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EX-31.2 - EXHIBIT 31.2 - GREENE COUNTY BANCORP INCex31_2.htm
EX-32.2 - EXHIBIT 32.2 - GREENE COUNTY BANCORP INCex32_2.htm
EX-32.1 - EXHIBIT 32.1 - GREENE COUNTY BANCORP INCex32_1.htm
EX-31.1 - EXHIBIT 31.1 - GREENE COUNTY BANCORP INCex31_1.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, 2016

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, 2016, the registrant had 8,474,414 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
 
4-5
 
6
 
7
 
8
 
9-29
     
Item 2.
30-44
     
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, 2016 and June 30, 2015
(Unaudited)
(In thousands, except share and per share amounts)

ASSETS
 
March 31, 2016
   
June 30, 2015
 
Total cash and cash equivalents
 
$
39,136
   
$
15,538
 
                 
Long term certificate of deposit
   
2,210
     
1,230
 
Securities available-for-sale, at fair value
   
103,246
     
86,034
 
Securities held-to-maturity, at amortized cost (fair value $197,652 at March 31, 2016; $171,976 at June 30, 2015)
   
191,576
     
169,000
 
Federal Home Loan Bank stock, at cost
   
1,531
     
2,494
 
                 
Loans
   
501,182
     
450,755
 
Allowance for loan losses
   
(8,988
)
   
(8,142
)
Unearned origination fees and costs, net
   
937
     
883
 
Net loans receivable
   
493,131
     
443,496
 
                 
Premises and equipment
   
14,225
     
14,515
 
Accrued interest receivable
   
3,649
     
3,026
 
Foreclosed real estate
   
370
     
847
 
Prepaid expenses and other assets
   
2,311
     
2,467
 
Total assets
 
$
851,385
   
$
738,647
 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Noninterest-bearing deposits
 
$
84,688
   
$
73,359
 
Interest-bearing deposits
   
665,621
     
549,358
 
Total deposits
   
750,309
     
622,717
 
                 
Borrowings from Federal Home Loan Bank, short-term
   
-
     
22,900
 
Borrowings from Federal Home Loan Bank, long-term
   
20,300
     
18,800
 
Accrued expenses and other liabilities
   
7,791
     
7,310
 
Total liabilities
   
778,400
     
671,727
 
                 
SHAREHOLDERS' EQUITY
               
Preferred stock, Authorized - 1,000,000 shares; Issued - None
   
-
     
-
 
Common stock, par value $.10 per share; Authorized - 12,000,000 shares; Issued – 8,611,340 shares at March 31, 2016, and 4,305,670 shares at June 30, 2015; Outstanding 8,474,414 shares at March 31, 2016,and 4,222,357 shares at June 30, 2015
   
861
     
431
 
Additional paid-in capital
   
10,870
     
11,220
 
Retained earnings
   
62,256
     
56,696
 
Accumulated other comprehensive loss
   
(485
)
   
(798
)
Treasury stock, at cost 136,926 shares at March 31, 2016, and 83,313 shares at June 30, 2015
   
(517
)
   
(629
)
Total shareholders’ equity
   
72,985
     
66,920
 
Total liabilities and shareholders’ equity
 
$
851,385
   
$
738,647
 

See notes to consolidated financial statements
 
3

Greene County Bancorp, Inc.
Consolidated Statements of Income
For the Nine Months Ended March 31, 2016 and 2015
(Unaudited)
(In thousands, except share and per share amounts)

   
2016
   
2015
 
Interest income:
           
Loans
 
$
16,337
   
$
14,779
 
Investment securities - taxable
   
424
     
412
 
Mortgage-backed securities
   
2,296
     
2,177
 
Investment securities - tax exempt
   
2,167
     
1,734
 
Interest-bearing deposits and federal funds sold
   
38
     
13
 
Total interest income
   
21,262
     
19,115
 
                 
Interest expense:
               
Interest on deposits
   
1,645
     
1,504
 
Interest on borrowings
   
247
     
200
 
Total interest expense
   
1,892
     
1,704
 
                 
Net interest income
   
19,370
     
17,411
 
Provision for loan losses
   
1,138
     
1,132
 
Net interest income after provision for loan losses
   
18,232
     
16,279
 
                 
Noninterest income:
               
Service charges on deposit accounts
   
2,153
     
2,069
 
Debit card fees
   
1,343
     
1,248
 
Investment services
   
260
     
284
 
E-commerce fees
   
70
     
76
 
Other operating income
   
560
     
483
 
Total noninterest income
   
4,386
     
4,160
 
                 
Noninterest expense:
               
Salaries and employee benefits
   
7,674
     
7,196
 
Occupancy expense
   
1,079
     
1,126
 
Equipment and furniture expense
   
376
     
403
 
Service and data processing fees
   
1,417
     
1,272
 
Computer software, supplies and support
   
335
     
429
 
Advertising and promotion
   
266
     
220
 
FDIC insurance premiums
   
307
     
293
 
Legal and professional fees
   
806
     
800
 
Other
   
1,735
     
1,488
 
Total noninterest expense
   
13,995
     
13,227
 
                 
Income before provision for income taxes
   
8,623
     
7,212
 
Provision for income taxes
   
1,992
     
1,842
 
Net income
 
$
6,631
   
$
5,370
 
                 
Basic earnings per share1
 
$
0.78
   
$
0.64
 
Basic average shares outstanding1
   
8,454,147
     
8,434,894
 
Diluted earnings per share1
 
$
0.78
   
$
0.63
 
Diluted average shares outstanding1
   
8,469,732
     
8,496,114
 
Dividends per share1
 
$
0.2775
   
$
0.2700
 

1
Share and per share data for 2015 have been adjusted for 2-for-1 stock split

See notes to consolidated financial statements
 
4

Greene County Bancorp, Inc.
Consolidated Statements of Income
For the Three Months Ended March 31, 2016 and 2015
(Unaudited)
(In thousands, except share and per share amounts)

   
2016
   
2015
 
Interest income:
           
Loans
 
$
5,565
   
$
4,996
 
Investment securities - taxable
   
151
     
135
 
Mortgage-backed securities
   
743
     
731
 
Investment securities - tax exempt
   
770
     
602
 
Interest-bearing deposits and federal funds sold
   
34
     
3
 
Total interest income
   
7,263
     
6,467
 
                 
Interest expense:
               
Interest on deposits
   
574
     
503
 
Interest on borrowings
   
78
     
76
 
Total interest expense
   
652
     
579
 
                 
Net interest income
   
6,611
     
5,888
 
Provision for loan losses
   
421
     
416
 
Net interest income after provision for loan losses
   
6,190
     
5,472
 
                 
Noninterest income:
               
Service charges on deposit accounts
   
670
     
623
 
Debit card fees
   
438
     
404
 
Investment services
   
89
     
95
 
E-commerce fees
   
29
     
23
 
Other operating income
   
136
     
106
 
Total noninterest income
   
1,362
     
1,251
 
                 
Noninterest expense:
               
Salaries and employee benefits
   
2,736
     
2,439
 
Occupancy expense
   
383
     
458
 
Equipment and furniture expense
   
138
     
150
 
Service and data processing fees
   
499
     
430
 
Computer software, supplies and support
   
106
     
90
 
Advertising and promotion
   
71
     
88
 
FDIC insurance premiums
   
103
     
101
 
Legal and professional fees
   
269
     
208
 
Other
   
443
     
490
 
Total noninterest expense
   
4,748
     
4,454
 
                 
Income before provision for income taxes
   
2,804
     
2,269
 
Provision for income taxes
   
643
     
485
 
Net income
 
$
2,161
   
$
1,784
 
                 
Basic earnings per share1
 
$
0.26
   
$
0.21
 
Basic average shares outstanding1
   
8,464,392
     
8,441,880
 
Diluted earnings per share1
 
$
0.25
   
$
0.21
 
Diluted average shares outstanding1
   
8,484,209
     
8,501,046
 
Dividends per share1
 
$
0.0925
   
$
0.0900
 

1
Share and per share data for 2015 have been adjusted for 2-for-1 stock split

See notes to consolidated financial statements
 
5

Greene County Bancorp, Inc.
Consolidated Statements of Comprehensive Income
For the Nine Months Ended March 31, 2016 and 2015
(Unaudited)
(In thousands)

   
2016
   
2015
 
Net Income
 
$
6,631
   
$
5,370
 
Other comprehensive income:
               
Unrealized holding gains on available-for-sale securities, net of income taxes of $192 and $266, respectively
   
305
     
422
 
                 
Accretion of unrealized loss on securities transferred to held-to-maturity, net of income taxes of $5 and $120, respectively
   
8
     
190
 
                 
Total other comprehensive income, net of taxes
   
313
     
612
 
                 
Comprehensive income
 
$
6,944
   
$
5,982
 

See notes to consolidated financial statements.

Greene County Bancorp, Inc.
Consolidated Statements of Comprehensive Income
For the Three Months Ended March 31, 2016 and 2015
(Unaudited)
(In thousands)

   
2016
   
2015
 
Net Income
 
$
2,161
   
$
1,784
 
Other comprehensive income:
               
Unrealized holding gains on available-for-sale securities, net of income taxes of $206 and $177, respectively
   
326
     
280
 
                 
Accretion of unrealized loss on securities transferred to held-to-maturity, net of income taxes of $1 and $19, respectively
   
1
     
31
 
                 
Total other comprehensive income, net of taxes
   
327
     
311
 
                 
Comprehensive income
 
$
2,488
   
$
2,095
 

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, 2016 and 2015
(Unaudited)
(In thousands)

   
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 declared2
                   
(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
 

   
Common
Stock
   
Additional
Paid-In
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Loss
   
Treasury
Stock
   
Total
Shareholders'
Equity
 
Balance at June 30, 2015
 
$
431
   
$
11,220
   
$
56,696
   
$
(798
)
 
$
(629
)
 
$
66,920
 
Options exercised
           
74
                     
112
     
186
 
Tax benefit of stock based compensation
           
6
                             
6
 
2-for-1 Stock Split1
   
430
     
(430
)
                           
-
 
Dividends declared2
                   
(1,071
)
                   
(1,071
)
Net income
                   
6,631
                     
6,631
 
Other comprehensive income, net of taxes
                           
313
             
313
 
Balance at March 31, 2016
 
$
861
   
$
10,870
   
$
62,256
   
$
(485
)
 
$
(517
)
 
$
72,985
 
 
1
On March 15, 2016, the Company issued an additional 4,305,670 shares at a par value of $0.10 per share as a result of the payment of a 2-for-1 stock split.
2
Dividends declared were $0.2775 per share and $0.27 per share for the nine months ended March 31, 2016 and 2015, adjusted for 2-for-1 stock split. This is based on total number of shares outstanding.  However, Greene County Bancorp, MHC, the owner of 54.4% of the Company’s shares outstanding at March 31, 2016, waived its right to receive dividends during the nine months ended March 31, 2016 and the six months ended December 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, 2016 and 2015
(Unaudited)
(In thousands)

   
2016
   
2015
 
Cash flows from operating activities:
           
Net Income
 
$
6,631
   
$
5,370
 
Adjustments to reconcile net income to net cash provided by operating activities
               
Depreciation
   
471
     
400
 
Deferred income tax benefit
   
(1,697
)
   
(539
)
Net amortization of premiums and discounts
   
498
     
880
 
Net amortization of deferred loan costs and fees
   
289
     
276
 
Provision for loan losses
   
1,138
     
1,132
 
Losses on sale and write-downs of foreclosed real estate
   
177
     
101
 
Excess tax benefit from share based compensation
   
(6
)
   
(16
)
Net increase in accrued income taxes
   
1,632
     
2,295
 
Net increase in accrued interest receivable
   
(623
)
   
(494
)
Net increase in prepaid and other assets
   
(149
)
   
(1,067
)
Net decrease in other liabilities
   
660
     
383
 
Net cash provided by operating activities
   
9,021
     
8,721
 
                 
Cash flows from investing activities:
               
Securities available-for-sale:
               
Proceeds from maturities
   
30,899
     
3,250
 
Purchases of securities
   
(51,069
)
   
(23,507
)
Principal payments on securities
   
3,292
     
4,612
 
Securities held-to-maturity:
               
Proceeds from maturities
   
6,745
     
12,847
 
Purchases of securities
   
(36,011
)
   
(15,594
)
Principal payments on securities
   
6,368
     
6,427
 
Net redemption of Federal Home Loan Bank Stock
   
963
     
207
 
Purchases of long term certificates of deposit
   
(980
)
   
(980
)
Net increase in loans receivable
   
(51,446
)
   
(38,343
)
Proceeds from sale of foreclosed real estate
   
684
     
302
 
Purchases of premises and equipment
   
(181
)
   
(516
)
Net cash used by investing activities
   
(90,736
)
   
(51,295
)
                 
Cash flows from financing activities
               
Net decrease in short-term FHLB advances
   
(22,900
)
   
(3,150
)
Proceeds from long-term FHLB advances
   
1,500
     
2,800
 
Payment of cash dividends
   
(1,071
)
   
(1,453
)
Proceeds from issuance of stock options
   
186
     
108
 
Excess tax benefit from share based compensation
   
6
     
16
 
Net increase in deposits
   
127,592
     
55,267
 
Net cash provided by financing activities
   
105,313
     
53,588
 
                 
Net increase in cash and cash equivalents
   
23,598
     
11,014
 
Cash and cash equivalents at beginning of period
   
15,538
     
13,809
 
Cash and cash equivalents at end of period
 
$
39,136
   
$
24,823
 
                 
Non-cash investing activities:
               
Foreclosed loans transferred to foreclosed real estate
 
$
384
   
$
934
 
Cash paid during period for:
               
Interest
 
$
1,880
   
$
1,700
 
Income taxes
 
$
2,057
   
$
86
 

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, 2016 and 2015

(1) Basis of Presentation

Within the accompanying unaudited consolidated statement of financial condition, June 30, 2015 was derived from the audited consolidated financial statements of Greene County Bancorp, Inc. (the “Company”) and its wholly owned subsidiaries, The Bank of Greene County (the “Bank”) and Greene Risk Management, Inc., and the Bank’s wholly owned subsidiaries, Greene County Commercial Bank and Greene Property Holdings, Ltd.  The consolidated financial statements at and for the nine and three months ended March 31, 2016 and 2015 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, 2015, 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, 2016, are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2016.   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.’s primary business is the ownership and operation of its subsidiaries, The Bank of Greene County and Greene Risk Management, Inc.  The Bank of Greene County has 13 full-service offices, an 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.  Greene Risk Management, Inc. is a pooled captive insurance company, which provides additional insurance coverage for the Company and its subsidiaries related to the operations of the Company for which insurance may not be economically feasible.  The Bank of Greene County also owns and operates 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, 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
 
 
10

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
 
 
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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.
 
12

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.
 
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(5) Loans and Allowance for Loan Losses

Loan segments and classes at March 31, 2016 and June 30, 2015 are summarized as follows:

(In thousands)
 
March 31, 2016
   
June 30, 2015
 
Residential real estate:
           
Residential real estate
 
$
232,330
   
$
226,648
 
Residential construction and land
   
5,267
     
3,621
 
Multi-family
   
3,848
     
4,287
 
Commercial real estate:
               
Commercial real estate
   
176,210
     
142,323
 
Commercial construction
   
12,140
     
8,936
 
Consumer loan:
               
Home equity
   
21,322
     
21,019
 
Consumer installment
   
4,084
     
4,123
 
Commercial loans
   
45,981
     
39,798
 
Total gross loans
   
501,182
     
450,755
 
Allowance for loan losses
   
(8,988
)
   
(8,142
)
Deferred fees and costs
   
937
     
883
 
Loans receivable, net
 
$
493,131
   
$
443,496
 

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.

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: residential real estate loans, commercial real estate loans, consumer loans and commercial loans.  The residential real estate portfolio consists of residential, construction and land, and multi-family loan classes. Commercial real estate loans consist of commercial real estate and commercial construction loan classes. Consumer loans consist of home equity loan and consumer installment loan classes.  Commercial loans consist of installment loans and lines of credit issued to business. 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.
 
14

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 commercial real estate, and multi-family dwellings, such as apartment buildings generally are larger than residential loans and involve a greater degree of risk. Commercial real estate 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 commercial real estate 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 commercial real estate 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.

Loan balances by internal credit quality indicator as of March 31, 2016 are shown below.
 
(In thousands)
 
Performing
   
Watch
   
Special Mention
   
Substandard
   
Total
 
Residential real estate
 
$
229,813
   
$
591
   
$
95
   
$
1,831
   
$
232,330
 
Residential construction and land
   
5,267
     
-
     
-
     
-
     
5,267
 
Multi-family
   
3,748
     
-
     
-
     
100
     
3,848
 
Commercial real estate
   
173,544
     
319
     
535
     
1,812
     
176,210
 
Commercial construction
   
12,140
     
-
     
-
     
-
     
12,140
 
Home equity
   
21,303
     
1
     
13
     
5
     
21,322
 
Consumer installment
   
4,083
     
1
     
-
     
-
     
4,084
 
Commercial loans
   
44,820
     
-
     
712
     
449
     
45,981
 
Total gross loans
 
$
494,718
   
$
912
   
$
1,355
   
$
4,197
   
$
501,182
 
 
15

Loan balances by internal credit quality indicator as of June 30, 2015 are shown below.

(In thousands)
 
Performing
   
Watch
   
Special Mention
   
Substandard
   
Total
 
Residential real estate
 
$
224,195
   
$
638
   
$
97
   
$
1,718
   
$
226,648
 
Residential construction and land
   
3,621
     
-
     
-
     
-
     
3,621
 
Multi-family
   
4,182
     
-
     
-
     
105
     
4,287
 
Commercial real estate
   
138,468
     
-
     
986
     
2,869
     
142,323
 
Commercial construction
   
8,936
     
-
     
-
     
-
     
8,936
 
Home equity
   
20,731
     
-
     
15
     
273
     
21,019
 
Consumer installment
   
4,117
     
6
     
-
     
-
     
4,123
 
Commercial loans
   
38,334
     
-
     
844
     
620
     
39,798
 
Total gross loans
 
$
442,584
   
$
644
   
$
1,942
   
$
5,585
   
$
450,755
 

The Company had no loans classified Doubtful or Loss at March 31, 2016 or June 30, 2015.

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, 2016 and June 30, 2015. Loans on nonaccrual status totaled $3.7 million at March 31, 2016, of which $1.5 million were in the process of foreclosure.  Of total loans in process of foreclosure, $923,000 consisted of residential real estate and home equity loans. Included in nonaccrual loans were $2.2 million of loans which were less than 90 days past due at March 31, 2016, 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 $78,000 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 $4.6 million at June 30, 2015 of which $1.2 million were in the process of foreclosure.  Included in nonaccrual loans were $2.6 million of loans which were less than 90 days past due at June 30, 2015, but have a recent history of delinquency greater than 90 days past due.

The following table sets forth information regarding delinquent and/or nonaccrual loans as of March 31, 2016:
 
(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 real estate
 
$
1,595
   
$
286
   
$
997
   
$
2,878
   
$
229,452
   
$
232,330
   
$
1,214
 
Residential construction and land
   
23
     
-
     
-
     
23
     
5,244
     
5,267
     
-
 
Multi-family
   
-
     
-
     
-
     
-
     
3,848
     
3,848
     
-
 
Commercial real estate
   
1,211
     
-
     
590
     
1,801
     
174,409
     
176,210
     
2,231
 
Commercial construction
   
-
     
-
     
-
     
-
     
12,140
     
12,140
     
-
 
Home equity
   
79
     
14
     
5
     
98
     
21,224
     
21,322
     
18
 
Consumer installment
   
-
     
1
     
-
     
1
     
4,083
     
4,084
     
-
 
Commercial loans
   
268
     
-
     
-
     
268
     
45,713
     
45,981
     
205
 
Total gross loans
 
$
3,176
   
$
301
   
$
1,592
   
$
5,069
   
$
496,113
   
$
501,182
   
$
3,668
 
 
16

The following table sets forth information regarding delinquent and/or nonaccrual loans as of June 30, 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 real estate
 
$
1,233
   
$
329
   
$
785
   
$
2,347
   
$
224,301
   
$
226,648
   
$
1,087
 
Residential construction and land
   
28
     
-
     
-
     
28
     
3,593
     
3,621
     
-
 
Multi-family
   
-
     
-
     
-
     
-
     
4,287
     
4,287
     
-
 
Commercial real estate
   
339
     
1
     
1,132
     
1,472
     
140,851
     
142,323
     
2,964
 
Commercial construction
   
-
     
-
     
-
     
-
     
8,936
     
8,936
     
-
 
Home equity
   
244
     
-
     
33
     
277
     
20,742
     
21,019
     
169
 
Consumer installment
   
25
     
6
     
-
     
31
     
4,092
     
4,123
     
-
 
Commercial loans
   
-
     
-
     
175
     
175
     
39,623
     
39,798
     
388
 
Total gross loans
 
$
1,869
   
$
336
   
$
2,125
   
$
4,330
   
$
446,425
   
$
450,755
   
$
4,608
 

The Bank of Greene County had accruing loans delinquent more than 90 days totaling $78,000 and $84,000 as of March 31, 2016 and June 30, 2015, respectively.  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 borrowers have made arrangements with the Bank to bring the loans current within a specified time period and have made a series of payments as agreed.

The table below details additional information related to nonaccrual loans for the nine and three months ended March 31:

   
For the nine months
ended March 31,
   
For the three months
ended March 31
 
(In thousands)
 
2016
   
2015
   
2016
   
2015
 
Interest income that would have been recorded if loans had been performing in accordance with original terms
 
$
222
   
$
246
   
$
63
   
$
47
 
Interest income that was recorded on nonaccrual loans
   
137
     
127
     
38
     
42
 

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.
 
17

The tables below detail additional information on impaired loans at the date or periods indicated:

   
As of March 31, 2016
   
For the nine months ended
March 31, 2016
   
For the three months ended
March 31, 2016
 
(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 real estate
 
$
266
   
$
266
   
$
-
   
$
235
   
$
5
   
$
171
   
$
3
 
Commercial real estate
   
1,027
     
1,234
     
-
     
1,105
     
22
     
1,028
     
5
 
Home equity
   
5
     
5
     
-
     
62
     
1
     
5
     
-
 
Impaired loans with no allowance
   
1,298
     
1,505
     
-
     
1,402
     
28
     
1,204
     
8
 
                                                         
With an allowance recorded:
                                                       
Residential real estate
   
1,464
     
1,464
     
273
     
1,395
     
45
     
1,399
     
17
 
Commercial real estate
   
407
     
407
     
61
     
514
     
21
     
410
     
9
 
Commercial loans
   
87
     
87
     
2
     
90
     
4
     
88
     
1
 
Impaired loans with allowance
   
1,958
     
1,958
     
336
     
1,999
     
70
     
1,897
     
27
 
                                                         
Total impaired:
                                                       
Residential real estate
   
1,730
     
1,730
     
273
     
1,630
     
50
     
1,570
     
20
 
Commercial real estate
   
1,434
     
1,641
     
61
     
1,619
     
43
     
1,438
     
14
 
Home equity
   
5
     
5
     
-
     
62
     
1
     
5
     
-
 
Commercial loans
   
87
     
87
     
2
     
90
     
4
     
88
     
1
 
Total impaired loans
 
$
3,256
   
$
3,463
   
$
336
   
$
3,401
   
$
98
   
$
3,101
   
$
35
 

   
As of June 30, 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 real estate
 
$
432
   
$
432
   
$
-
   
$
500
   
$
26
   
$
716
   
$
13
 
Commercial real estate
   
1,206
     
1,412
     
-
     
890
     
31
     
1,409
     
18
 
Home equity
   
154
     
154
     
-
     
69
     
1
     
48
     
1
 
Commercial loans
   
-
     
-
             
167
     
9
     
500
     
9
 
Impaired loans with no allowance
   
1,792
     
1,998
     
-
     
1,626
     
67
     
2,673
     
41
 
                                           
With an allowance recorded: