Note 3. Securities

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 June 30, 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 Company’s current securities investment strategy utilizes a risk management approach of diversified investing among three categories: short-, intermediate- and long-term. The emphasis of this approach is to increase overall investment securities yields while managing interest rate risk. The Company will only invest in high quality securities as determined by management’s analysis at the time of purchase. The Company does not engage in any derivative or hedging transactions, such as interest rate swaps or caps.

Securities at June 30, 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	$	4,587	$	304	$	-	$	4,891
State and political subdivisions		60,491		8		-		60,499
Mortgage-backed securities-residential		6,360		185		5		6,540
Mortgage-backed securities-multi-family		22,594		1,285		-		23,879
Asset-backed securities		5		-		-		5
Corporate debt securities		4,028		129		-		4,157
Total debt securities		98,065		1,911		5		99,971
Equity securities		62		90		-		152
Total securities available-for-sale		98,127		2,001		5		100,123
Securities held-to-maturity:
U.S. government sponsored enterprises		2,000		32		-		2,032
State and political subdivisions		99,040		5,003		3		104,040
Mortgage-backed securities-residential		13,543		606		-		14,149
Mortgage-backed securities-multi-family		87,204		3,471		4		90,671
Corporate debt securities		1,000		-		-		1,000
Other securities		2,148		18		-		2,166
Total securities held-to-maturity		204,935		9,130		7		214,058
Total securities	$	303,062	$	11,131	$	12	$	314,181

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

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, 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	$	924	$	5		1	$	-	$	-		-	$	924	$	5		1
Total securities available-for-sale		924		5		1		-		-		-		924		5		1
Securities held-to-maturity:
State and political subdivisions		272		2		1		175		1		2		447		3		3
Mortgage-backed securities-multi-family		499		4		4		-		-		-		499		4		4
Total securities held-to-maturity		771		6		5		175		1		2		946		7		7
Total securities	$	1,695	$	11		6	$	175	$	1		2	$	1,870	$	12		8

	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

Management evaluated these securities considering the factors as outlined in Note 1 of these consolidated financial statements, and based on this evaluation, the Company does not consider these investments to be other-than-temporarily impaired at June 30, 2016. Management believes that the reasons for the decline in fair value are due to interest rates, widening credit spreads and market illiquidity at the reporting date.

There were no transfers of securities available-for-sale to held-to-maturity during the year ended June 30, 2016 or 2015. During the years ended June 30, 2016 and 2015, there were no sales of securities and no gains or losses were recognized. There were no other-than-temporary impairment losses recognized during the years ended June 30, 2016 and 2015.

The estimated fair values of debt securities at June 30, 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	$	60,946	$	60,960
After one year through five years		8,160		8,587
After five years through ten years		-		-
After ten years		-		-
Total available-for-sale debt securities		69,106		69,547
Mortgage-backed and asset-backed securities		28,959		30,424
Equity securities		62		152
Total available-for-sale securities		98,127		100,123

Held-to-maturity debt securities
Within one year		14,049		14,336
After one year through five years		52,196		54,076
After five years through ten years		26,629		28,324
After ten years		11,314		12,502
Total held-to-maturity debt securities		104,188		109,238
Mortgage-backed		100,747		104,820
Total held-to-maturity securities		204,935		214,058
Total securities	$	303,062	$	314,181

As of June 30, 2016 and 2015, respectively, securities with an aggregate fair value of $291.6 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 June 30, 2016 and 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 years ended June 30, 2016 or 2015.