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EXCEL - IDEA: XBRL DOCUMENT - GREENE COUNTY BANCORP INCFinancial_Report.xls
EX-31.1 - EXHIBIT 31.1 - GREENE COUNTY BANCORP INCex31_1.htm
EX-32.1 - EXHIBIT 32.1 - GREENE COUNTY BANCORP INCex32_1.htm
EX-31.2 - EXHIBIT 31.2 - GREENE COUNTY BANCORP INCex31_2.htm
EX-32.2 - EXHIBIT 32.2 - GREENE COUNTY BANCORP INCex32_2.htm

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2015

OR

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

GREENE COUNTY BANCORP, INC.

(Exact name of registrant as specified in its charter)

Commission file number  0-25165

United States
 
14-1809721
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer  Identification Number)

302 Main Street, Catskill, New York
 
12414
(Address of principal executive office)
 
(Zip code)

Registrant's telephone number, including area code: (518) 943-2600

Check 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes: ☒     No: ☐

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

Large accelerated filer   ☐
Accelerated filer ☐
Non-accelerated filer    ☐
Smaller reporting company ☒

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

As of May 13, 2015, the registrant had 4,222,357 shares of common stock outstanding at $ 0.10 par value per share.
 


GREENE COUNTY BANCORP, INC.

INDEX

PART I.
FINANCIAL INFORMATION
 
   
Page
Item 1.
Financial Statements (unaudited)
 
 
3
 
4
 
6
 
7
 
8
 
9-29
     
Item 2.
30-43
     
Item 3.
44
     
Item 4.
44
     
PART II.
OTHER INFORMATION
 
     
Item 1.
45
     
Item 1A.
45
     
Item 2.
45
     
Item 3.
45
     
Item 4.
45
     
Item 5.
45
     
Item 6.
45
     
 
46
 
Exhibit 31.1 302 Certification of Chief Executive Officer
 
 
Exhibit 31.2 302 Certification of Chief Financial Officer
 
 
Exhibit 32.1 906 Statement of Chief Executive Officer
 
 
Exhibit 32.2 906 Statement of Chief Financial Officer
 
 
Exhibit 101 Extensible Business Reporting Language (XBRL)
 
 
2

Greene County Bancorp, Inc.
Consolidated Statements of Financial Condition
As of March 31, 2015 and June 30, 2014
(Unaudited)
(In thousands, except share and per share amounts)

ASSETS
 
March 31, 2015
   
June 30, 2014
 
 
Total cash and cash equivalents
 
$
24,823
   
$
13,809
 
                 
Long term certificate of deposit
   
1,230
     
250
 
Securities available for sale, at fair value
   
72,207
     
56,151
 
Securities held to maturity, at amortized cost (fair value $180,266 at March 31, 2015; $181,932 at June 30, 2014)
   
177,973
     
181,946
 
Federal Home Loan Bank stock, at cost
   
1,354
     
1,561
 
                 
Loans
   
442,223
     
405,841
 
Allowance for loan losses
   
(7,824
)
   
(7,419
)
Unearned origination fees and costs, net
   
911
     
887
 
Net loans receivable
   
435,310
     
399,309
 
                 
Premises and equipment
   
14,423
     
14,307
 
Accrued interest receivable
   
3,204
     
2,710
 
Foreclosed real estate
   
1,003
     
473
 
Prepaid expenses and other assets
   
2,504
     
3,645
 
Total assets
 
$
734,031
   
$
674,161
 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Noninterest bearing deposits
 
$
68,891
   
$
67,446
 
Interest bearing deposits
   
575,950
     
522,128
 
Total deposits
   
644,841
     
589,574
 
                 
Borrowings from Federal Home Loan Bank, short-term
   
-
     
3,150
 
Borrowings from Federal Home Loan Bank, long-term
   
17,300
     
14,500
 
Accrued expenses and other liabilities
   
6,037
     
5,737
 
Total liabilities
   
668,178
     
612,961
 
                 
SHAREHOLDERS' EQUITY
               
Preferred stock, Authorized - 1,000,000 shares; Issued - None
   
-
     
-
 
Common stock, par value $.10 per share; Authorized - 12,000,000 shares; Issued - 4,305,670 shares Outstanding 4,222,357 shares at March 31, 2015, and 4,213,757 shares at June 30, 2014
   
431
     
431
 
Additional paid-in capital
   
11,267
     
11,208
 
Retained earnings
   
55,222
     
51,305
 
Accumulated other comprehensive loss
   
(438
)
   
(1,050
)
Treasury stock, at cost 83,313 shares at March 31, 2015, and 91,913 shares at June 30, 2014
   
(629
)
   
(694
)
Total shareholders’ equity
   
65,853
     
61,200
 
Total liabilities and shareholders’ equity
 
$
734,031
   
$
674,161
 

See notes to consolidated financial statements
 
3

Greene County Bancorp, Inc.
Consolidated Statements of Income
For the Nine Months Ended March 31, 2015 and 2014
(Unaudited)
(In thousands, except share and per share amounts)

   
2015
   
2014
 
Interest income:
       
Loans
 
$
14,779
   
$
13,790
 
Investment securities - taxable
   
412
     
494
 
Mortgage-backed securities
   
2,177
     
1,905
 
Investment securities - tax exempt
   
1,734
     
1,525
 
Interest bearing deposits and federal funds sold
   
13
     
17
 
Total interest income
   
19,115
     
17,731
 
                 
Interest expense:
               
Interest on deposits
   
1,504
     
1,647
 
Interest on borrowings
   
200
     
113
 
Total interest expense
   
1,704
     
1,760
 
                 
Net interest income
   
17,411
     
15,971
 
Provision for loan losses
   
1,132
     
1,109
 
Net interest income after provision for loan losses
   
16,279
     
14,862
 
                 
Noninterest income:
               
Service charges on deposit accounts
   
2,069
     
1,916
 
Debit card fees
   
1,248
     
1,148
 
Investment services
   
284
     
302
 
E-commerce fees
   
76
     
72
 
Other operating income
   
483
     
476
 
Total noninterest income
   
4,160
     
3,914
 
                 
Noninterest expense:
               
Salaries and employee benefits
   
7,196
     
6,766
 
Occupancy expense
   
1,126
     
990
 
Equipment and furniture expense
   
403
     
343
 
Service and data processing fees
   
1,272
     
1,051
 
Computer software, supplies and support
   
429
     
307
 
Advertising and promotion
   
220
     
202
 
FDIC insurance premiums
   
293
     
280
 
Legal and professional fees
   
800
     
645
 
Other
   
1,488
     
1,254
 
Total noninterest expense
   
13,227
     
11,838
 
                 
Income before provision for income taxes
   
7,212
     
6,938
 
Provision for income taxes
   
1,842
     
1,963
 
Net income
 
$
5,370
   
$
4,975
 
                 
Basic earnings per share
 
$
1.27
   
$
1.18
 
Basic average shares outstanding
   
4,217,447
     
4,203,350
 
Diluted earnings per share
 
$
1.26
   
$
1.17
 
Diluted average shares outstanding
   
4,248,057
     
4,239,657
 
Dividends per share
 
$
0.540
   
$
0.525
 
 
See notes to consolidated financial statements
 
4

Greene County Bancorp, Inc.
Consolidated Statements of Income
For the Three Months Ended March 31, 2015 and 2014
(Unaudited)
(In thousands, except share and per share amounts)

   
2015
   
2014
 
Interest income:
       
Loans
 
$
4,996
   
$
4,666
 
Investment securities - taxable
   
135
     
161
 
Mortgage-backed securities
   
731
     
611
 
Investment securities - tax exempt
   
602
     
507
 
Interest bearing deposits and federal funds sold
   
3
     
9
 
Total interest income
   
6,467
     
5,954
 
                 
Interest expense:
               
Interest on deposits
   
503
     
548
 
Interest on borrowings
   
76
     
52
 
Total interest expense
   
579
     
600
 
                 
Net interest income
   
5,888
     
5,354
 
Provision for loan losses
   
416
     
288
 
Net interest income after provision for loan losses
   
5,472
     
5,066
 
                 
Noninterest income:
               
Service charges on deposit accounts
   
623
     
585
 
Debit card fees
   
404
     
373
 
Investment services
   
95
     
110
 
E-commerce fees
   
23
     
21
 
Other operating income
   
106
     
159
 
Total noninterest income
   
1,251
     
1,248
 
                 
Noninterest expense:
               
Salaries and employee benefits
   
2,439
     
2,509
 
Occupancy expense
   
458
     
371
 
Equipment and furniture expense
   
150
     
81
 
Service and data processing fees
   
430
     
397
 
Computer software, supplies and support
   
90
     
100
 
Advertising and promotion
   
88
     
66
 
FDIC insurance premiums
   
101
     
88
 
Legal and professional fees
   
208
     
190
 
Other
   
490
     
473
 
Total noninterest expense
   
4,454
     
4,275
 
                 
Income before provision for income taxes
   
2,269
     
2,039
 
Provision for income taxes
   
485
     
543
 
Net income
 
$
1,784
   
$
1,496
 
                 
Basic earnings per share
 
$
0.42
   
$
0.36
 
Basic average shares outstanding
   
4,220,940
     
4,211,531
 
Diluted earnings per share
 
$
0.42
   
$
0.35
 
Diluted average shares outstanding
   
4,250,523
     
4,243,398
 
Dividends per share
 
$
0.180
   
$
0.175
 
 
See notes to consolidated financial statements
 
5

Greene County Bancorp, Inc.
Consolidated Statements of Comprehensive Income
For the Nine Months Ended March 31, 2015 and 2014
(Unaudited)
(In thousands)

   
2015
   
2014
 
Net Income
 
$
5,370
   
$
4,975
 
Other comprehensive income (loss):
               
Unrealized holding gains (losses) on available for sale securities, net of income taxes of $266 and ($408), respectively
   
422
     
(647
)
                 
Accretion of unrealized loss on securities transferred to held to maturity, net of income taxes of $120 and $102, respectively(1)
   
190
     
162
 
                        
Total other comprehensive income (loss), net of taxes
   
612
     
(485
)
                 
Comprehensive income
 
$
5,982
   
$
4,490
 

(1) The accretion of the unrealized holding losses in accumulated other comprehensive income (loss) at the date of transfer partially offsets the amortization of the difference between the par value and fair value of the investment securities at the date of transfer, and is an adjustment of interest income.

Greene County Bancorp, Inc.
Consolidated Statements of Comprehensive Income
For the Three Months Ended March 31, 2015 and 2014
(Unaudited)
(In thousands)

   
2015
   
2014
 
Net Income
 
$
1,784
   
$
1,496
 
Other comprehensive income (loss):
               
Unrealized holding gains (losses) on available for sale securities, net of income taxes of $177 and $26, respectively
   
280
     
41
 
                 
Accretion of unrealized loss on securities transferred to held to maturity, net of income taxes of $19 and $75, respectively(1)
   
31
     
119
 
                       
Total other comprehensive income (loss), net of taxes
   
311
     
160
 
                 
Comprehensive income
 
$
2,095
   
$
1,656
 

(1) The accretion of the unrealized holding losses in accumulated other comprehensive income (loss) at the date of transfer partially offsets the amortization of the difference between the par value and fair value of the investment securities at the date of transfer, and is an adjustment of interest income.

See notes to consolidated financial statements.
 
6

Greene County Bancorp, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
For the Nine Months Ended March 31, 2015 and 2014
(Unaudited)
(In thousands)

   
Common Stock
   
Additional
Paid-In
Capital
   
Retained
Earnings
   
Accumulated Other Comprehensive Loss
   
Treasury
Stock
   
Total Shareholders' Equity
 
Balance at June 30, 2013
 
$
431
   
$
11,168
   
$
46,112
   
$
(750
)
 
$
(853
)
 
$
56,108
 
Options exercised
           
13
                     
159
     
172
 
Tax benefit of stock based compensation
           
27
                             
27
 
Dividends declared1
                   
(1,001
)
                   
(1,001
)
Net income
                   
4,975
                     
4,975
 
Other comprehensive loss, net of taxes
                                      
(485
)
             
(485
)
Balance at March 31, 2014
 
$
431
   
$
11,208
   
$
50,086
   
$
(1,235
)
 
$
(694
)
 
$
59,796
 

   
Common Stock
   
Additional
Paid-In
Capital
   
Retained
Earnings
   
Accumulated Other Comprehensive Loss
   
Treasury
Stock
   
Total
Shareholders'
Equity
 
Balance at June 30, 2014
 
$
431
     
11,208
   
$
51,305
   
$
(1,050
)
 
$
(694
)
 
$
61,200
 
Options exercised
           
43
                     
65
     
108
 
Tax benefit of stock based compensation
           
16
                             
16
 
Dividends declared1
                   
(1,453
)
                   
(1,453
)
Net income
                   
5,370
                     
5,370
 
Other comprehensive income, net of taxes
                                   
612
                
612
 
Balance at March 31, 2015
 
$
431
   
$
11,267
   
$
55,222
   
$
(438
)
 
$
(629
)
 
$
65,853
 
 
1
Dividends declared were $0.54 per share and $0.525 per share for the nine months ended March 31, 2015 and 2014. This is based on total number of shares outstanding.  Greene County Bancorp, MHC, the owner of 54.6% of the Company’s shares outstanding waived its right to receive dividends during the six months ended December 31, 2014 and the nine months ended March 31, 2014.  Dividends were paid to the MHC during the three months ended March 31, 2015.  The MHC’s ability to waive the receipt of dividends is dependent upon annual approval of its members as well as receiving the non-objection of the Federal Reserve Board.

See notes to consolidated financial statements.
 
7

Greene County Bancorp, Inc.
Consolidated Statements of Cash Flows
For the Nine Months Ended March 31, 2015 and 2014
(Unaudited)
(In thousands)
 
   
2015
   
2014
 
Cash flows from operating activities:
       
Net Income
 
$
5,370
   
$
4,975
 
Adjustments to reconcile net income to net cash provided by operating activities
               
Depreciation
   
400
     
486
 
Deferred income tax benefit
   
(539
)
   
(985
)
Net amortization of premiums and discounts
   
880
     
1,408
 
Net amortization of deferred loan costs and fees
   
276
     
267
 
Provision for loan losses
   
1,132
     
1,109
 
Loss on foreclosed real estate
   
101
     
49
 
Tax benefit from share-based payment arrangements
   
(16
)
   
(27
)
Net increase (decrease) in accrued income taxes
   
2,295
     
(230
)
Net increase in accrued interest receivable
   
(494
)
   
(304
)
Net increase in prepaid and other assets
   
(1,067
)
   
(319
)
Net increase in other liabilities
   
383
     
733
 
Net cash provided by operating activities
   
8,721
     
7,162
 
                 
Cash flows from investing activities:
               
Securities available for sale:
               
Proceeds from maturities
   
3,250
     
515
 
Purchases of securities
   
(23,507
)
   
-
 
Principal payments on securities
   
4,612
     
5,324
 
Securities held to maturity:
               
Proceeds from maturities
   
12,847
     
17,207
 
Purchases of securities
   
(15,594
)
   
(13,497
)
Principal payments on securities
   
6,427
     
6,046
 
Net redemption of Federal Home Loan Bank Stock
   
207
     
5
 
Purchases of long term certificates of deposit
   
(980
)
   
-
 
Net increase in loans receivable
   
(38,343
)
   
(35,004
)
Proceeds from sale of foreclosed real estate
   
302
     
105
 
Purchases of premises and equipment
   
(516
)
   
(383
)
Net cash used by investing activities
   
(51,295
)
   
(19,682
)
                 
Cash flows from financing activities
               
Net decrease in short-term FHLB advances
   
(3,150
)
   
(10,600
)
Proceeds from long-term FHLB advances
   
2,800
     
10,500
 
Payment of cash dividends
   
(1,453
)
   
(1,001
)
Proceeds from issuance of stock options
   
108
     
172
 
Tax benefit from share-based payment arrangements
   
16
     
27
 
Net decrease in deposits
   
55,267
     
62,799
 
Net cash provided by financing activities
   
53,588
     
61,897
 
                 
Net increase in cash and cash equivalents
   
11,014
     
49,377
 
Cash and cash equivalents at beginning of period
   
13,809
     
6,222
 
Cash and cash equivalents at end of period
 
$
24,823
   
$
55,599
 
                 
Non-cash investing activities:
               
Foreclosed loans transferred to foreclosed real estate
 
$
934
     
574
 
Available for sale securities transferred at fair value to held to maturity
   
-
     
11,735
 
Cash paid during period for:
               
Interest
 
$
1,700
   
$
1,749
 
Income taxes
 
$
86
   
$
3,178
 

See notes to consolidated financial statements
 
8

Greene County Bancorp, Inc.
Notes to Consolidated Financial Statements
As of and for the Nine and Three Months Ended March 31, 2015 and 2014

(1) Basis of Presentation

The accompanying consolidated statement of financial condition as of June 30, 2014 was derived from the audited consolidated financial statements of Greene County Bancorp, Inc. (the “Company”) and its wholly owned subsidiary, The Bank of Greene County (the “Bank”) and the Bank’s wholly owned subsidiary, Greene County Commercial Bank and Greene Property Holdings, Ltd.  The consolidated financial statements at and for the nine and three months ended March 31, 2015 and 2014 are unaudited.

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.  To the extent that information and notes required by GAAP for complete financial statements are contained in or are consistent with the audited financial statements incorporated by reference to Greene County Bancorp, Inc.’s Annual Report on Form 10-K for the year ended June 30, 2014, such information and notes have not been duplicated herein.  In the opinion of management, all adjustments (consisting of only normal recurring items) necessary for a fair presentation of the financial position and results of operations and cash flows at and for the periods presented have been included.   Amounts in the prior year’s consolidated financial statements have been reclassified whenever necessary to conform to the current year’s presentation.  These reclassifications, if any, had no effect on net income or retained earnings as previously reported.  All material inter-company accounts and transactions have been eliminated in the consolidation. The results of operations and other data, for the nine and three months ended March 31, 2015, are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2015.   These consolidated financial statements consider events that occurred through the date the consolidated financial statements were issued.

CRITICAL ACCOUNTING POLICIES

Greene County Bancorp, Inc.’s critical accounting policies relate to the allowance for loan losses and the evaluation of securities for other-than-temporary impairment.  The allowance for loan losses is based on management’s estimation of an amount that is intended to absorb losses in the existing loan portfolio.  The allowance for loan losses is established through a provision for loan losses based on management’s evaluation of the risk inherent in the loan portfolio, the composition of the portfolio, specific impaired loans and current economic conditions.  Such evaluation, which includes a review of all loans for which full collectibility may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, historical loan loss experience, management’s estimate of probable credit losses and other factors that warrant recognition in providing for the allowance of loan losses.  However, this evaluation involves a high degree of complexity and requires management to make subjective judgments that often require assumptions or estimates about highly uncertain matters.  This critical accounting policy and its application are periodically reviewed with the Audit Committee and the Board of Directors.

Securities are evaluated for other-than-temporary impairment by performing periodic reviews of individual securities in the investment portfolio.  Greene County Bancorp, Inc. makes an assessment to determine whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is impaired on an other-than-temporary basis.  The Company considers many factors, including the severity and duration of the impairment; the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value; recent events specific to the issuer or industry; and for debt securities, intent to sell the security, the likelihood to be required to sell the security before it recovers the entire amortized cost, external credit ratings and recent downgrades.  The Company is required to record other-than-temporary impairment charges through earnings, if it has the intent to sell, or will more likely than not be required to sell an impaired debt security before a recovery of its amortized cost basis.  In addition, the Company is required to record other-than-temporary impairment charges through earnings for the amount of credit losses, regardless of the intent or requirement to sell.  Credit loss is measured as the difference between the present value of an impaired debt security’s cash flows and its amortized cost basis.  Non-credit related impairment must be recorded as decreases to accumulated other comprehensive income as long as the Company has no intent or requirement to sell an impaired security before a recovery of amortized cost basis.

(2) Nature of Operations

Greene County Bancorp, Inc. has two wholly-owned subsidiaries, The Bank of Greene County and Greene Risk Management, Inc.  Greene Risk Management, Inc. was formed on December 30, 2014 as a pooled captive insurance company subsidiary, incorporated in the State of Nevada, to provide additional insurance coverage for the Company and its subsidiaries related to the operations of the Company for which insurance may not be economically feasible.
 
Greene County Bancorp, Inc.’s primary business is the ownership and operation of its banking subsidiaries.  The Bank of Greene County has thirteen full-service offices and an administrative office, operations center and lending center located in its market area within the Hudson Valley Region of New York State.    The Bank of Greene County is primarily engaged in the business of attracting deposits from the general public in The Bank of Greene County’s market area, and investing such deposits, together with other sources of funds, in loans and investment securities.  The Bank of Greene County has two subsidiaries, Greene County Commercial Bank and Greene Property Holdings, Ltd.  Greene County Commercial Bank’s primary business is to attract deposits from and provide banking services to local municipalities. Greene Property Holdings, Ltd.is a real estate investment trust, which holds mortgages and notes which were originated through and serviced by The Bank of Greene County.
 
9

(3) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could materially differ from those estimates.  Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the assessment of other-than-temporary security impairment.

While management uses available information to recognize losses on loans, future additions to the allowance for loan losses (the “Allowance”) may be necessary, based on changes in economic conditions, asset quality or other factors.  In addition, various regulatory authorities, as an integral part of their examination process, periodically review the Allowance.  Such authorities may require the Company to recognize additions to the Allowance based on their judgments of information available to them at the time of their examination.

Greene County Bancorp, Inc. makes an assessment to determine whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is impaired on an other-than-temporary basis.  The Company considers many factors including the severity and duration of the impairment; the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value; recent events specific to the issuer or industry; and for debt securities, intent to sell the security, whether it is more likely than not we will be required to sell the security before recovery, whether loss of the entire amortized cost is expected, external credit ratings and recent downgrades.  Securities on which there is an unrealized loss that is deemed to be other-than-temporary are written down to fair value.

(4) Securities

Securities at March 31, 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
 
$
7,615
   
$
288
   
$
-
   
$
7,903
 
State and political subdivisions
   
24,824
     
14
     
-
     
24,838
 
Mortgage-backed securities-residential
   
8,186
     
191
     
14
     
8,363
 
Mortgage-backed securities-multi-family
   
25,593
     
586
     
42
     
26,137
 
Asset-backed securities
   
13
     
-
     
1
     
12
 
Corporate debt securities
   
4,548
     
277
     
6
     
4,819
 
Total debt securities
   
70,779
     
1,356
     
63
     
72,072
 
Equity securities
   
62
     
73
     
-
     
135
 
Total securities available for sale
   
70,841
     
1,429
     
63
     
72,207
 
Securities held to maturity:
                               
U.S. government sponsored enterprises
   
2,000
     
-
     
30
     
1,970
 
State and political subdivisions
   
94,237
     
747
     
57
     
94,927
 
Mortgage-backed securities-residential
   
19,133
     
944
     
-
     
20,077
 
Mortgage-backed securities-multi-family
   
61,760
     
1,132
     
439
     
62,453
 
Other securities
   
843
     
-
     
4
     
839
 
Total securities held to maturity
   
177,973
     
2,823
     
530
     
180,266
 
Total securities
 
$
248,814
   
$
4,252
   
$
593
   
$
252,473
 
 
10

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 March 31, 2015 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 March 31, 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:
                                   
Mortgage-backed securities-residential
 
$
1,684
   
$
14
     
1
   
$
-
   
$
-
       
$
1,684
   
$
14
     
1
 
Mortgage-backed securities-multi-family
   
2,803
     
42
     
2
     
-
     
-
     
-
     
2,803
     
42
     
2
 
Asset-backed securities
   
-
     
-
     
-
     
12
     
1
     
1
     
12
     
1
     
1
 
Corporate debt securities
   
772
     
6
     
2
     
-
     
-
     
-
     
772
     
6
     
2
 
Total securities available for sale
   
5,259
     
62
     
5
     
12
     
1
     
1
     
5,271
     
63
     
6
 
Securities held to maturity:
                                                                       
U.S. government sponsored enterprises
   
1,970
     
30
     
1
     
-
     
-
     
-
     
1,970
     
30
     
1
 
State and political subdivisions
   
4,792
     
56
     
23
     
79
     
1
     
1
     
4,871
     
57
     
24
 
Mortgage-backed securities-multi-family
   
29,198
     
368
     
7
     
6,044
     
71
     
2
     
35,242
     
439
     
9
 
Other securities
   
400
     
2
     
2
     
150
     
2
     
2
     
550
     
4
     
4
 
Total securities held to maturity
   
36,360
     
456
     
33
     
6,273
     
74
     
5
     
42,633
     
530
     
38
 
Total securities
 
$
41,619
   
$
518
     
38
   
$
6,285
   
$
75
     
6
   
$
47,904
   
$
593
     
44
 

 
11

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, 2014.
 
   
Less Than 12 Months
   
More Than 12 Months
   
Total
 
(In thousands, except number of securities)
 
Fair
Value
   
Unrealized
Losses
   
Number of S
ecurities
   
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 March 31, 2015.  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, 2015 and 2014, 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, 2015 and 2014.
 
12

The estimated fair values of debt securities at March 31, 2015, 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
 
$
27,200
   
$
27,236
 
After one year through five years
   
7,191
     
7,576
 
After five years through ten years
   
2,596
     
2,748
 
After ten years
   
-
     
-
 
Total available for sale debt securities
   
36,987
     
37,560
 
Mortgage-backed and asset-backed securities
   
33,792
     
34,512
 
Equity securities
   
62
     
135
 
Total available for sale securities
   
70,841
     
72,207
 
                 
Held to maturity debt securities
               
Within one year
   
24,659
     
24,680
 
After one year through five years
   
45,129
     
45,515
 
After five years through ten years
   
19,164
     
19,364
 
After ten years
   
8,128
     
8,177
 
Total held to maturity debt securities
   
97,080
     
97,736
 
Mortgage-backed
   
80,893
     
82,530
 
Total held to maturity securities
   
177,973
     
180,266
 
Total securities
 
$
248,814
   
$
252,473
 

As of March 31, 2015 and June 30, 2014, respectively, securities with an aggregate fair value of $219.5 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 March 31, 2015 and June 30, 2014, securities with an aggregate fair value of $4.8 million and $5.2 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 and three months ended March 31, 2015 or 2014.

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, 2015 or 2014.

(5) Loans and Allowance for Loan Losses

Management closely monitors the quality of the loan portfolio and has established a loan review process designed to help grade the quality and profitability of the Company’s loan portfolio.  The credit quality grade helps management make a consistent assessment of each loan relationship’s credit risk. Consistent with regulatory guidelines, The Bank of Greene County provides for the classification of loans considered being of lesser quality.  Such ratings coincide with the “Substandard,” “Doubtful” and “Loss” classifications used by federal regulators in their examination of financial institutions. Generally, an asset is considered Substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. Substandard assets include those characterized by the distinct possibility that the insured financial institution will sustain some loss if the deficiencies are not corrected. Assets classified as Doubtful have all the weaknesses inherent in assets classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable. Assets classified as Loss are those considered uncollectible and of such little value that their continuance as assets without the establishment of a full loss reserve and/or charge-off is not warranted. Assets that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories but otherwise possess weaknesses are designated “Special Mention.”   Management also maintains a listing of loans designated “Watch.” These loans represent borrowers with declining earnings, strained cash flow, increasing leverage and/or weakening market fundamentals that indicate above average risk.
 
13

When The Bank of Greene County classifies problem assets as either Substandard or Doubtful, it generally establishes a specific valuation allowance or “loss reserve” in an amount deemed prudent by management.  General allowances represent loss allowances that have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular loans.  When The Bank of Greene County identifies problem loans as being impaired, it is required to evaluate whether the Bank will be able to collect all amounts due either through repayments or the liquidation of the underlying collateral.  If it is determined that impairment exists, the Bank is required either to establish a specific allowance for losses equal to the amount of impairment of the assets, or to charge-off such amount.  The Bank of Greene County’s determination as to the classification of its loans and the amount of its valuation allowance is subject to review by its regulatory agencies, which can order the establishment of additional general or specific loss allowances.  The Bank of Greene County reviews its portfolio monthly to determine whether any assets require classification in accordance with applicable regulations.

The Bank primarily has four segments within its loan portfolio that it considers when measuring credit quality: real estate loans, home equity, consumer installment and commercial loans.  The real estate portfolio consists of residential, nonresidential, and construction loan classes. The inherent risk within the loan portfolio varies depending upon each of these loan types.

The Bank of Greene County’s primary lending activity is the origination of residential mortgage loans, including home equity loans, which are collateralized by residences.   Generally, residential mortgage loans are made in amounts up to 89.9% of the appraised value of the property.  However, The Bank of Greene County will originate residential mortgage loans with loan-to-value ratios of up to 95.0%, with private mortgage insurance.  In the event of default by the borrower, The Bank of Greene County will acquire and liquidate the underlying collateral. By originating the loan at a loan-to-value ratio of 89.9% or less or obtaining private mortgage insurance, The Bank of Greene County limits its risk of loss in the event of default.  However, the market values of the collateral may be adversely impacted by declines in the economy.  Home equity loans may have an additional inherent risk if The Bank of Greene County does not hold the first mortgage.  The Bank of Greene County may stand in a secondary position in the event of collateral liquidation resulting in a greater chance of insufficiency to meet all obligations.

Construction lending generally involves a greater degree of risk than other residential mortgage lending.  The repayment of the construction loan is, to a great degree, dependent upon the successful and timely completion of the construction of the subject property within specified cost limits.  The Bank of Greene County completes inspections during the construction phase prior to any disbursements.  The Bank of Greene County limits its risk during the construction as disbursements are not made until the required work for each advance has been completed.  Construction delays may further impair the borrower’s ability to repay the loan.

Loans collateralized by nonresidential mortgage loans, and multi-family loans, such as apartment buildings generally are larger than residential loans and involve a greater degree of risk. Commercial mortgage loans often involve large loan balances to single borrowers or groups of related borrowers. Payments on these loans depend to a large degree on the results of operations and management of the properties or underlying businesses, and may be affected to a greater extent by adverse conditions in the real estate market or the economy in general. Accordingly, the nature of nonresidential mortgage loans makes them more difficult for management to monitor and evaluate.

Consumer loans generally have shorter terms and higher interest rates than residential mortgage loans. In addition, consumer loans expand the products and services offered by The Bank of Greene County to better meet the financial services needs of its customers.  Consumer loans generally involve greater credit risk than residential mortgage loans because of the difference in the nature of the underlying collateral.  Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance because of the greater likelihood of damage, loss or depreciation in the underlying collateral. The remaining deficiency often does not warrant further substantial collection efforts against the borrower beyond obtaining a deficiency judgment. In addition, consumer loan collections depend on the borrower’s personal financial stability.  Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

Commercial lending generally involves greater risk than residential mortgage lending and involves risks that are different from those associated with residential and nonresidential mortgage lending. Real estate lending is generally considered to be collateral-based, with loan amounts based on fixed loan-to-collateral values, and liquidation of the underlying real estate collateral is viewed as the primary source of repayment in the event of borrower default. Although commercial loans may be collateralized by equipment or other business assets, the liquidation of collateral in the event of a borrower default is often an insufficient source of repayment because equipment and other business assets may be obsolete or of limited use, among other things. Accordingly, the repayment of a commercial loan depends primarily on the creditworthiness of the borrower (and any guarantors), while liquidation of collateral is a secondary and often insufficient source of repayment.
 
14

Loan balances by internal credit quality indicator as of March 31, 2015 are shown below.
 
(In thousands)
 
Performing
   
Watch
   
Special Mention
   
Substandard
   
Total
 
Residential mortgage
 
$
223,938
   
$
186
   
$
97
   
$
2,849
   
$
227,070
 
Nonresidential mortgage
   
132,690
     
604
     
1,883
     
2,630
     
137,807
 
Residential construction and land
   
3,819
     
-
     
-
     
-
     
3,819
 
Commercial construction
   
5,944
     
-
     
-
     
-
     
5,944
 
Multi-family
   
4,286
     
-
     
-
     
107
     
4,393
 
Home equity
   
20,728
     
-
     
17
     
112
     
20,857
 
Consumer installment
   
3,927
     
-
     
-
     
7
     
3,934
 
Commercial loans
   
37,175
     
-
     
370
     
854
     
38,399
 
Total gross loans
 
$
432,507
   
$
790
   
$
2,367
   
$
6,559
   
$
442,223
 

Loan balances by internal credit quality indicator as of June 30, 2014 are shown below.
 
(In thousands)
 
Performing
   
Watch
   
Special Mention
   
Substandard
   
Total
 
Residential mortgage
 
$
223,772
   
$
221
   
$
99
   
$
3,281
   
$
227,373
 
Nonresidential mortgage
   
109,281
     
-
     
1,789
     
2,996
     
114,066
 
Residential construction and land
   
3,005
     
-
     
-
     
-
     
3,005
 
Commercial construction
   
1,558
     
-
     
-
     
-
     
1,558
 
Multi-family
   
3,946
     
-
     
-
     
113
     
4,059
 
Home equity
   
20,239
     
-
     
-
     
339
     
20,578
 
Consumer installment
   
4,208
     
-
     
-
     
-
     
4,208
 
Commercial loans
   
29,686
     
-
     
385
     
923
     
30,994
 
Total gross loans
 
$
395,695
   
$
221
   
$
2,273
   
$
7,652
   
$
405,841
 

The Company had no loans classified Doubtful or Loss at March 31, 2015 or June 30, 2014.

Nonaccrual Loans

Management places loans on nonaccrual status once the loans have become 90 days or more delinquent.  A nonaccrual loan is defined as a loan in which collectability is questionable and therefore interest on the loan will no longer be recognized on an accrual basis.  A loan is not placed back on accrual status until the borrower has demonstrated the ability and willingness to make timely payments on the loan.  A loan does not have to be 90 days delinquent in order to be classified as nonaccrual.   Nonaccrual loans consisted primarily of loans secured by real estate at March 31, 2015 and June 30, 2014.  While the Bank makes every reasonable effort to work with the borrowers to collect amounts due, the number of loans in process of foreclosure has remained historically high over the past several years.  These high levels have been the result of adverse changes within the economy and increases in local unemployment.   These levels are also due in part to the extended length of time required to meet all of the legal requirements mandated by New York state law prior to a foreclosure sale, which may be in excess of two years. Loans on nonaccrual status totaled $5.4 million at March 31, 2015 of which $1.6 million were in the process of foreclosure.  Included in nonaccrual loans were $3.3 million of loans which were less than 90 days past due at March 31, 2015, but have a recent history of delinquency greater than 90 days past due. These loans will be returned to accrual status once they have demonstrated a history of timely payments.  Included in total loans past due were $484,000 of loans which were making payments pursuant to forbearance agreements.  Under the forbearance agreements, the customers have made arrangements with the Bank to bring the loans current over a specified period of time (resulting in an insignificant delay in repayment).  During this term of the forbearance agreement, the Bank has agreed not to continue foreclosure proceedings.  Loans on nonaccrual status totaled $5.9 million at June 30, 2014 of which $3.0 million were in the process of foreclosure.  Included in nonaccrual loans were $922,000 of loans which were less than 90 days past due at June 30, 2014, but have a recent history of delinquency greater than 90 days past due.
 
15

The following table sets forth information regarding delinquent and/or nonaccrual loans as of March 31, 2015:

(In thousands)
 
30-59
days
past due
   
60-89
days past
due
   
90 days
or more
past due
   
Total
past due
   
Current
   
Total
Loans
   
Loans on
Non-
accrual
 
Residential mortgage
 
$
1,627
   
$
201
   
$
1,452
   
$
3,280
   
$
223,790
   
$
227,070
   
$
1,965
 
Nonresidential mortgage
   
-
     
1,028
     
775
     
1,803
     
136,004
     
137,807
     
2,900
 
Residential construction and land
   
-
     
-
     
-
     
-
     
3,819
     
3,819
     
-
 
Commercial construction
   
-
     
-
     
-
     
-
     
5,944
     
5,944
     
-
 
Multi-family
   
-
     
-
     
-
     
-
     
4,393
     
4,393
     
-
 
Home equity
   
283
     
17
     
112
     
412
     
20,445
     
20,857
     
112
 
Consumer installment
   
26
     
-
     
7
     
33
     
3,901
     
3,934
     
7
 
Commercial loans
   
519
     
-
     
175
     
694
     
37,705
     
38,399
     
392
 
Total gross loans
 
$
2,455
   
$
1,246
   
$
2,521
   
$
6,222
   
$
436,001
   
$
442,223
   
$
5,376
 

The following table sets forth information regarding delinquent and/or nonaccrual loans as of June 30, 2014:
 
(In thousands)
 
30-59
days
past due
   
60-89
days
past due
   
90 days
 or more
past due
   
Total
past due
   
Current
   
Total
Loans
   
Loans on
Non-
accrual
 
Residential mortgage
 
$
1,047
   
$
290
   
$
1,938
   
$
3,275
   
$
224,098
   
$
227,373
   
$
2,473
 
Nonresidential mortgage
   
-
     
504
     
2,688
     
3,192
     
110,874
     
114,066
     
2,775
 
Residential construction and land
   
-
     
-
     
-
     
-
     
3,005
     
3,005
     
-
 
Commercial construction
   
-
     
-
     
-
     
-
     
1,558
     
1,558
     
-
 
Multi-family
   
-
     
-
     
-
     
-
     
4,059
     
4,059
     
-
 
Home equity
   
260
     
-
     
339
     
599
     
19,979
     
20,578
     
339
 
Consumer installment
   
51
     
-
     
-
     
51
     
4,157
     
4,208
     
-
 
Commercial loans
   
509
     
123
     
278
     
910
     
30,084
     
30,994
     
312
 
Total gross loans
 
$
1,867
   
$
917
   
$
5,243
   
$
8,027
   
$
397,814
   
$
405,841
   
$
5,899
 

The Bank of Greene County had accruing loans delinquent more than 90 days as of March 31, 2015 totaling $461,000 and had accruing loans delinquent more than 90 days as of June 30, 2014 totaling $266,000.    The loans delinquent more than 90 days and accruing consist of loans that are well collateralized and the borrowers have demonstrated the ability and willingness to pay.  The borrower has made arrangements with the Bank to bring the loan current within a specified time period and has made a series of payments as agreed.

The table below details additional information related to nonaccrual loans.

   
For the nine months
ended March 31,
   
For the three months
ended March 31,
 
(In thousands)
 
2015
   
2014
   
2015
   
2014
 
Interest income that would have been recorded if loans had been performing in accordance with original terms
 
$
246
   
$
389
   
$
47
   
$
181
 
Interest income that was recorded on nonaccrual loans
   
127
     
92
     
42
     
28
 

Impaired Loan Analysis

The Company identifies impaired loans and measures the impairment in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) subtopic “Receivables – Loan Impairment.”  Management may consider a loan impaired once it is classified as nonaccrual and when it is probable that the borrower will be unable to repay the loan according to the original contractual terms of the loan agreement or the loan is restructured in a troubled debt restructuring.  It should be noted that management does not evaluate all loans individually for impairment.  The Bank of Greene County considers residential mortgages, home equity loans, smaller commercial loans and installment loans as small, homogeneous loans, which are evaluated for impairment collectively based on historical loan experience and other factors.  In contrast, large commercial mortgage, construction, multi-family and commercial loans are viewed individually and considered impaired if it is probable that The Bank of Greene County will not be able to collect scheduled payments of principal and interest when due, according to the contractual terms of the loan agreement.  The measurement of impaired loans is generally based on the fair value of the underlying collateral.  The majority of The Bank of Greene County loans, including most nonaccrual loans, are small homogenous loan types adequately supported by collateral.  Management considers the payment status of loans in the process of evaluating the adequacy of the allowance for loan losses among other factors.  Loans that are either delinquent a minimum of 60 days or are on nonaccrual status, and are not individually evaluated for impairment, are either designated as Special Mention or Substandard, and the allocation of the allowance for loan loss is based upon the risk associated with such designation.  Loans that have been modified as a troubled debt restructuring are included in impaired loans.  The measurement of impairment is generally based on the discounted cash flows based on the original rate of the loan before the restructuring, unless it is determined that the restructured loan is collateral dependent.  If the restructured loan is deemed to be collateral dependent, impairment is based on the fair value of the underlying collateral.
 
16

The tables below detail additional information on impaired loans at the date or periods indicated:
 
   
As of March 31, 2015
   
For the nine months ended March 31, 2015
   
For the three months ended March 31, 2015
 
(In thousands)
 
Recorded Investment
   
Unpaid Principal
   
Related Allowance
   
Average Recorded Investment
   
Interest Income Recognized
   
Average Recorded Investment
   
Interest
Income
Recognized
 
With no related allowance recorded:
                     
Residential mortgage
 
$
855
   
$
855
   
$
-
   
$
500
   
$
26
   
$
716
   
$
13
 
Nonresidential mortgage
   
1,400
     
1,607
     
-
     
890
     
31
     
1,409
     
18
 
Home equity
   
112
     
233
     
-
     
69
     
1
     
48
     
1
 
Commercial loans
   
500
     
500
     
-
     
167
     
9
     
500
     
9
 
     
2,867
     
3,195
     
-
     
1,626
     
67
     
2,673
     
41
 
With an allowance recorded:
                                                       
Residential mortgage
   
2,147
     
2,147
     
375
     
2,345
     
63
     
2,061
     
16
 
Nonresidential mortgage
   
1,270
     
1,270
     
191
     
1,935
     
53
     
1,203
     
11
 
Home equity
   
-
     
-
     
-
     
178
     
-
     
133
     
-
 
Commercial loans
   
96
     
96
     
2
     
432
     
21
     
97
     
1
 
     
3,513
     
3,513
     
568
     
4,890
     
137
     
3,494
     
28
 
Total impaired:
                                                       
Residential mortgage
   
3,002
     
3,002
     
375
     
2,845
     
89
     
2,777
     
29
 
Nonresidential mortgage
   
2,670
     
2,877
     
191
     
2,825
     
84
     
2,612
     
29
 
Home equity
   
112
     
233
     
-
     
247
     
1
     
181
     
1
 
Commercial loans
   
596
     
596
     
2
     
599
     
30
     
597
     
10
 
   
$
6,380
   
$
6,708
   
$
568
   
$
6,516
   
$
204
   
$
6,167
   
$
69
 
 
17

   
As of June 30, 2014
   
For the nine months ended March 31, 2014
   
For the three months ended March 31, 2014
 
(In thousands)
 
Recorded Investment
   
Unpaid Principal
   
Related Allowance
   
Average Recorded Investment
   
Interest Income Recognized
   
Average Recorded Investment
   
Interest
Income
Recognized
 
With no related allowance recorded:
                     
Residential mortgage
 
$
206
   
$
206
   
$
-
   
$
355
   
$
7
   
$
267
   
$
6
 
Nonresidential mortgage
   
461
     
461
     
-
     
537
     
23
     
513
     
6
 
Home equity
   
96
     
96
     
-
     
-
     
-
     
-
     
-
 
     
763
     
763
     
-
     
892
     
30
     
780
     
12
 
With an allowance recorded:
                                                       
Residential mortgage
   
2,700
     
2,790
     
441
     
3,025
     
45
     
2,876
     
15
 
Nonresidential mortgage
   
2,572
     
2,959
     
338
     
2,243
     
37
     
2,775
     
17
 
Commercial construction
   
-
     
-
     
-