securities
  
101,539
   
1,573
   
21
   
103,091
 
  Equity securities
  
62
   
93
   
-
   
155
 
Total securities available-for-sale
  
101,601
   
1,666
   
21
   
103,246
 
Securities held-to-maturity:
                
  U.S. government sponsored enterprises
  
2,000
   
14
   
-
   
2,014
 
  State and political subdivisions
  
97,729
   
3,410
   
7
   
101,132
 
  Mortgage-backed securities-residential
  
15,072
   
621
   
-
   
15,693
 
  Mortgage-backed securities-multi-family
  
73,587
   
2,047
   
23
   
75,611
 
  Corporate debt securities
  
1,000
   
-
   
-
   
1,000
 
  Other securities
  
2,188
   
15
   
1
   
2,202
 
Total securities held-to-maturity
  
191,576
   
6,107
   
31
   
197,652
 
Total securities
 
$
293,177
  
$
7,773
  
$
52
  
$
300,898
 
 
Securities at June 30, 2015 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
 
$
7,608
  
$
247
  
$
-
  
$
7,855
 
  State and political subdivisions
  
39,574
   
9
   
1
   
39,582
 
  Mortgage-backed securities-residential
  
7,797
   
155
   
10
   
7,942
 
  Mortgage-backed securities-multi-family
  
25,291
   
486
   
42
   
25,735
 
  Asset-backed securities
  
10
   
-
   
1
   
9
 
  Corporate debt securities
  
4,544
   
242
   
12
   
4,774
 
Total debt securities
  
84,824
   
1,139
   
66
   
85,897
 
  Equity securities
  
62
   
75
   
-
   
137
 
Total securities available-for-sale
  
84,886
   
1,214
   
66
   
86,034
 
Securities held-to-maturity:
                
  U.S. government sponsored enterprises
  
2,000
   
-
   
49
   
1,951
 
  State and political subdivisions
  
81,501
   
2,137
   
187
   
83,451
 
  Mortgage-backed securities-residential
  
17,468
   
768
   
-
   
18,236
 
  Mortgage-backed securities-multi-family
  
67,239
   
990
   
665
   
67,564
 
  Other securities
  
792
   
-
   
18
   
774
 
Total securities held-to-maturity
  
169,000
   
3,895
   
919
   
171,976
 
Total securities
 
$
253,886
  
$
5,109
  
$
985
  
$
258,010
 

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 issued by these entities.  As of March 31, 2016, all mortgage-backed securities including collateralized mortgage obligations were securities of government sponsored enterprises, 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, 2016.


                            
  
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
 
$
2,406
  
$
13
   
2
  
$
-
  
$
-
     
$
2,406
  
$
13
   
2
 
  Mortgage-backed securities-multi-family
  
1,876
   
1
   
1
   
-
   
-
      
1,876
   
1
   
1
 
  Asset-backed securities
  
-
   
-
   
-
   
4
   
1
   
1
   
4
   
1
   
1
 
  Corporate debt securities
  
-
   
-
   
-
   
494
   
6
   
1
   
494
   
6
   
1
 
Total securities available-for-sale
  
4,282
   
14
   
3
   
498
   
7
   
2
   
4,780
   
21
   
5
 
Securities held-to-maturity:
                                    
  State and political subdivisions
  
969
   
6
   
11
   
26
   
1
   
1
   
995
   
7
   
12
 
  Mortgage-backed securities-multi-family
  
6,333
   
23
   
5
   
-
   
-
   
-
   
6,333
   
23
   
5
 
  Other securities
  
-
   
-
   
-
   
161
   
1
   
1
   
161
   
1
   
1
 
Total securities held-to-maturity
  
7,302
   
29
   
16
   
187
   
2
   
2
   
7,489
   
31
   
18
 
Total securities
 
$
11,584
  
$
43
   
19
  
$
685
  
$
9
   
4
  
$
12,269
  
$
52
   
23
 
 
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 June 30, 2015.

                            
  
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:
                           
  State and political subdivisions
 
$
799
  
$
1
   
1
  
$
-
  
$
-
     
$
799
  
$
1
   
1
 
  Mortgage-backed securities-residential
  
-
   
-
   
-
   
1,630
   
10
   
1
   
1,630
   
10
   
1
 
  Mortgage-backed securities-multi-family
  
2,023
   
26
   
1
   
753
   
16
   
1
   
2,776
   
42
   
2
 
  Asset-backed securities
  
-
   
-
   
-
   
9
   
1
   
1
   
9
   
1
   
1
 
  Corporate debt securities
  
273
   
2
   
1
   
491
   
10
   
2
   
764
   
12
   
3
 
Total securities available-for-sale
  
3,095
   
29
   
3
   
2,883
   
37
   
5
   
5,978
   
66
   
8
 
Securities held-to-maturity:
                                    
  U.S. government sponsored enterprises
  
-
   
-
   
-
   
1,951
   
49
   
1
   
1,951
   
49
   
1
 
  State and political subdivisions
  
11,171
   
143
   
49
   
1,221
   
44
   
9
   
12,392
   
187
   
58
 
  Mortgage-backed securities-multi-family
  
14,464
   
100
   
4
   
28,187
   
565
   
6
   
42,651
   
665
   
10
 
  Other securities
  
334
   
11
   
1
   
202
   
7
   
1
   
536
   
18
   
2
 
Total securities held-to-maturity
  
25,969
   
254
   
54
   
31,561
   
665
   
17
   
57,530
   
919
   
71
 
Total securities
 
$
29,064
  
$
283
   
57
  
$
34,444
  
$
702
   
22
  
$
63,508
  
$
985
   
79
 

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, 2016. 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 and three months ended March 31, 2016 and 2015, 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, 2016 and 2015.
 
The estimated fair values of debt securities at March 31, 2016, 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
 
$
63,694
  
$
63,723
 
   After one year through five years
  
8,169
   
8,589
 
   After five years through ten years
  
-
   
-
 
   After ten years
  
-
   
-
 
Total available-for-sale debt securities
  
71,863
   
72,312
 
Mortgage-backed and asset-backed securities
  
29,676
   
30,779
 
Equity securities
  
62
   
155
 
Total available-for-sale securities
  
101,601
   
103,246
 
         
Held-to-maturity debt securities
        
   Within one year
  
14,012
   
14,201
 
   After one year through five years
  
52,959
   
54,390
 
   After five years through ten years
  
25,455
   
26,601
 
   After ten years
  
10,491
   
11,156
 
         Total held-to-maturity debt securities
  
102,917
   
106,348
 
Mortgage-backed
  
88,659
   
91,304
 
Total held-to-maturity securities
  
191,576
   
197,652
 
Total securities
 
$
293,177
  
$
300,898
 

As of March 31, 2016 and June 30, 2015, respectively, securities with an aggregate fair value of $277.4 million and $223.1 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, 2016 and June 30, 2015, securities with an aggregate fair value of $4.2 million and $4.8 million, respectively, 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 months ended March 31, 2016 or 2015.

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, 2016 or 2015.