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 SEPTEMBER 30, 2019
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

Securities registered pursuant to Section 12(b) of the Act:

Title of class
Trading symbol
Name of exchange on which registered
Common Stock, $0.10 par value
GCBC
The Nasdaq Stock Market

Securities Registered Pursuant to Section 12(g) of the Act:
None
(Title of Class)

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 every Interactive Data File required to be submitted 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, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   ☐
Accelerated filer  ☒
Emerging Growth Company ☐
Non-accelerated filer     ☐
Smaller reporting company ☒
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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 November 8, 2019, the registrant had 8,537,114 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
 
8-30
     
Item 2.
31-43
     
Item 3.
44
     
Item 4.
44
     
PART II.
OTHER INFORMATION
 
     
Item 1.
44
     
Item 1A.
44
     
Item 2.
44
     
Item 3.
44
     
Item 4.
44
     
Item 5.
44
     
Item 6.
44
     
 
45

2

Greene County Bancorp, Inc.
Consolidated Statements of Financial Condition
At September 30, 2019 and June 30, 2019
(Unaudited)
(In thousands, except share and per share amounts)

ASSETS
 
September 30, 2019
   
June 30, 2019
 
Total cash and cash equivalents
 
$
110,852
   
$
29,538
 
                 
Long term certificates of deposit
   
3,626
     
2,875
 
Securities available-for-sale, at fair value
   
159,263
     
122,728
 
Securities held-to-maturity, at amortized cost (fair value $315,322 at September 30, 2019; $313,613 at June 30, 2019)
   
304,582
     
304,208
 
Equity securities, at fair value
   
251
     
253
 
Federal Home Loan Bank stock, at cost
   
1,399
     
1,759
 
                 
Loans
   
818,176
     
798,105
 
Allowance for loan losses
   
(13,444
)
   
(13,200
)
Unearned origination fees and costs, net
   
807
     
833
 
Net loans receivable
   
805,539
     
785,738
 
                 
Premises and equipment, net
   
13,336
     
13,255
 
Accrued interest receivable
   
5,970
     
5,853
 
Foreclosed real estate
   
303
     
53
 
Prepaid expenses and other assets
   
4,599
     
3,202
 
Total assets
 
$
1,409,720
   
$
1,269,462
 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Noninterest-bearing deposits
 
$
115,474
   
$
107,469
 
Interest-bearing deposits
   
1,147,736
     
1,013,100
 
Total deposits
   
1,263,210
     
1,120,569
 
                 
Borrowings from Federal Home Loan Bank, short-term
   
-
     
8,000
 
Borrowings from Federal Home Loan Bank, long-term
   
13,600
     
13,600
 
Accrued expenses and other liabilities
   
16,381
     
14,924
 
Total liabilities
   
1,293,191
     
1,157,093
 
                 
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; Outstanding – 8,537,814
   
861
     
861
 
Additional paid-in capital
   
11,017
     
11,017
 
Retained earnings
   
106,205
     
101,774
 
Accumulated other comprehensive loss
   
(1,277
)
   
(1,006
)
Treasury stock, at cost 73,526 shares
   
(277
)
   
(277
)
Total shareholders’ equity
   
116,529
     
112,369
 
Total liabilities and shareholders’ equity
 
$
1,409,720
   
$
1,269,462
 

See notes to consolidated financial statements

3

Greene County Bancorp, Inc.
Consolidated Statements of Income
For the Three Months Ended September 30, 2019 and 2018
(Unaudited)
(In thousands, except share and per share amounts)

   
2019
   
2018
 
Interest income:
           
Loans
 
$
9,405
   
$
8,298
 
Investment securities - taxable
   
159
     
194
 
Mortgage-backed securities
   
1,244
     
1,114
 
Investment securities - tax exempt
   
1,602
     
1,360
 
Interest-bearing deposits and federal funds sold
   
198
     
31
 
Total interest income
   
12,608
     
10,997
 
                 
Interest expense:
               
Interest on deposits
   
2,050
     
1,036
 
Interest on borrowings
   
58
     
304
 
Total interest expense
   
2,108
     
1,340
 
                 
Net interest income
   
10,500
     
9,657
 
Provision for loan losses
   
551
     
354
 
Net interest income after provision for loan losses
   
9,949
     
9,303
 
                 
Noninterest income:
               
Service charges on deposit accounts
   
1,125
     
1,037
 
Debit card fees
   
743
     
640
 
Investment services
   
145
     
115
 
E-commerce fees
   
35
     
37
 
Other operating income
   
218
     
223
 
Total noninterest income
   
2,266
     
2,052
 
                 
Noninterest expense:
               
Salaries and employee benefits
   
3,942
     
3,478
 
Occupancy expense
   
466
     
402
 
Equipment and furniture expense
   
281
     
214
 
Service and data processing fees
   
574
     
495
 
Computer software, supplies and support
   
242
     
223
 
Advertising and promotion
   
116
     
120
 
FDIC insurance premiums
   
(39
)
   
127
 
Legal and professional fees
   
279
     
329
 
Other
   
561
     
573
 
Total noninterest expense
   
6,422
     
5,961
 
                 
Income before provision for income taxes
   
5,793
     
5,394
 
Provision for income taxes
   
930
     
1,014
 
Net income
 
$
4,863
   
$
4,380
 
                 
Basic and diluted earnings per share
 
$
0.57
   
$
0.51
 
Basic and diluted average shares outstanding
   
8,537,814
     
8,537,814
 
Dividends per share
 
$
0.11
   
$
0.10
 

See notes to consolidated financial statements

4

Greene County Bancorp, Inc.
Consolidated Statements of Comprehensive Income
For the Three Months Ended September 30, 2019 and 2018
(Unaudited)
(In thousands)

   
2019
   
2018
 
Net Income
 
$
4,863
   
$
4,380
 
Other comprehensive loss:
               
Unrealized holding loss on available-for-sale securities, net of income tax benefit of ($96) and ($27), respectively
   
(271
)
   
(76
)
                 
Total other comprehensive loss, net of taxes
   
(271
)
   
(76
)
                 
Comprehensive income
 
$
4,592
   
$
4,304
 

See notes to consolidated financial statements.

5

Greene County Bancorp, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
For the Three Months Ended September 30, 2019 and 2018
(Unaudited)
(In thousands)

   
Common
Stock
   
Additional
Paid-In
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Loss
   
Treasury
Stock
   
Total
Shareholders'
Equity
 
Balance at June 30, 2018
 
$
861
   
$
11,017
   
$
86,213
   
$
(1,623
)
 
$
(277
)
 
$
96,191
 
Impact of Adopting ASU 2016-01(1)
                   
114
     
(114
)
           
-
 
Dividends declared
                   
(854
)
                   
(854
)
Net income
                   
4,380
                     
4,380
 
Other comprehensive loss, net of taxes
                           
(76
)
           
(76
)
Balance at September 30, 2018
 
$
861
   
$
11,017
   
$
89,853
   
$
(1,813
)
 
$
(277
)
 
$
99,641
 

   
Common
Stock
   
Additional
Paid-In
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Loss
   
Treasury
Stock
   
Total
Shareholders'
Equity
 
Balance at June 30, 2019
 
$
861
   
$
11,017
   
$
101,774
   
$
(1,006
)
 
$
(277
)
 
$
112,369
 
Dividends declared
                   
(432
)
                   
(432
)
Net income
                   
4,863
                     
4,863
 
Other comprehensive loss, net of taxes
                           
(271
)
           
(271
)
Balance at September 30, 2019
 
$
861
   
$
11,017
   
$
106,205
   
$
(1,277
)
 
$
(277
)
 
$
116,529
 


(1)
See Note 9 Impact of Recent Accounting Pronouncements – cumulative effect of change in measurement of equity securities.

See notes to consolidated financial statements.

6

Greene County Bancorp, Inc.
Consolidated Statements of Cash Flows
For the Three Months Ended September 30, 2019 and 2018
(Unaudited)
(In thousands)

   
2019
   
2018
 
Cash flows from operating activities:
           
Net Income
 
$
4,863
   
$
4,380
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation
   
175
     
154
 
Deferred income tax benefit
   
(380
)
   
(388
)
Net amortization of premiums and discounts
   
120
     
81
 
Net amortization of deferred loan costs and fees
   
143
     
110
 
Provision for loan losses
   
551
     
354
 
Net loss (gain) on equity securities
   
2
     
(15
)
(Income) losses on sale of foreclosed real estate
   
(76
)
   
9
 
Net increase in accrued income taxes
   
558
     
426
 
Net increase in accrued interest receivable
   
(117
)
   
(380
)
Net (increase) decrease in prepaid and other assets
   
(1,450
)
   
255
 
Net increase (decrease) in other liabilities
   
1,428
     
(2,082
)
Net cash provided by operating activities
   
5,817
     
2,904
 
                 
Cash flows from investing activities:
               
Securities available-for-sale:
               
Proceeds from maturities
   
30,178
     
32,825
 
Purchases of securities
   
(68,828
)
   
(32,921
)
Principal payments on securities
   
1,739
     
1,191
 
Securities held-to-maturity:
               
Proceeds from maturities
   
14,129
     
4,519
 
Purchases of securities
   
(21,466
)
   
(23,918
)
Principal payments on securities
   
6,852
     
13,102
 
Net redemption (purchase) of Federal Home Loan Bank Stock
   
360
     
(2,602
)
Purchase of long term certificates of deposit
   
(751
)
   
-
 
Net increase in loans receivable
   
(20,710
)
   
(20,593
)
Proceeds from sale of foreclosed real estate
   
41
     
65
 
Purchases of premises and equipment
   
(256
)
   
(117
)
Net cash used by investing activities
   
(58,712
)
   
(28,449
)
                 
Cash flows from financing activities
               
Net (decrease) increase in short-term advances
   
(8,000
)
   
58,800
 
Repayment of long-term FHLB advances
   
-
     
(1,000
)
Payment of cash dividends
   
(432
)
   
(854
)
Net increase (decrease) in deposits
   
142,641
     
(22,773
)
Net cash provided by financing activities
   
134,209
     
34,173
 
                 
Net increase in cash and cash equivalents
   
81,314
     
8,628
 
Cash and cash equivalents at beginning of period
   
29,538
     
26,504
 
Cash and cash equivalents at end of period
 
$
110,852
   
$
35,132
 
                 
Non-cash investing activities:
               
    Foreclosed loans transferred to foreclosed real estate
 
$
215
   
$
34
 
Cash paid during period for:
               
Interest
 
$
2,094
   
$
1,332
 
Income taxes
 
$
752
   
$
975
 

See notes to consolidated financial statements

7

Greene County Bancorp, Inc.
Notes to Consolidated Financial Statements
At and for the Three Months Ended September 30, 2019 and 2018

(1)
Basis of Presentation

Within the accompanying unaudited consolidated statement of financial condition, and related notes to the consolidated financial statements, June 30, 2019 data 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 three months ended September 30, 2019 and 2018 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, 2019, 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.   The Company had no reclassifications from amounts in the prior year’s consolidated financial statements to conform to the current year’s presentation.  All material inter-company accounts and transactions have been eliminated in the consolidation. The results of operations and other data for the three months ended September 30, 2019 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2020.   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 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 collectability 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. There have been no significant changes in the application of this critical accounting policy during the three months ended September 30, 2019.

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 equity security for a period of time sufficient for a recovery in value; recent events specific to the issuer or industry; and for debt securities, the 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 write-downs to fair value 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.

8

(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 16 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.

(3)
Use of Estimates

The preparation of consolidated 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 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 through earnings.

(4)
Securities

Securities at September 30, 2019 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
 
$
4,517
   
$
28
   
$
-
   
$
4,545
 
State and political subdivisions
   
120,630
     
346
     
-
     
120,976
 
Mortgage-backed securities-residential
   
8,589
     
51
     
19
     
8,621
 
Mortgage-backed securities-multi-family
   
20,256
     
323
     
1
     
20,578
 
Corporate debt securities
   
4,512
     
61
     
30
     
4,543
 
Total securities available-for-sale
   
158,504
     
809
     
50
     
159,263
 
Securities held-to-maturity:
                               
U.S. government sponsored enterprises
   
2,000
     
-
     
12
     
1,988
 
State and political subdivisions
   
155,729
     
6,383
     
70
     
162,042
 
Mortgage-backed securities-residential
   
10,154
     
164
     
-
     
10,318
 
Mortgage-backed securities-multi-family
   
132,795
     
4,257
     
2
     
137,050
 
Corporate debt securities
   
1,480
     
12
     
28
     
1,464
 
Other securities
   
2,424
     
36
     
-
     
2,460
 
Total securities held-to-maturity
   
304,582
     
10,852
     
112
     
315,322
 
Total securities
 
$
463,086
   
$
11,661
   
$
162
   
$
474,585
 

9

Securities at June 30, 2019 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
 
$
5,522
   
$
31
   
$
-
   
$
5,553
 
State and political subdivisions
   
95,782
     
788
     
-
     
96,570
 
Mortgage-backed securities-residential
   
2,634
     
31
     
20
     
2,645
 
Mortgage-backed securities-multi-family
   
16,151
     
259
     
-
     
16,410
 
Corporate debt securities
   
1,513
     
37
     
-
     
1,550
 
Total securities available-for-sale
   
121,602
     
1,146
     
20
     
122,728
 
Securities held-to-maturity:
                               
U.S. government sponsored enterprises
   
9,249
     
1
     
14
     
9,236
 
State and political subdivisions
   
152,358
     
6,212
     
23
     
158,547
 
Mortgage-backed securities-residential
   
4,570
     
97
     
-
     
4,667
 
Mortgage-backed securities-multi-family
   
134,970
     
3,122
     
17
     
138,075
 
Corporate debt securities
   
1,478
     
18
     
25
     
1,471
 
Other securities
   
1,583
     
34
     
-
     
1,617
 
Total securities held-to-maturity
   
304,208
     
9,484
     
79
     
313,613
 
Total securities
 
$
425,810
   
$
10,630
   
$
99
   
$
436,341
 

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.  At September 30, 2019, all mortgage-backed securities including collateralized mortgage obligations were securities of government sponsored enterprises, no private-label mortgage-backed securities or collateralized mortgage obligations were held in the securities portfolio.  The Company’s investments in state and political subdivisions securities generally are municipal obligations that are general obligations supported by the general taxing authority of the issuer, and in some cases are insured.  The obligations issued by school districts are supported by state aid.  Primarily, these investments are issued by municipalities within New York State.

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

The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2019.

   
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
 
$
3,078
   
$
2
     
1
   
$
803
   
$
17
     
1
   
$
3,881
   
$
19
     
2
 
Mortgage-backed securities-multi-family
   
3,085
     
1
     
1
     
-
     
-
     
-
     
3,085
     
1
     
1
 
Corporate debt securities
   
2,970
     
30
     
5
     
-
     
-
     
-
     
2,970
     
30
     
5
 
Total securities available-for-sale
   
9,133
     
33
     
7
     
803
     
17
     
1
     
9,936
     
50
     
8
 
Securities held-to-maturity:
                                                                       
U.S. government sponsored enterprises
   
-
     
-
     
-
     
1,988
     
12
     
1
     
1,988
     
12
     
1
 
State and political subdivisions
   
10,966
     
58
     
94
     
2,424
     
12
     
16
     
13,390
     
70
     
110
 
Mortgage-backed securities-multi-family
   
2,764
     
2
     
2
     
-
     
-
     
-
     
2,764
     
2
     
2
 
Corporate debt securities
   
-
     
-
     
-
     
452
     
28
     
1
     
452
     
28
     
1
 
Total securities held-to-maturity
   
13,730
     
60
     
96
     
4,864
     
52
     
18
     
18,594
     
112
     
114
 
Total securities
 
$
22,863
   
$
93
     
103
   
$
5,667
   
$
69
     
19
   
$
28,530
   
$
162
     
122
 

10

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, 2019.

   
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
 
$
856
   
$
20
     
1
   
$
-
   
$
-
     
-
   
$
856
   
$
20
     
1
 
Total securities available-for-sale
   
856
     
20
     
1
     
-
     
-
     
-
     
856
     
20
     
1
 
Securities held-to-maturity:
                                                                       
U.S. government sponsored enterprises
   
-
     
-
     
-
     
1,986
     
14
     
1
     
1,986
     
14
     
1
 
State and political subdivisions
   
3,541
     
17
     
22
     
2,111
     
6
     
13
     
5,652
     
23
     
35
 
Mortgage-backed securities-multi-family
   
1,250
     
6
     
1
     
3,799
     
11
     
3
     
5,049
     
17
     
4
 
Corporate debt securities
   
-
     
-
     
-
     
452
     
25
     
1
     
452
     
25
     
1
 
Total securities held-to-maturity
   
4,791
     
23
     
23
     
8,348
     
56
     
18
     
13,139
     
79
     
41
 
Total securities
 
$
5,647
   
$
43
     
24
   
$
8,348
   
$
56
     
18
   
$
13,995
   
$
99
     
42
 

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 before recovery of its amortized cost basis, (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 earnings while noncredit-related OTTI on securities not expected to be sold is recognized in other comprehensive income/loss (“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.  Management evaluated securities considering the factors as outlined above, and based on this evaluation the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2019.  Management believes that the reasons for the decline in fair value are due to interest rates, widening credit spreads and market illiquidity at the reporting date.

There were no transfers of securities available-for-sale to held-to-maturity during the three months ended September 30, 2019 or 2018. During the three months ended September 30, 2019 and 2018, there were no sales of securities and no gains or losses were recognized.  There was no other-than-temporary impairment loss recognized during the three months ended September 30, 2019 and 2018.

11

The estimated fair values of debt securities at September 30, 2019, 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
 
$
125,147
   
$
125,521
 
After one year through five years
   
510
     
526
 
After five years through ten years
   
2,002
     
2,046
 
After ten years
   
2,000
     
1,971
 
Total available-for-sale debt securities
   
129,659
     
130,064
 
Mortgage-backed securities
   
28,845
     
29,199
 
Total available-for-sale securities
   
158,504
     
159,263
 
                 
Held-to-maturity debt securities
               
Within one year
   
25,105
     
25,395
 
After one year through five years
   
74,861
     
76,755
 
After five years through ten years
   
43,093
     
45,660
 
After ten years
   
18,574
     
20,144
 
Total held-to-maturity debt securities
   
161,633
     
167,954
 
Mortgage-backed securities
   
142,949
     
147,368
 
Total held-to-maturity securities
   
304,582
     
315,322
 
Total debt securities
 
$
463,086
   
$
474,585
 

At September 30, 2019 and June 30, 2019, respectively, securities with an aggregate fair value of $460.9 million and $425.7 million were pledged as collateral for deposits in excess of FDIC insurance limits for various municipalities placing deposits with Greene County Commercial Bank.  At September 30, 2019 and June 30, 2019, securities with an aggregate fair value of $4.5 million and $1.5 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 quarters ended September 30, 2019 or 2018.

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 three months ended September 30, 2019 or 2018.

12

(5)
Loans and Allowance for Loan Losses

Loan segments and classes at September 30, 2019 and June 30, 2019 are summarized as follows:
(In thousands)
 
September 30, 2019
   
June 30, 2019
 
Residential real estate:
           
Residential real estate
 
$
267,245
   
$
267,802
 
Residential construction and land
   
8,377
     
7,462
 
Multi-family
   
25,021
     
24,592
 
Commercial real estate:
               
Commercial real estate
   
332,185
     
329,668
 
Commercial construction
   
48,751
     
36,361
 
Consumer loan:
               
Home equity
   
23,288
     
23,185
 
Consumer installment
   
5,677
     
5,481
 
Commercial loans
   
107,632
     
103,554
 
Total gross loans
   
818,176
     
798,105
 
Allowance for loan losses
   
(13,444
)
   
(13,200
)
Unearned origination fees and costs, net
   
807
     
833
 
Loans receivable, net
 
$
805,539
   
$
785,738
 

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 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. The inherent risk within the loan portfolio varies depending upon each of these loan types.

The Bank of Greene County’s primary lending activity historically has been 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.

13

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.  Over the past few years, The Bank of Greene County has shifted more focus on the origination of commercial loans including commercial real estate.  The Bank of Greene County has also formed relationships with other community banks within our region to participate in larger commercial loan relationships.  These types of loans are generally considered to be riskier due to the size and complexity of the loan relationship.  By entering into a participation agreement with the other bank, The Bank of Greene County can obtain the loan relationship while limiting its exposure to credit loss.  Management completes its due diligence in underwriting these loans and monitors the servicing of these loans.

Loan balances by internal credit quality indicator at September 30, 2019 are shown below.

(In thousands)
 
Performing
   
Watch
   
Special Mention
   
Substandard
   
Total
 
Residential real estate
 
$
264,257
   
$
496
   
$
209
   
$
2,283
   
$
267,245
 
Residential construction and land
   
8,377
     
-
     
-
     
-
     
8,377
 
Multi-family
   
23,127
     
-
     
1,759
     
135
     
25,021
 
Commercial real estate
   
321,306
     
161
     
7,569
     
3,149
     
332,185
 
Commercial construction
   
43,957
     
-
     
4,692
     
102
     
48,751
 
Home equity
   
22,624
     
75
     
-
     
589
     
23,288
 
Consumer installment
   
5,659
     
18
     
-
     
-
     
5,677
 
Commercial loans
   
105,389
     
-
     
1,936
     
307
     
107,632
 
Total gross loans
 
$
794,697
   
$
750
   
$
16,165
   
$
6,564
   
$
818,176
 

14

Loan balances by internal credit quality indicator at June 30, 2019 are shown below.

(In thousands)
 
Performing
   
Watch
   
Special
Mention
   
Substandard
   
Total
 
Residential real estate
 
$
264,138
   
$
874
   
$
86
   
$
2,704
   
$
267,802
 
Residential construction and land
   
7,462
     
-
     
-
     
-
     
7,462
 
Multi-family
   
22,544
     
137
     
1,835
     
76
     
24,592
 
Commercial real estate
   
318,703
     
616
     
7,435
     
2,914
     
329,668
 
Commercial construction
   
36,259
     
-
     
-
     
102
     
36,361
 
Home equity
   
22,392
     
20
     
-
     
773
     
23,185
 
Consumer installment
   
5,461
     
14
     
-
     
6
     
5,481
 
Commercial loans
   
102,103
     
261
     
1,082
     
108
     
103,554
 
Total gross loans
 
$
779,062
   
$
1,922
   
$
10,438
   
$
6,683
   
$
798,105
 

The Company had no loans classified doubtful or loss at September 30, 2019 or June 30, 2019.  During the three months ended September 30, 2019 the Company downgraded a construction loan to special mention as a result of project cost overruns and several delinquent payments. At September 30, 2019, this loan was performing. Management continues to monitor this loan relationship closely.

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 September 30, 2019 and June 30, 2019.  Loans on nonaccrual status totaled $3.5 million at September 30, 2019 of which $1.1 million were in the process of foreclosure. At September 30, 2019, there were 9 residential loans in the process of foreclosure totaling $938,000.  Included in nonaccrual loans were $1.8 million of loans which were less than 90 days past due at September 30, 2019, 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 $150,000 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 $3.6 million at June 30, 2019 of which $1.6 million were in the process of foreclosure.  At June 30, 2019, there were 12 residential loans in the process of foreclosure totaling $1.5 million.  Included in nonaccrual loans were $1.8 million of loans which were less than 90 days past due at June 30, 2019, 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 at September 30, 2019:

(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
 
$
1,906
   
$
212
   
$
986
   
$
3,104
   
$
264,141
   
$
267,245
   
$
2,026
 
Residential construction and land
   
-
     
-
     
-
     
-
     
8,377
     
8,377
     
-
 
Multi-family
   
-
     
-
     
134
     
134
     
24,887
     
25,021
     
134
 
Commercial real estate
   
1,083
     
474
     
114
     
1,671
     
330,514
     
332,185
     
847
 
Commercial construction
   
-
     
-
     
-
     
-
     
48,751
     
48,751
     
-
 
Home equity
   
124
     
75
     
243
     
442
     
22,846
     
23,288
     
268
 
Consumer installment
   
66
     
18
     
-
     
84
     
5,593
     
5,677
     
-
 
Commercial loans
   
174
     
-
     
237
     
411
     
107,221
     
107,632
     
247
 
Total gross loans
 
$
3,353
   
$
779
   
$
1,714
   
$
5,846
   
$
812,330
   
$
818,176
   
$
3,522
 

15

The following table sets forth information regarding delinquent and/or nonaccrual loans at June 30, 2019:

(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
 
$
2,144
   
$
870
   
$
1,385
   
$
4,399
   
$
263,403
   
$
267,802
   
$
2,474
 
Residential construction and land
   
-
     
-
     
-
     
-
     
7,462
     
7,462
     
-
 
Multi-family
   
1
     
137
     
-
     
138
     
24,454
     
24,592
     
-
 
Commercial real estate
   
280
     
1,108
     
102
     
1,490
     
328,178
     
329,668
     
598
 
Commercial construction
   
-
     
-
     
-
     
-
     
36,361
     
36,361
     
-
 
Home equity
   
16
     
136
     
309
     
461
     
22,724
     
23,185
     
452
 
Consumer installment
   
32
     
14
     
6
     
52
     
5,429
     
5,481
     
6
 
Commercial loans
   
430
     
342
     
28
     
800
     
102,754
     
103,554
     
108
 
Total gross loans
 
$
2,903
   
$
2,607
   
$
1,830
   
$
7,340
   
$
790,765
   
$
798,105
   
$
3,638
 

The Bank of Greene County had no accruing loans delinquent more than 90 days at September 30, 2019 or June 30, 2019, 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 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 three months ended September 30:

(In thousands)
 
2019
   
2018
 
Interest income that would have been recorded if loans had been performing in accordance with original terms
 
$
101
   
$
71
 
Interest income that was recorded on nonaccrual loans
   
50
     
32
 

Impaired Loan Analysis

The Company identifies impaired loans and measures the impairment in accordance with FASB 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.  Generally, The Bank of Greene County considers residential mortgages, home equity 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, business loans and select larger balance residential mortgage loans are reviewed 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.  Based on this evaluation, a delinquent loan’s risk rating may be downgraded to either pass-watch, 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:

   
At September 30, 2019
   
For the three months ended
September 30, 2019
 
(In thousands)
 
Recorded
Investment
   
Unpaid
Principal
   
Related
Allowance
   
Average
Recorded
Investment
   
Interest
Income
Recognized
 
With no related allowance recorded:
                   
Residential real estate
 
$
674
   
$
674
   
$
-
   
$
692
   
$
30
 
Commercial real estate
   
697
     
697
     
-
     
704
     
7
 
Home equity
   
153
     
153
     
-
     
266
     
-
 
Commercial loans
   
135
     
135
     
-
     
137
     
-
 
Total impaired loans with no allowance
   
1,659
     
1,659
     
-
     
1,799
     
37
 
                                         
With an allowance recorded:
                                       
Residential real estate
   
830
     
830
     
91
     
1,087
     
24
 
Commercial construction
   
102
     
102
     
2
     
102
     
-
 
Home equity
   
321
     
321
     
73
     
330
     
5
 
Commercial loans
   
130
     
130
     
12
     
130
     
1
 
Total impaired loans with allowance
   
1,383
     
1,383
     
178
     
1,649
     
30
 
                                         
Total impaired:
                                       
Residential real estate
   
1,504
     
1,504
     
91
     
1,779
     
54
 
Commercial real estate
   
697
     
697
     
-
     
704
     
7
 
Commercial construction
   
102
     
102
     
2
     
102
     
-
 
Home equity
   
474
     
474
     
73
     
596
     
5
 
Commercial loans
   
265
     
265
     
12
     
267
     
1
 
Total impaired loans
 
$
3,042
   
$
3,042
   
$
178
   
$
3,448
   
$
67
 

   
At June 30, 2019
   
For the three months ended
September 30, 2018
 
(In thousands)
 
Recorded
Investment
   
Unpaid
Principal
   
Related
Allowance
   
Average
Recorded
Investment
   
Interest
Income
Recognized
 
With no related allowance recorded:
                   
Residential real estate
 
$
727
   
$
727
   
$
-
   
$
7
   
$
3
 
Commercial real estate
   
717
     
717
     
-
     
796
     
8
 
Home equity
   
309
     
309
     
-
     
224
     
-
 
Commercial loans
   
141
     
141
     
-
     
157
     
-
 
Impaired loans with no allowance
   
1,894
     
1,894
     
-
     
1,184
     
11
 
                                         
With an allowance recorded:
                                       
Residential real estate
   
1,420
     
1,420
     
188
     
1,855
     
23
 
Commercial real estate
   
-
     
-
     
-
     
365
     
-
 
Commercial construction
   
102
     
102
     
2
     
176
     
-
 
Home equity
   
348
     
348
     
59
     
322
     
4
 
Commercial Loans
   
130
     
130
     
13
     
-
     
-
 
Impaired loans with allowance
   
2,000
     
2,000
     
262
     
2,718
     
27
 
                                         
Total impaired:
                                       
Residential real estate
   
2,147
     
2,147
     
188
     
1,862
     
26
 
Commercial real estate
   
717
     
717
     
-
     
1,161
     
8
 
Commercial construction
   
102
     
102
     
2
     
176
     
-
 
Home equity
   
657
     
657
     
59
     
546
     
4
 
Commercial loans
   
271
     
271
     
13
     
157
     
-
 
Total impaired loans
 
$
3,894
   
$
3,894
   
$
262
   
$
3,902
   
$
38
 

17

There were no loans that have been modified as a troubled debt restructuring during the three months ended September 30, 2019 or 2018.   There were no loans that had been modified as a troubled debt restructuring during the twelve months prior to June 30, 2019 or 2018 which have subsequently defaulted during the three months ended September 30, 2019 or 2018, respectively.

Allowance for Loan Losses

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 loan portfolio, specific impaired loans and current economic conditions.  Such evaluation, which includes a review of certain identified loans on which full collectability may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, payment status of the loan, historical loan loss experience and other factors that warrant recognition in providing for the loan loss allowance.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review The Bank of Greene County’s allowance for loan losses.  Such agencies may require The Bank of Greene County to recognize additions to the allowance based on their judgment about information available to them at the time of their examination. The Bank of Greene County considers smaller balance residential mortgages, home equity loans, commercial loans and installment loans to customers as small, homogeneous loans, which are evaluated for impairment collectively based on historical loss experience.  Larger balance residential, commercial mortgage and business 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 agreements.  The measurement of impaired loans is generally based on the fair value of the underlying collateral.  The Bank of Greene County charges loans off against the allowance for credit losses when it becomes evident that a loan cannot be collected within a reasonable amount of time or that it will cost the Bank more than it will receive, and all possible avenues of repayment have been analyzed, including the potential of future cash flow, the value of the underlying collateral, and strength of any guarantors or co-borrowers.  Generally, consumer loans and smaller commercial loans (not secured by real estate) in excess of 90 days are charged-off against the allowance for loan losses, unless equitable arrangements are made. Included within consumer installment loan charge-offs and recoveries are deposit accounts that have been overdrawn in excess of 60 days. With continued growth in the number of deposit accounts, charge-off activity within this category has also grown, as can be seen from the tables below. For loans secured by real estate, a charge-off is recorded when it is determined that the collection of all or a portion of a loan may not be collected and the amount of that loss can be reasonably estimated. The allowance for loan losses is increased by a provision for loan losses (which results in a charge to expense) and recoveries of loans previously charged off and is reduced by charge-offs.

The following tables set forth the activity and allocation of the allowance for loan losses by loan category during and at the periods indicated.  The allowance is allocated to each loan category based on historical loss experience and economic conditions.

   
Activity for the three months ended September 30, 2019
 
(In thousands)
 
Balance at
June 30, 2019
   
Charge-offs
   
Recoveries
   
Provision
   
Balance at
September 30,
2019
 
Residential real estate
 
$
2,026
   
$
53
   
$
-
   
$
(461
)
 
$
1,512
 
Residential construction and land
   
87
     
-
     
-
     
12
     
99
 
Multi-family
   
180
     
-
     
-
     
25
     
205
 
Commercial real estate
   
7,110
     
-
     
-
     
49
     
7,159
 
Commercial construction
   
872
     
-
     
-
     
419
     
1,291
 
Home equity
   
314
     
-
     
-
     
(7
)
   
307
 
Consumer installment
   
250
     
109
     
24
     
154
     
319
 
Commercial loans
   
2,361
     
199
     
30
     
360
     
2,552
 
Total
 
$
13,200
   
$
361
   
$
54
   
$
551
   
$
13,444
 

18

   
Allowance for Loan Losses
   
Loans Receivable
 
   
Ending Balance At September 30, 2019
Impairment Analysis
   
Ending Balance At September 30, 2019
Impairment Analysis
 
(In thousands)
 
Individually
Evaluated
   
Collectively
Evaluated
   
Individually
Evaluated
   
Collectively
Evaluated
 
Residential real estate
 
$
91
   
$
1,421
   
$
1,504
   
$
265,741
 
Residential construction and land
   
-
     
99
     
-
     
8,377
 
Multi-family
   
-
     
205
     
-
     
25,021
 
Commercial real estate
   
-
     
7,159
     
697
     
331,488
 
Commercial construction
   
2
     
1,289
     
102
     
48,649
 
Home equity
   
73
     
234
     
474
     
22,814
 
Consumer installment
   
-
     
319
     
-
     
5,677
 
Commercial loans
   
12
     
2,540
     
265
     
107,367
 
Unallocated
   
-
     
-
     
-
     
-
 
Total
 
$
178
   
$
13,266
   
$
3,042
   
$
815,134
 

   
Activity for the three months ended September 30, 2018
 
(In thousands)
 
Balance at
June 30, 2018
   
Charge-offs
   
Recoveries
   
Provision
   
Balance at
September 30,
2018
 
Residential real estate
 
$
2,116
   
$
21
   
$
13
   
$
-
   
$
2,108
 
Residential construction and land
   
114
     
-
     
-
     
2
     
116
 
Multi-family
   
162
     
-
     
-
     
9
     
171
 
Commercial real estate
   
5,979
     
-
     
-
     
44
     
6,023
 
Commercial construction
   
950
     
-
     
-
     
7
     
957
 
Home equity
   
317
     
-
     
-
     
-
     
317
 
Consumer installment
   
224
     
99
     
37
     
67
     
229
 
Commercial loans
   
2,128
     
-
     
-
     
5
     
2,133
 
Unallocated
   
34
     
-
     
-
     
220
     
254
 
Total
 
$
12,024
   
$
120
   
$
50
   
$
354
   
$
12,308
 

   
Allowance for Loan Losses
   
Loans Receivable
 
   
Ending Balance June 30, 2019
Impairment Analysis
   
Ending Balance June 30, 2019
Impairment Analysis
 
(In thousands)
 
Individually
Evaluated
   
Collectively
Evaluated
   
Individually
Evaluated
   
Collectively
Evaluated
 
Residential real estate
 
$
188
   
$
1,838
   
$
2,147
   
$
265,655
 
Residential construction and land
   
-
     
87
     
-
     
7,462
 
Multi-family
   
-
     
180
     
-
     
24,592
 
Commercial real estate
   
-
     
7,110
     
717
     
328,951
 
Commercial construction
   
2
     
870
     
102
     
36,259
 
Home equity
   
59
     
255
     
657
     
22,528
 
Consumer installment
   
-
     
250
     
-
     
5,481
 
Commercial loans
   
13
     
2,348
     
271
     
103,283
 
Unallocated
   
-
     
-
     
-
     
-
 
Total
 
$
262
   
$
12,938
   
$
3,894
   
$
794,211
 

Foreclosed real estate (FRE)

FRE consists of properties acquired through mortgage loan foreclosure proceedings or in full or partial satisfaction of loans. The following table sets forth information regarding FRE at September 30, 2019 and June 30, 2019:

(in thousands)
 
September 30, 2019
   
June 30, 2019
 
Residential real estate
 
$
303
   
$
53
 
Total foreclosed real estate
 
$
303
   
$
53
 

19

(6)
Fair Value Measurements and Fair Value of Financial Instruments

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique.  Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sale transaction on the dates indicated.  The estimated fair value amounts have been measured at September 30, 2019 and June 30, 2019 and have not been re-evaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates.  As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.

The FASB ASC Topic on “Fair Value Measurement” established a fair value hierarchy that prioritized the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
 
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
 
Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.
 
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).
 
An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

For assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used are as follows:

         
Fair Value Measurements Using
 
         
Quoted
Prices In
Active Markets
For Identical
Assets
   
Significant
Other
Observable
Inputs
   
Significant
Unobservable
Inputs
 
(In thousands)
 
September 30, 2019
   
(Level 1)
   
(Level 2)
   
(Level 3)
 
Assets:
                       
U.S. Government sponsored enterprises
 
$
4,545
   
$
-
   
$
4,545
   
$
-
 
State and political subdivisions
   
120,976
     
-
     
120,976
     
-
 
Mortgage-backed securities-residential
   
8,621
     
-
     
8,621
     
-
 
Mortgage-backed securities-multi-family
   
20,578
     
-
     
20,578
     
-
 
Corporate debt securities
   
4,543
     
4,543
     
-
     
-
 
Securities available-for-sale
   
159,263
   
$
4,543
   
$
154,720
     
-
 
Equity securities
   
251
     
251
     
-
     
-
 
Total securities measured at fair value
 
$
159,514
   
$
4,794
   
$
154,720
   
$
-
 

20

         
Fair Value Measurements Using
 
         
Quoted Prices
In Active
Markets For
Identical Assets
   
Significant
Other Observable
Inputs
   
Significant
Unobservable
Inputs
 
(In thousands)
 
June 30, 2019
   
(Level 1)
   
(Level 2)
   
(Level 3)
 
Assets:
                       
U.S. Government sponsored enterprises
 
$
5,553
   
$
-
   
$
5,553
   
$
-
 
State and political subdivisions
   
96,570
     
-
     
96,570
     
-
 
Mortgage-backed securities-residential
   
2,645
     
-
     
2,645
     
-
 
Mortgage-backed securities-multi-family
   
16,410
     
-
     
16,410
     
-
 
Corporate debt securities
   
1,550
     
1,550
     
-
     
-
 
Securities available-for-sale
   
122,728
     
1,550
     
121,178
     
-
 
Equity securities
   
253
     
253
     
-
     
-
 
Total securities measured at fair value
 
$
122,981
   
$
1,803
   
$
121,178
   
$
-
 

Certain investments that are actively traded and have quoted market prices have been classified as Level 1 valuations.  Other available-for-sale investment securities have been valued by reference to prices for similar securities or through model-based techniques in which all significant inputs are observable and, therefore, such valuations have been classified as Level 2.

In addition to disclosures of the fair value of assets on a recurring basis, FASB ASC Topic on “Fair Value Measurement” requires disclosures for assets and liabilities measured at fair value on a nonrecurring basis, such as impaired assets, in the period in which a re-measurement at fair value is performed.  Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral-dependent loans calculated as required by the “Receivables –Loan Impairment” subtopic of the FASB ASC when establishing the allowance for credit losses. Impaired loans are those loans in which the Company has measured impairment based on the fair value of the loan’s collateral or the discounted value of expected future cash flows. Fair value is generally determined based upon market value evaluations by third parties of the properties and/or estimates by management of working capital collateral or discounted cash flows based upon expected proceeds. These appraisals may include up to three approaches to value: the sales comparison approach, the income approach (for income-producing property), and the cost approach. Management modifies the appraised values, if needed, to take into account recent developments in the market or other factors, such as, changes in absorption rates or market conditions from the time of valuation and anticipated sales values considering management’s plans for disposition. Such modifications to the appraised values could result in lower valuations of such collateral. Estimated costs to sell are based on current amounts of disposal costs for similar assets. These measurements are classified as Level 3 within the valuation hierarchy. Impaired loans are subject to nonrecurring fair value adjustment upon initial recognition or subsequent impairment. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance.

Fair values for foreclosed real estate are initially recorded based on market value evaluations by third parties, less costs to sell (“initial cost basis”). Any write-downs required when the related loan receivable is exchanged for the underlying real estate collateral at the time of transfer to foreclosed real estate are charged to the allowance for loan losses. Values are derived from appraisals, similar to impaired loans, of underlying collateral or discounted cash flow analysis. Subsequent to foreclosure, valuations are updated periodically and assets are marked to current fair value, not to exceed the initial cost basis. In the determination of fair value subsequent to foreclosure, management also considers other factors or recent developments, such as, changes in absorption rates and market conditions from the time of valuation and anticipated sales values considering management’s plans for disposition. Either change could result in adjustment to lower the property value estimates indicated in the appraisals. These measurements are classified as Level 3 within the fair value hierarchy.

21

                     
Fair Value Measurements Using
 
(In thousands)
 
Recorded
Investment
   
Related
Allowance
   
Fair Value
   
(Level 1)
   
(Level 2)
   
(Level 3)
 
September 30, 2019
                                   
Impaired loans
 
$
1,547
   
$
178
   
$
1,369
   
$
-
   
$
-
   
$
1,369
 
Foreclosed real estate
   
303
     
-
     
303
     
-
     
-
     
303
 
                                                 
June 30, 2019
                                               
Impaired loans
 
$
2,335
   
$
262
   
$
2,073
   
$
-
   
$
-
   
$
2,073
 
Foreclosed real estate
   
53
     
-
     
53
     
-
     
-
     
53
 

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Level 3 inputs were utilized to determine fair value:

(Dollars in thousands)
 
Fair Value
 
Valuation Technique
Unobservable Input
 
Range
   
Weighted
Average
 
September 30, 2019
                     
Impaired Loans
 
$
703
 
Appraisal of collateral(1)
Appraisal adjustments(2)
   
27.03%-41.67
%
   
35.97
%
             
Liquidation expenses(3)
   
3.98%-5.49
%
   
4.43
%
     
666
 
Discounted cash flow
Discount rate
   
4.19%-8.66
%
   
6.07
%
Foreclosed real estate
   
303
 
Appraisal of collateral(1)
Appraisal adjustments(2)
   
0.00-0.00
%
   
0.00
%
             
Liquidation expenses(3)
   
6.80
%
   
6.80
%
June 30, 2019
                           
Impaired loans
 
$
1,403
 
Appraisal of collateral(1)
Appraisal adjustments(2)
   
0.00%-33.73
%
   
24.48
%
             
Liquidation expenses(3)
 
 3.98%-6.00
%
 
 4.53
%
     
670
 
Discounted cash flow
Discount rate
 
 4.19%-8.66
%
 
 6.07
%
Foreclosed real estate
   
53
 
Appraisal of collateral(1)
Appraisal adjustments(2)
 
 0.00%-0.00
%
 
 0.00
%
             
Liquidation expenses(3)
 
      10.41
%
   
10.41
%


(1)
Fair value is generally determined through independent third-party appraisals of the underlying collateral, which generally includes various Level 3 inputs which are not observable.

(2)
Appraisals may be adjusted downwards by management for qualitative factors such as economic conditions.  Higher downward adjustments are caused by negative changes to the collateral or conditions in the real estate market, actual offers or sales contracts received or age of the appraisal.

(3)
Appraisals are adjusted downwards by management for qualitative factors such as the estimated costs to liquidate the collateral.

The carrying amounts reported in the statements of financial condition for cash and cash equivalents, accrued interest receivable and accrued interest payable approximate their fair values.  Fair values of securities are based on quoted market prices (Level 1), where available, or matrix pricing (Level 2), which is a mathematical technique, used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.  The carrying amount of Federal Home Loan Bank stock approximates fair value due to its restricted nature.  The fair values for loans are measured using the "exit price" notion which is a reasonable estimate of what another party might pay in an orderly transaction. Fair values for variable rate loans that reprice frequently, with no significant credit risk, are based on carrying value.  Fair value for fixed rate loans are estimated using discounted cash flows and interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.  Fair values disclosed for demand and savings deposits are equal to carrying amounts at the reporting date.  The carrying amounts for variable rate money market deposits approximate fair values at the reporting date.  Fair values for fixed rate certificates of deposit are estimated using discounted cash flows and interest rates currently being offered in the market on similar certificates.  Fair value for Federal Home Loan Bank long term borrowings are estimated using discounted cash flows and interest rates currently being offered on similar borrowings.  The carrying value of short-term Federal Home Loan Bank borrowings approximates its fair value.

The fair value of commitments to extend credit is estimated based on an analysis of the interest rates and fees currently charged to enter into similar transactions, considering the remaining terms of the commitments and the credit-worthiness of the potential borrowers.  At September 30, 2019 and June 30, 2019, the estimated fair values of these off-balance sheet financial instruments were immaterial, and are therefore excluded from the table below.

22

The carrying amounts and estimated fair value of financial instruments are as follows:

(In thousands)
 
September 30, 2019
   
Fair Value Measurements Using
 
   
Carrying
Amount
   
Fair Value
   
(Level 1)
   
(Level 2)
   
(Level 3)
 
Cash and cash equivalents
 
$
110,852
   
$
110,852
   
$
110,852
   
$
-
   
$
-
 
Long term certificate of deposit
   
3,626
     
3,626
     
3,626
     
-
     
-
 
Securities available-for-sale
   
159,263
     
159,263
     
4,543
     
154,720
     
-
 
Securities held-to-maturity
   
304,582
     
315,322
     
-
     
315,322
     
-
 
Equity securities
   
251
     
251
     
251
     
-
         
Federal Home Loan Bank stock
   
1,399
     
1,399
     
-
     
1,399
     
-
 
Net loans receivable
   
805,539
     
805,814
     
-
     
-
     
805,814
 
Accrued interest receivable
   
5,970
     
5,970
     
-
     
5,970
     
-
 
Deposits
   
1,263,210
     
1,263,336
     
-
     
1,263,336
     
-
 
Borrowings from Federal Home Loan Bank
   
13,600
      13,572      
-
      13,572      
-
 
Accrued interest payable
   
124
     
124
     
-
     
124
     
-
 

(In thousands)
 
June 30, 2019
   
Fair Value Measurements Using
 
   
Carrying
Amount
   
Fair Value
   
(Level 1)
   
(Level 2)
   
(Level 3)
 
Cash and cash equivalents
 
$
29,538
   
$
29,538
   
$
29,538
   
$
-
   
$
-
 
Long term certificate of deposit
   
2,875
     
2,875
     
2,875
     
-
     
-
 
Securities available-for-sale
   
122,728
     
122,728
     
1,550
     
121,178
     
-
 
Securities held-to-maturity
   
304,208
     
313,613
     
-
     
313,613
     
-
 
Equity Securities
   
253
     
253
     
253
     
-
     
-
 
Federal Home Loan Bank stock
   
1,759
     
1,759
     
-
     
1,759
     
-
 
Net loans receivable
   
785,738
     
781,614
     
-
     
-
     
781,614
 
Accrued interest receivable
   
5,853
     
5,853
     
-
     
5,853
     
-
 
Deposits
   
1,120,569
     
1,120,632
     
-
     
1,120,632
     
-
 
Borrowings from Federal Home Loan Bank
   
21,600
     
21,534
     
-
     
21,534
     
-
 
Accrued interest payable
   
110
     
110
     
-
     
110
     
-
 

(7)
Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period.  Diluted earnings per share is computed in a manner similar to that of basic earnings per share except that the weighted-average number of common shares outstanding is increased to include the number of incremental common shares that would have been outstanding under the treasury stock method if all potentially dilutive common shares (such as stock options) issued became vested during the period.  There were no dilutive or anti-dilutive securities or contracts outstanding during the three months ended September 30, 2019 and 2018.

   
For the three months ended September 30,
 
   
2019
   
2018
 
             
Net Income
 
$
4,863,000
   
$
4,380,000
 
Weighted Average Shares – Basic
   
8,537,814
     
8,537,814
 
Weighted Average Shares - Diluted
   
8,537,814
     
8,537,814
 
                 
Earnings per share - Basic
 
$
0.57
   
$
0.51
 
Earnings per share - Diluted
 
$
0.57
   
$
0.51
 

23

(8)
Dividends

On July 17, 2019, Greene County Bancorp, Inc. announced that its Board of Directors had approved a quarterly cash dividend of $0.11 per share on the Company’s common stock. The dividend reflects an annual cash dividend rate of $0.44 per share which represents a 10.0% increase from the previous annual cash dividend rate of $0.40 per share. The dividend was payable to stockholders of record as of August 15, 2019, and was paid on August 30, 2019.  Greene County Bancorp, MHC waived its right to receive this dividend.

(9)
Impact of Recent Accounting Pronouncements

Accounting Pronouncements Recently Adopted

The following accounting standards have been adopted in the first quarter ended September 30, 2019:

On July 1, 2019, the Company adopted ASU 2016-02 Leases and all subsequent amendments (collectively, “ASU 2016-02”). The objective of this ASU is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements to meet that objective.  The main difference between previous GAAP and this ASU is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP.  Under this new guidance, a lessee should recognize in the statement of financial position a liability to make lease payments and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term.  The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP.  ASU 2016-02 required a modified retrospective transition approach, applying the new standard to all leases existing at the date of initial application. The Company elected to use the effective date, July 1, 2019, as our date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before July 1, 2019.  In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. Under ASU 2016-02, leases are classified as finance or operating, with the classification affecting the pattern and classification of expense recognition in the income statement. The Company’s leases, consisting of property leases for certain of our bank branches, are classified as operating leases. Operating lease ROU assets and liabilities were recognized in the amount of $1.7 million at commencement date, with no adjustment to retained earnings, based on the present value of lease payments over the lease term. As these leases do not provide an implicit rate, we use our incremental borrowing rate from the Federal Home Loan Bank of New York in determining the present value of lease payments. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for lease payments is recognized on a straight-line basis over the lease term. ASU 2016-02 did not have a material impact on the consolidated statements of income or the consolidated statements of cash flows.

On July 1, 2019, the Company adopted ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20) related to premium amortization on purchased callable debt securities. This Update shortens the amortization period for certain callable debt securities held at a premium.  Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity.  For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  Early adoption was permitted, including adoption in an interim period.  If an entity early adopted the amendments in an interim period, any adjustments were reflected as of the beginning of the fiscal year that includes that interim period.  An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption.  The adoption of this guidance did not have a material impact on our consolidated results of operations or financial position.
 
24

Accounting Pronouncements to be adopted in future periods

In June 2016, the FASB issued an Update (ASU 2016-13) to its guidance on “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 requires credit losses on most financial assets measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected credit loss (CECL) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications unless reasonable expectation of a troubled debt restructuring exists) from the date of initial recognition of that instrument. The ASU also replaces the current accounting model for purchased credit impaired loans and debt securities. The allowance for credit losses for purchased financial assets with a more-than insignificant amount of credit deterioration since origination (“PCD assets”), should be determined in a similar manner to other financial assets measured on an amortized cost basis. However, upon initial recognition, the allowance for credit losses is added to the purchase price (“gross up approach”) to determine the initial amortized cost basis. The subsequent accounting for PCD financial assets is the same expected loss model described above. Further, the ASU made certain targeted amendments to the existing impairment model for available-for-sale (AFS) debt securities. For an AFS debt security for which there is neither the intent nor a more-likely-than-not requirement to sell, an entity will record credit losses as an allowance rather than a write-down of the amortized cost basis.  An entity will apply the amendments in this Update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which aligns the implementation date for nonpublic entities’ annual financial statements with the implementation date for their interim financial statements and clarifies the scope of the guidance in the amendments in ASU 2016-13.  In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.  ASU 2019-04 clarifies or addresses stakeholders’ specific issues about certain aspects of the amendments in Update 2016-13 related to measuring the allowance for loan losses under the new guidance. The effective dates and transition requirements for the amendments related to this Update are the same as the effective dates and transition requirements in Update 2016-13. The Company is currently evaluating the potential impact on our consolidated results of operations or financial position. The initial adjustment will not be reported in earnings and therefore will not have any material impact on our consolidated results of operations, but it is expected that it will have an impact on our consolidated financial position at the date of adoption of this Update.  At this time, we have not calculated the estimated impact that this Update will have on our Allowance for Loan Losses, however, we anticipate it will have a significant impact on the methodology process we utilize to calculate the allowance.  A vendor has been selected and alternative methodologies are currently being considered.  Data requirements and integrity are being reviewed and enhancements incorporated into standard processes.  For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, excluding small reporting companies such as the Company, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  On October 16, 2019, FASB approved a proposed ASU, to be issued in mid-November 2019, to topic 326, Financial Instruments – Credit Losses which amends the implementation effective date for small reporting companies, such as the Company, and non-public business entities, for fiscal years beginning after December 15, 2022. All entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.   The Company is in the early stages of evaluation and implementation of the guidance.
 
In August 2018, the FASB issued an Update (ASU 2018-13) to its guidance on “Fair Value Measurement (Topic 820)”.  This update modifies the disclosure requirements on fair value measurements. The following disclosure requirements were removed from Topic 820:  (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (2) the policy for timing of transfers between levels; (3) the valuation processes for Level 3 fair value measurements; and (4) for nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting period.  The following disclosure requirements were modified in Topic 820: (1) in lieu of a rollforward for Level 3 fair value measurements, a nonpublic entity is required to disclose transfers into and out of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities; (2) for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and (3) the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The following disclosure requirements were added to Topic 820; however, the disclosures are not required for non-public entities: (1) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.  In addition, the amendments eliminate at a minimum from the phrase “an entity shall disclose at a minimum” to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements. The amendments in ASU No. 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date.  Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU No. 2018-13 and delay adoption of the additional disclosures until their effective date.  The adoption of this guidance is not expected to have a material impact on our consolidated results of operations or financial position.

25

In August 2018, the FASB has issued an Update (ASU No. 2018-14), “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans”, that applies to all employers that sponsor defined benefit pension or other postretirement plans.  The amendments modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The following disclosure requirements were removed from Subtopic 715-20: (1) the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year; (2) the amount and timing of plan assets expected to be returned to the employer; (3) the disclosures related to the June 2001 amendments to the Japanese Welfare Pension Insurance Law; related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan; (4) for nonpublic entities, the reconciliation of the opening balances to the closing balances of plan assets measured on a recurring basis in Level 3 of the fair value hierarchy. However, nonpublic entities will be required to disclose separately the amounts of transfers into and out of Level 3 of the fair value hierarchy and purchases of Level 3 plan assets; and (5) for public entities, the effects of a one-percentage-point change in assumed health care cost trend rates on the (a) aggregate of the service and interest cost components of net periodic benefit costs and (b) benefit obligation for postretirement health care benefits. The following disclosure requirements were added to Subtopic 715-20: (1) the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates; and (2) an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The amendments also clarify the disclosure requirements in paragraph 715-20-50-3, which state that the following information for defined benefit pension plans should be disclosed: (1) the projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets; and (2) the accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets.  ASU No. 2018-14 is effective for fiscal years ending after December 15, 2020, for public business entities and for fiscal years ending after December 15, 2021, for all other entities. Early adoption is permitted for all entities. The adoption of this guidance is not expected to have a material impact on our consolidated results of operations or financial position.

In April 2019, the FASB issued an Update (ASU 2019-04), Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.  The amendments to Topic 326 and other topics in this Update include items related to the amendments in Update 2016-13 discussed at the June 2018 and November 2018 Credit Losses TRG meetings. The amendments clarify or address stakeholders’ specific issues about certain aspects of the amendments in Update 2016-13 on a number of different topics, including the following:  Accrued Interest, Transfers between Classifications or Categories for Loans and Debt Securities, Recoveries, Consideration of Prepayments in Determining the Effective Interest Rate, Consideration of Estimated Costs to Sell When Foreclosure Is Probable, Vintage Disclosures— Line-of-Credit Arrangements Converted to Term Loans, and Contractual Extensions and Renewals.   The ASU also covered a number of issues that related to hedge accounting including: Partial-Term Fair Value Hedges of Interest Rate Risk, Amortization of Fair Value Hedge Basis Adjustments, Disclosure of Fair Value Hedge Basis Adjustments, Consideration of the Hedged Contractually Specified Interest Rate under the Hypothetical Derivative Method, Scoping for Not-for-Profit Entities, Hedge Accounting Provisions Applicable to Certain Private Companies and Not-for-Profit Entities, Application of a First-Payments-Received Cash Flow Hedging Technique to Overall Cash Flows on a Group of Variable Interest Payments, and Transition Guidance  For Codification Improvements specific to ASU 2016-01. The following topics were covered within ASU 2019-04: Scope Clarifications, Held-to-Maturity Debt Securities Fair Value Disclosures, Applicability of Topic 820 to the Measurement Alternative, and Remeasurement of Equity Securities at Historical Exchange Rates. ASU 2019-04 has various implementation dates dependent on a number of factors as it pertains to the above items. The Company is in the early stages of evaluation of the guidance.

26

(10)
Employee Benefit Plans

Defined Benefit Plan

The components of net periodic pension cost related to the defined benefit pension plan for the three months ended September 30, 2019 and 2018 were as follows:

   
Three months ended
September 30,
 
(In thousands)
 
2019
   
2018
 
Interest cost
 
$
49
   
$
54
 
Expected return on plan assets
   
(63
)
   
(59
)
Amortization of net loss
   
40
     
35
 
Net periodic pension cost
 
$
26
   
$
30
 

The Company does not anticipate that it will make any additional contributions to the defined benefit pension plan during fiscal 2020.

SERP

The Board of Directors of The Bank of Greene County adopted The Bank of Greene County Supplemental Executive Retirement Plan (the “SERP Plan”), effective as of July 1, 2010. The SERP Plan benefits certain key senior executives of the Bank who have been selected by the Board to participate. The SERP Plan is intended to provide a benefit from the Bank upon retirement, death or disability or voluntary or involuntary termination of service (other than “for cause”).  The SERP Plan is more fully described in Note 10 of the consolidated financial statements and notes thereto for the year ended June 30, 2019.

The net periodic pension costs related to the SERP Plan for the three months ended September 30, 2019 and 2018 were $205,000 and $158,000, respectively, consisting primarily of service costs and interest costs. The total liability for the SERP Plan was $5.5 million and $5.0 million at September 30, 2019 and June 30, 2019, respectively, and is included in accrued expenses and other liabilities.  The total liability for the SERP Plan includes both accumulated net periodic pension costs and participant contributions.

(11)
Stock-Based Compensation

Phantom Stock Option Plan and Long-term Incentive Plan

The Greene County Bancorp, Inc. 2011 Phantom Stock Option and Long-term Incentive Plan (the “Plan”) was adopted effective July 1, 2011, to promote the long-term financial success of the Company and its subsidiaries by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company’s shareholders. The Plan is intended to provide benefits to employees and directors of the Company or any subsidiary as designated by the Compensation Committee of the Board of Directors of the Company (“Committee”).   A phantom stock option represents the right to receive a cash payment on the date the award vests. The Plan is more fully described in Note 11 of the consolidated financial statements and notes thereto for the year ended June 30, 2019.

A summary of the Company’s phantom stock option activity and related information for the Plan for the three months ended September 30, 2019 and 2018 is as follows:

   
2019
   
2018
 
Number of options outstanding at beginning of year
   
1,711,600
     
1,634,160
 
Options granted
   
614,700
     
592,700
 
Options forfeited
   
(7,000
)
   
-
 
Options paid in cash
   
-
     
(484,760
)
Number of options outstanding at period end
   
2,319,300
     
1,742,100
 

(In thousands)
 
2019
   
2018
 
Cash paid out on options vested
 
$
-
   
$
1,704
 
Compensation expense recognized
   
645
     
516
 

The total liability for the Plan was $4.8 million and $4.1 million at September 30, 2019 and June 30, 2019, respectively, and is included in accrued expenses and other liabilities.

27

(12)
Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss at September 30, 2019 and 2018 are presented in the following table:

(In thousands)
 
Unrealized
gain (losses)
on securities
available-for-
sale
   
Pension
benefits
   
Total
 
Balance - June 30, 2018
 
$
10
   
$
(1,633
)
 
$
(1,623
)
Other comprehensive loss before reclassification
   
(76
)
   
-
     
(76
)
Other comprehensive loss for the three months ended September 30, 2018
   
(76
)
   
-
     
(76
)
Reclassification for change in accounting(1)
   
(114
)
   
-
     
(114
)
Balance - September 30, 2018
 
$
(180
)
 
$
(1,633
)
 
$
(1,813
)
                         
Balance - June 30, 2019
 
$
832
   
$
(1,838
)
 
$
(1,006
)
Other comprehensive loss before reclassification
   
(271
)
   
-
     
(271
)
Other comprehensive loss for the three months ended September 30, 2019
   
(271
)
   
-
     
(271
)
Balance - September 30, 2019
 
$
561
   
$
(1,838
)
 
$
(1,277
)


(1)
Adoption of ASU 2016-01 – cumulative effect of change in measurement of equity securities.

(13)
Revenue from Contracts with Customers

The majority of the Company's revenue-generating transactions are not subject to ASC Topic 606, including revenue generated from financial instruments, such as loans and investment securities which are presented in our consolidated income statements as components of net interest income. All of the Company's revenue from contracts with customers in the scope of ASC 606 is recognized within non-interest income, with the exception of net gains and losses from sales of foreclosed real estate, which is recognized within non-interest expense. The following table presents revenues subject to ASC 606 for the three months ended September 30, 2019 and 2018, respectively.

   
For the three months ended
September 30,
 
(In thousands)
 
2019
   
2018
 
Service charges on deposit accounts
           
Insufficient funds fees
 
$
1,019
   
$
930
 
Deposit related fees
   
38
     
37
 
ATM/point of sale fees
   
68
     
70
 
Total service charges
   
1,125
     
1,037
 
Interchange fee income
               
Debit card interchange fees
   
743
     
640
 
E-commerce fee income
               
E-commerce fees
   
35
     
37
 
Investment services income
               
Investment services
   
145
     
115
 
Sales of assets
               
Net gain (loss) on sale of foreclosed real estate
   
76
     
(9
)

Service Charges on Deposit Accounts: The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which included services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are recognized at the time the maintenance occurs. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer's account balance.

Debit Card Interchange Fee Income: The Company earns interchange fees from debit cardholder transactions conducted through the Visa DPS payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to cardholder.

28

E-commerce income:  The Company earns fees for merchant transaction processing services provided to its business customers by a third party service provider.  The fees represent a percentage of the monthly transaction activity net of related costs, and are received from the service provider on a monthly basis.

Investment Services Income: The Company earns fees from investment brokerage services provided to its customers by a third-party service provider. The Company receives commissions from the third-party service provider on a monthly basis based upon customer activity for the month. The Company (i) acts as an agent in arranging the relationship between the customer and the third-party service provider and (ii) does not control the services rendered to the customers. Investment brokerage fees are presented net of related costs.

Net Gains/Losses on Sales of Foreclosed Real Estate: The Company records a gain or loss from the sale of foreclosed real estate when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of foreclosed real estate to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the foreclosed real estate asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.

(14)
Operating leases

The Company leases certain branch properties under long-term, operating lease agreements.  The Company’s operating lease agreements contain lease components, which are generally accounted for separately.  The Company’s lease agreements do not contain any residual value guarantees.  There are no significant right and obligations of the Company for leases that have not commenced as of the reporting date. The following includes quantitative data related to the Company’s operating leases as of September 30, 2019:

(In thousands, except weighted-average information).
     
Right-of-use assets
 
$
1,770
 
Lease liabilities
 
$
1,773
 
         
Operating lease cost
 
$
72
 
Variable lease cost
 
$
10
 
Operating outgoing cash flows from operating leases
 
$
78
 
Right-of-use assets obtained in exchange for new operating lease liabilities
 
$
1,840
 
Weighted-average remaining lease term (Years)
   
7.8
 
Weighted-average discount rate
   
2.50
%

The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding CAM charges as of September 30, 2019:

(in thousands)
     
Within the twelve months ended September 30,
     
2020
 
$
288
 
2021
   
283
 
2022
   
245
 
2023
   
205
 
2024
   
218
 
Thereafter
   
722
 
Total undiscounted cash flow
   
1,961
 
Less net present value adjustment
   
(188
)
Lease Liability
 
$
1,773
 

Right-of-use assets are included in prepaid expenses and other assets, and lease liabilities are included in accrued expenses and other liabilities within the Company’s statement of condition.  The Company did not have any lease commitments that had not yet commenced at September 30, 2019.

29

(15)
Subsequent events

On October 15, 2019, the Board of Directors declared a cash dividend for the quarter ended September 30, 2019 of $0.11 per share on Greene County Bancorp, Inc.’s common stock.  The dividend reflects an annual cash dividend rate of $0.44 per share, which was the same rate as the dividend declared during the previous quarter.  The dividend will be payable to stockholders of record as of November 15, 2019, and will be paid on November 29, 2019.  The MHC does not intend to waive its receipt of this dividend.

30

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operation

Overview of the Company’s Activities and Risks

Greene County Bancorp, Inc.’s results of operations depend primarily on its net interest income, which is the difference between the income earned on Greene County Bancorp, Inc.’s loan and securities portfolios and its cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by Greene County Bancorp, Inc.’s provision for loan losses, gains and losses from sales of securities, noninterest income and noninterest expense.  Noninterest income consists primarily of fees and service charges.  Greene County Bancorp, Inc.’s noninterest expense consists principally of compensation and employee benefits, occupancy, equipment and data processing, and other operating expenses. Results of operations are also significantly affected by general economic and competitive conditions, changes in interest rates, as well as government policies and actions of regulatory authorities. Additionally, future changes in applicable law, regulations or government policies may materially affect Greene County Bancorp, Inc.

To operate successfully, the Company must manage various types of risk, including but not limited to, market or interest rate risk, credit risk, transaction risk, liquidity risk, security risk, strategic risk, reputation risk and compliance risk.  While all of these risks are important, the risks of greatest significance to the Company relate to market or interest rate risk and credit risk.

Market risk is the risk of loss from adverse changes in market prices and/or interest rates.  Since net interest income (the difference between interest earned on loans and investments and interest paid on deposits and borrowings) is the Company’s primary source of revenue, interest rate risk is the most significant non-credit related market risk to which the Company is exposed.  Net interest income is affected by changes in interest rates as well as fluctuations in the level and duration of the Company’s assets and liabilities.

Interest rate risk is the exposure of the Company’s net interest income to adverse movements in interest rates.  In addition to directly impacting net interest income, changes in interest rates can also affect the amount of new loan originations, the ability of borrowers and debt issuers to repay loans and debt securities, the volume of loan repayments and refinancings, and the flow and mix of deposits.

Credit risk is the risk to the Company’s earnings and shareholders’ equity that results from customers, to whom loans have been made and to the issuers of debt securities in which the Company has invested, failing to repay their obligations.  The magnitude of risk depends on the capacity and willingness of borrowers and debt issuers to repay and the sufficiency of the value of collateral obtained to secure the loans made or investments purchased.

Special Note Regarding Forward-Looking Statements

This quarterly report contains forward-looking statements.  Greene County Bancorp, Inc. desires to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and is including this statement for the express purpose of availing itself of the protections of the safe harbor with respect to all such forward-looking statements.  These forward-looking statements, which are included in this Management’s Discussion and Analysis and elsewhere in this quarterly report, describe future plans or strategies and include Greene County Bancorp, Inc.’s expectations of future financial results.   The words “believe,” “expect,” “anticipate,” “project,” and similar expressions identify forward-looking statements.  Greene County Bancorp, Inc.’s ability to predict results or the effect of future plans or strategies or qualitative or quantitative changes based on market risk exposure is inherently uncertain.  Factors that could affect actual results include but are not limited to:


(a)
changes in general market interest rates,

(b)
general economic conditions, including unemployment rates and real estate values,

(c)
legislative and regulatory changes,

(d)
monetary and fiscal policies of the U.S. Treasury and the Federal Reserve,

(e)
changes in the quality or composition of The Bank of Greene County’s loan portfolio or the consolidated investment portfolios of The Bank of Greene County and Greene County Bancorp, Inc.,

(f)
deposit flows,

(g)
competition, and

(h)
demand for financial services in Greene County Bancorp, Inc.’s market area.

These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements, since results in future periods may differ materially from those currently expected because of various risks and uncertainties.

31

Non-GAAP Financial Measures

Regulation G, a rule adopted by the Securities and Exchange Commission (SEC), applies to certain SEC filings, including earnings releases, made by registered companies that contain “non-GAAP financial measures.”  GAAP is generally accepted accounting principles in the United States of America.  Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure (if a comparable GAAP measure exists) and a statement of the Company’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures.  The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP.  When these exempted measures are included in public disclosures, supplemental information is not required. Financial institutions like the Company and its subsidiary banks are subject to an array of bank regulatory capital measures that are financial in nature but are not based on GAAP and are not easily reconcilable to the closest comparable GAAP financial measures, even in those cases where a comparable measure exists. The Company follows industry practice in disclosing its financial condition under these various regulatory capital measures in its periodic reports filed with the SEC, including period-end regulatory capital ratios for itself and its subsidiary banks, and does so without compliance with Regulation G, on the widely-shared assumption that the SEC regards such non-GAAP measures to be exempt from Regulation G.  The Company uses in this Report additional non-GAAP financial measures that are commonly utilized by financial institutions and have not been specifically exempted by the SEC from Regulation G. The Company provides, as supplemental information, such non-GAAP measures included in this Report as described immediately below.

Tax-Equivalent Net Interest Income and Net Interest Margin: Net interest income, as a component of the tabular presentation by financial institutions of Selected Financial Information regarding their recently completed operations, as well as disclosures based on that tabular presentation, is commonly presented on a tax-equivalent basis.  That is, to the extent that some component of the institution's net interest income, which is presented on a before-tax basis, is exempt from taxation (e.g., is received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added to the actual before-tax net interest income total.  This adjustment is considered helpful in comparing one financial institution's net interest income to that of another institution or in analyzing any institution’s net interest income trend line over time, to correct any analytical distortion that might otherwise arise from the fact that financial institutions vary widely in the proportions of their portfolios that are invested in tax-exempt securities, and that even a single institution may significantly alter over time the proportion of its own portfolio that is invested in tax-exempt obligations.  Moreover, net interest income is itself a component of a second financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average earning assets.  For purposes of this measure as well, tax-equivalent net interest income is generally used by financial institutions, again to provide a better basis of comparison from institution to institution and to better demonstrate a single institution’s performance over time. While we present net interest income and net interest margin utilizing GAAP measures (no tax-equivalent adjustments) as a component of the tabular presentation within our disclosures, we do provide as supplemental information net interest income and net interest margin on a tax-equivalent basis.

32

Comparison of Financial Condition at September 30, 2019 and June 30, 2019

ASSETS

Total assets of the Company were $1.4 billion at September 30, 2019 and $1.3 billion at June 30, 2019, an increase of $140.3 million, or 11.0%.  Securities available-for-sale and held-to-maturity amounted to $463.8 million at September 30, 2019 as compared to $426.9 million at June 30, 2019, an increase of $36.9 million, or 8.6%.   Net loans grew by $19.8 million, or 2.5%, to $805.5 million at September 30, 2019 as compared to $785.7 million at June 30, 2019.

CASH AND CASH EQUIVALENTS

Total cash and cash equivalents increased $81.3 million to $110.8 million at September 30, 2019 from $29.5 million at June 30, 2019.  The level of cash and cash equivalents is a function of the daily account clearing needs and deposit levels as well as activities associated with securities transactions and loan funding.  All of these items can cause cash levels to fluctuate significantly on a daily basis.

SECURITIES

Securities available-for-sale and held-to-maturity increased $36.9 million, or 8.6%, to $463.8 million at September 30, 2019 as compared to $426.9 million at June 30, 2019.  Securities purchases totaled $90.3 million during the three months ended September 30, 2019 and consisted of $64.3 million of state and political subdivision securities and $22.1 million of mortgage-backed securities, $3.0 million of corporate securities, and $875,000 of other securities. Principal pay-downs and maturities during the three months amounted to $52.9 million, of which $8.6 million were mortgage-backed securities, $36.1 million were state and political subdivision securities, and $8.2 million were U.S. government sponsored enterprises. At September 30, 2019, 59.7% of our securities portfolio consisted of state and political subdivision securities to take advantage of tax savings and to promote Greene County Bancorp, Inc.’s participation in the communities in which it operates. Mortgage-backed securities and asset-backed securities held within the portfolio do not contain sub-prime loans and are not exposed to the credit risk associated with such lending.
   
September 30, 2019
   
June 30, 2019
 
(Dollars in thousands)
 
Balance
   
Percentage of
portfolio
   
Balance
   
Percentage of
portfolio
 
Securities available-for-sale:
                       
U.S. government sponsored enterprises
 
$
4,545
     
1.0
%
 
$
5,553
     
1.3
%
State and political subdivisions
   
120,976
     
26.1
     
96,570
     
22.6
 
Mortgage-backed securities-residential
   
8,621
     
1.9
     
2,645
     
0.6
 
Mortgage-backed securities-multifamily
   
20,578
     
4.4
     
16,410
     
3.8
 
Corporate debt securities
   
4,543
     
1.0
     
1,550
     
0.4
 
Total securities available-for-sale
   
159,263
     
34.4
     
122,728
     
28.7
 
Securities held-to-maturity:
                               
U.S. government sponsored enterprises
   
2,000
     
0.4
     
9,249
     
2.2
 
State and political subdivisions
   
155,729
     
33.6
     
152,358
     
35.7
 
Mortgage-backed securities-residential
   
10,154
     
2.2
     
4,570
     
1.1
 
Mortgage-backed securities-multifamily
   
132,795
     
28.6
     
134,970
     
31.6
 
Corporate debt securities
   
1,480
     
0.3
     
1,478
     
0.3
 
Other securities
   
2,424
     
0.5
     
1,583
     
0.4
 
Total securities held-to-maturity
   
304,582
     
65.6
     
304,208
     
71.3
 
Total securities
 
$
463,845
     
100.0
%
 
$
426,936
     
100.0
%

LOANS

Net loans receivable increased $19.8 million, or 2.5%, to $805.5 million at September 30, 2019 from $785.7 million at June 30, 2019.  The loan growth experienced during the three months consisted primarily of $12.4 million in commercial construction loans, $2.5 million in commercial real estate loans, $4.1 million in commercial loans, $915,000 in residential construction and land loans, and $429,000 in multi-family real estate loans.  This growth was partially offset by a $557,000 decrease in residential real estate loans, and $244,000 increase in allowance for loan losses.  We believe that the continued low interest rate environment and strong customer satisfaction from personal service continued to enhance loan growth. If long term rates begin to rise, the Company anticipates some slowdown in new loan demand as well as refinancing activities.  The Bank of Greene County continues to use a conservative underwriting policy in regard to all loan originations, and does not engage in sub-prime lending or other exotic loan products.  A significant decline in home values, however, in the Company’s markets could have a negative effect on the consolidated results of operations, as any such decline in home values would likely lead to a decrease in residential real estate loans and new home equity loan originations and increased delinquencies and defaults in both the consumer home equity loan and the residential real estate loan portfolios and result in increased losses in these portfolios.  Updated appraisals are obtained on loans when there is a reason to believe that there has been a change in the borrower’s ability to repay the loan principal and interest, generally, when a loan is in a delinquent status.  Additionally, if an existing loan is to be modified or refinanced, generally, an appraisal is ordered to ensure continued collateral adequacy.

33

(Dollars in thousands)
 
September 30, 2019
   
June 30, 2019
 
   
Balance
   
Percentage of
Portfolio
   
Balance
   
Percentage of
Portfolio
 
Residential real estate
 
$
267,245
     
32.7
%
 
$
267,802
     
33.6
%
Residential construction and land
   
8,377
     
1.0
     
7,462
     
0.9
 
Multi-family
   
25,021
     
3.1
     
24,592
     
3.1
 
Commercial real estate
   
332,185
     
40.6
     
329,668
     
41.3
 
Commercial construction
   
48,751
     
5.9
     
36,361
     
4.5
 
Home equity
   
23,288
     
2.8
     
23,185
     
2.9
 
Consumer installment
   
5,677
     
0.7
     
5,481
     
0.7
 
Commercial loans
   
107,632
     
13.2
     
103,554
     
13.0
 
Total gross loans
   
818,176
     
100.0
%
   
798,105
     
100.0
%
Allowance for loan losses
   
(13,444
)
           
(13,200
)
       
Deferred fees and costs
   
807
             
833
         
Total net loans
 
$
805,539
           
$
785,738
         

ALLOWANCE FOR LOAN LOSSES

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 loan portfolio, specific impaired loans and current economic conditions.  Such evaluation, which includes a review of certain identified loans on which full collectability may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, payment status of the loan, historical loan loss experience and other factors that warrant recognition in providing for an allowance for loan loss.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review The Bank of Greene County’s allowance for loan losses.  Such agencies may require The Bank of Greene County to recognize additions to the allowance based on their judgment about information available to them at the time of their examination.  The Bank of Greene County considers smaller balance residential mortgages, home equity loans and installment loans to customers as small, homogeneous loans, which are evaluated for impairment collectively based on historical loss experience.  Larger balance residential and commercial mortgage and business 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 agreements.  The measurement of impaired loans is generally based on the fair value of the underlying collateral. The Bank of Greene County charges loans off against the allowance for loan losses when it becomes evident that a loan cannot be collected within a reasonable amount of time or that it will cost the Bank more than it will receive, and all possible avenues of repayment have been analyzed, including the potential of future cash flow, the value of the underlying collateral, and strength of any guarantors or co-borrowers.  Generally, consumer loans and smaller business loans (not secured by real estate) in excess of 90 days are charged-off against the allowance for loan losses, unless equitable arrangements are made.  For loans secured by real estate, a charge-off is recorded when it is determined that the collection of all or a portion of a loan may not be collected and the amount of that loss can be reasonably estimated. The allowance for loan losses is increased by a provision for loan losses (which results in a charge to expense) and recoveries of loans previously charged off and is reduced by charge-offs.

34

Analysis of allowance for loan losses activity

   
At or for the three months
ended September 30,
 
(Dollars in thousands)
 
2019
   
2018
 
Balance at the beginning of the period
 
$
13,200
   
$
12,024
 
Charge-offs:
               
Residential real estate
   
53
     
21
 
Consumer installment
   
109
     
99
 
Commercial loans
   
199
     
-
 
Total loans charged off
   
361
     
120
 
                 
Recoveries:
               
Consumer installment
   
24
     
13
 
Commercial loans
   
30
     
37
 
Total recoveries
   
54
     
50
 
                 
Net charge-offs
   
307
     
70
 
                 
Provisions charged to operations
   
551
     
354
 
Balance at the end of the period
 
$
13,444
   
$
12,308
 
                 
Net charge-offs to average loans outstanding (annualized)
   
0.16
%
   
0.04
%
Net charge-offs to nonperforming assets (annualized)
   
32.10
%
   
8.08
%
Allowance for loan losses to nonperforming loans
   
381.71
%
   
363.39
%
Allowance for loan losses to total loans receivable
   
1.64
%
   
1.67
%

Nonaccrual Loans and Nonperforming Assets

Loans are reviewed on a regular basis to assess collectability of all principal and interest payments due.  Management determines that a loan is impaired or nonperforming when it is probable at least a portion of the principal or interest will not be collected in accordance with contractual terms of the note.  When a loan is determined to be impaired, the measurement of the loan is based on present value of estimated future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral.

Generally, management places loans on nonaccrual status once the loans have become 90 days or more delinquent or sooner if there is a significant reason for management to believe the collectability is questionable and, therefore, interest on the loan will no longer be recognized on an accrual basis.  The Company identifies impaired loans and measures the impairment in accordance with FASB 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.  Generally, The Bank of Greene County considers residential mortgages, home equity 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, business loans and select larger balance residential mortgage 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.  Based on this evaluation, a delinquent loan’s risk rating may be downgraded to either pass-watch, special mention, or substandard, and the allocation of the allowance for loan loss is based upon the risk associated with such designation. A loan does not have to be 90 days delinquent in order to be classified as nonperforming.  Foreclosed real estate is considered to be a nonperforming asset.

35

Analysis of Nonaccrual Loans and Nonperforming Assets

(Dollars in thousands)
 
September 30,
2019
     
June 30,
2019
 
Nonaccruing loans:
             
Residential real estate
 
$
2,026
   
$
2,474
 
Multi-family
   
134
     
-
 
Commercial real estate
   
847
     
598
 
Home equity
   
268
     
452
 
Consumer installment
   
-
     
6
 
Commercial
   
247
     
108
 
Total nonaccruing loans
   
3,522
     
3,638
 
90 days & accruing
               
Residential real estate
   
-
     
-
 
Total 90 days & accruing
   
-
     
-
 
Total nonperforming loans
   
3,522
     
3,638
 
Foreclosed real estate:
               
Residential real estate
   
303
     
53
 
Total foreclosed real estate
   
303
     
53
 
Total nonperforming assets
 
$
3,825
   
$
3,691
 
                 
Troubled debt restructuring:
               
Nonperforming (included above)
 
$
337
   
$
531
 
Performing (accruing and excluded above)
   
1361
     
1,368
 
                 
Total nonperforming assets as a percentage of total assets
   
0.27
%    
0.29
%
Total nonperforming loans to net loans
   
0.44
%
   
0.46
%

The table below details additional information related to nonaccrual loans for the three months ended September 30:

(In thousands)
 
2019
   
2018
 
Interest income that would have been recorded if loans had been performing in accordance with original terms
 
$
101
   
$
71
 
Interest income that was recorded on nonaccrual loans
   
50
     
32
 

Nonperforming assets amounted to $3.8 million at September 30, 2019 and $3.7 million at June 30, 2019, an increase of $134,000, or 3.6%. Nonaccrual loans consisted primarily of loans secured by real estate at September 30, 2019 and June 30, 2019. Loans on nonaccrual status totaled $3.5 million at September 30, 2019 of which $1.1 million were in the process of foreclosure. At September 30, 2019, there were 9 residential loans in the process of foreclosure totaling $938,000.  Included in nonaccrual loans were $1.8 million of loans which were less than 90 days past due at September 30, 2019, 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 $150,000 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 $3.6 million at June 30, 2019 of which $1.6 million were in the process of foreclosure.  At June 30, 2019, there were 12 residential loans in the process of foreclosure totaling $1.5 million. Included in nonaccrual loans were $1.8 million of loans which were less than 90 days past due at June 30, 2019, but have a recent history of delinquency greater than 90 days past due.

Impaired Loans

The Company identifies impaired loans and measures the impairment in accordance with FASB ASC subtopic “Receivables – Loan Impairment”.  A loan is considered impaired 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.

36

The table below details additional information on impaired loans at September 30, 2019 and June 30, 2019:

(In thousands)
 
September 30, 2019
   
June 30, 2019
 
Balance of impaired loans, with a valuation allowance
 
$
1,383
   
$
2,000
 
Allowances relating to impaired loans included in allowance for loan losses
   
178
     
262
 
Balance of impaired loans, without a valuation allowance
   
1,659
     
1,894
 
Total impaired loans
   
3,042
     
3,894
 

   
For the three months ended
September 30,
 
(In thousands)
 
2019
   
2018
 
Average balance of impaired loans for the periods ended
 
$
3,448
   
$
3,902
 
Interest income recorded on impaired loans during the periods ended
   
67
     
38
 

DEPOSITS

Deposits totaled $1.3 billion at September 30, 2019 and $1.1 billion at June 30, 2019, an increase of $142.6 million, or 12.7%. Noninterest-bearing deposits increased $8.0 million, or 7.4%, and NOW deposits increased $144.6 million, or 22.3%, and certificates of deposits increased $401,000, when comparing September 30, 2019 and June 30, 2019.  These increases were offset by a decrease in money market deposits of $4.1 million, or 3.6%, and a decrease in savings deposits of $6.4 million, or 3.0%, when comparing September 30, 2019 and June 30, 2019. Typically deposits increase during the first quarter of the Company’s fiscal year as a result of an increase in municipal deposits at Greene County Commercial Bank, primarily from tax collection, and new account relationships.

(In thousands)
 
September 30, 2019
   
Percentage
of Portfolio
   
June 30, 2019
   
Percentage
of Portfolio
 
Noninterest-bearing deposits
 
$
115,474
     
9.1
%
 
$
107,469
     
9.6
%
Certificates of deposit
   
36,943
     
2.9
     
36,542
     
3.3
 
Savings deposits
   
208,319
     
16.5
     
214,680
     
19.2
 
Money market deposits
   
110,844
     
8.8
     
114,915
     
10.2
 
NOW deposits
   
791,630
     
62.7
     
646,963
     
57.7
 
Total deposits
 
$
1,263,210
     
100.0
%
 
$
1,120,569
     
100.0
%

BORROWINGS

At September 30, 2019, The Bank of Greene County had pledged approximately $308.9 million of its residential and commercial mortgage portfolio as collateral for borrowing and irrevocable stand-by letters of credit at the Federal Home Loan Bank of New York (“FHLB”).  The maximum amount of funding available from the FHLB was $252.9 million at September 30, 2019, of which $13.6 million in borrowings and $130.6 million in irrevocable stand-by letters of credit were outstanding at September 30, 2019.  There were no short-term or overnight borrowings outstanding at September 30, 2019. The $13.6 million consisted of long-term fixed rate advances with a weighted average rate of 1.68% and a weighted average maturity of 15 months.  The $130.6 million of irrevocable stand-by letters of credit with the FHLB have been issued to secure municipal transactional deposit accounts, on behalf of Greene County Commercial Bank.

The Bank of Greene County also pledges securities and certificates of deposit as collateral at the Federal Reserve Bank discount window for overnight borrowings.  At September 30, 2019, approximately $5.3 million of collateral was available to be pledged against potential borrowings at the Federal Reserve Bank discount window. There were no balances outstanding with the Federal Reserve Bank at September 30, 2019 or June 30, 2019.

The Bank of Greene County has established unsecured lines of credit with Atlantic Central Bankers Bank for $10.0 million and two other financial institutions for $40.0 million.  Greene County Bancorp, Inc. has also established an unsecured line of credit with Atlantic Central Bankers Bank for $7.5 million.  The lines of credit provide for overnight borrowing and the interest rate is determined at the time of the borrowing.  At September 30, 2019 and June 30, 2019, there were no balances outstanding on any of these lines of credit.

37

Scheduled maturities of long-term borrowings at September 30, 2019 were as follows:

(In thousands)
     
Within the twelve months ended September 30,
     
2020
 
$
6,000
 
2021
   
1,800
 
2022
   
5,800
 
   
$
13,600
 

EQUITY

Shareholders’ equity increased to $116.5 million at September 30, 2019 from $112.4 million at June 30, 2019, resulting primarily from net income of $4.9 million, partially offset by dividends declared and paid of $432,000 and an increase in other accumulated comprehensive loss of $271,000.

On September 17, 2019, the Board of Directors of the Company adopted a stock repurchase program.  Under the repurchase program, the Company may repurchase up to 200,000 shares of its common stock.  Repurchases will be made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. At September 30, 2019, no shares have been repurchased.

Selected Equity Data:
     
   
September 30, 2019
   
June 30, 2019
 
Shareholders’ equity to total assets, at end of period
   
8.27
%
   
8.85
%
Book value per share
 
$
13.65
   
$
13.16
 
Closing market price of common stock
 
$
27.40
   
$
29.42
 

   
For the three months ended September 30,
 
     
2019
     
2018
 
Average shareholders’ equity to average assets
   
8.76
%
   
8.49
%
Dividend payout ratio1
   
19.30
%
   
19.61
%
Actual dividends paid to net income2
   
8.88
%
   
19.50
%

1The dividend payout ratio has been calculated based on the dividends declared per share divided by basic earnings per share.  No adjustments have been made for dividends waived by Greene County Bancorp, MHC (“MHC”), the owner of 54.0% of the Company’s shares outstanding.
2 Dividends declared divided by net income.  The MHC waived its right to receive dividends declared during the three months ended September 30, 2019.  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.

38

Comparison of Operating Results for the Three Months Ended September 30, 2019 and 2018

Average Balance Sheet

The following table sets forth certain information relating to Greene County Bancorp, Inc. for the three months ended September 30, 2019 and 2018.  For the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, are expressed both in dollars and rates.  No tax equivalent adjustments were made.  Average balances were based on daily averages.  Average loan balances include nonperforming loans.  The loan yields include net amortization of certain deferred fees and costs that are considered adjustments to yields.

   
2019
   
2018
 
(Dollars in thousands)
 
Average
Outstanding
Balance
 
Interest
Earned
/ Paid
   
Average
Yield /
Rate
   
Average
Outstanding
Balance
 
Interest
Earned
/ Paid
   
Average
Yield /
Rate
 
Interest-earning Assets:
                                   
Loans receivable, net1
 
$
804,498
   
$
9,405
     
4.68
%
 
$
725,143
   
$
8,298
     
4.58
%
Securities2
   
441,557
     
2,982
     
2.70
     
398,867
     
2,640
     
2.65
 
Interest-bearing bank balances and federal funds
   
39,507
     
198
     
2.00
     
6,779
     
31
     
1.83
 
FHLB stock
   
1,404
     
23
     
6.55
     
3,313
     
28
     
3.38
 
Total interest-earning assets
   
1,286,966
     
12,608
     
3.92
%
   
1,134,102
     
10,997
     
3.88
%
Cash and due from banks
   
10,736
                     
9,624
                 
Allowance for loan losses
   
(13,229
)
                   
(12,116
)
               
Other noninterest-earning assets
   
21,650
                     
19,155
                 
Total assets
 
$
1,306,123
                   
$
1,150,765
                 
                                                 
Interest-Bearing Liabilities:
                                               
Savings and money market deposits
 
$
329,695
   
$
341
     
0.41
%
 
$
342,998
   
$
293
     
0.34
%
NOW deposits
   
688,624
     
1,587
     
0.92
     
499,699
     
641
     
0.51
 
Certificates of deposit
   
36,984
     
122
     
1.32
     
39,571
     
102
     
1.03
 
Borrowings
   
13,736
     
58
     
1.69
     
57,425
     
304
     
2.12
 
Total interest-bearing liabilities
   
1,069,039
     
2,108
     
0.79
%
   
939,693
     
1,340
     
0.57
%
Noninterest-bearing deposits
   
106,673
                     
102,215
                 
Other noninterest-bearing liabilities
   
16,015
                     
11,110
                 
Shareholders' equity
   
114,396
                     
97,747
                 
Total liabilities and equity
 
$
1,306,123
                   
$
1,150,765
                 
                                                 
Net interest income
         
$
10,500
                   
$
9,657
         
Net interest rate spread
                   
3.13
%
                   
3.31
%
Net earnings assets
 
$
217,927
                   
$
194,409
                 
Net interest margin
                   
3.26
%
                   
3.41
%
Average interest-earning assets to average interest-bearing liabilities
    120.39 %                    
120.69
%                


1Calculated net of deferred loan fees and costs, loan discounts, and loans in process.
2Includes tax-free securities, mortgage-backed securities, and asset-backed securities.

Taxable-equivalent net interest income and net interest margin
 
For the three months ended
September 30,
 
(Dollars in thousands)
 
2019
   
2018
 
Net interest income (GAAP)
 
$
10,500
   
$
9,657
 
Tax-equivalent adjustment(1)
   
571
     
473
 
Net interest income (fully taxable-equivalent)
 
$
11,071
   
$
10,130
 
                 
Average interest-earning assets
 
$
1,286,966
   
$
1,134,102
 
Net interest margin (fully taxable-equivalent)
   
3.44
%
   
3.57
%
1Net interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if the Company’s investment in tax-exempt securities and loans had been subject to federal and New York State income taxes yielding the same after-tax income. The rate used for this adjustment was 21% for federal income taxes and 3.32% for New York State income taxes for the period ended September 30, 2019 and 2018.

39

Rate / Volume Analysis

The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected Greene County Bancorp, Inc.’s interest income and interest expense during the periods indicated.  Information is provided in each category with respect to:

(i)
Change attributable to changes in volume (changes in volume multiplied by prior rate);

(ii)
Change attributable to changes in rate (changes in rate multiplied by prior volume); and

(iii)
The net change.
The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.



Three months ended September 30,

2019 versus 2018
Increase/(Decrease)
   
Total
 
   
Due To
   
Increase/
 
(Dollars in thousands)
 
Volume
   
Rate
   
(Decrease)
 
Interest-earning Assets:
                 
Loans receivable, net1
 
$
923
   
$
184
   
$
1,107
 
Securities2
   
291
     
51
     
342
 
Interest-bearing bank balances and federal funds
   
164
     
3
     
167
 
FHLB stock
   
(22
)
   
17
     
(5
)
Total interest-earning assets
   
1,356
     
255
     
1,611
 
                         
Interest-Bearing Liabilities:
                       
Savings and money market deposits
   
(11
)
   
59
     
48
 
NOW deposits
   
303
     
643
     
946
 
Certificates of deposit
   
(7
)
   
27
     
20
 
Borrowings
   
(194
)
   
(52
)
   
(246
)
Total interest-bearing liabilities
   
91
     
677
     
768
 
Net change in net interest income
 
$
1,265
   
$
(422
)
 
$
843
 


1 Calculated net of deferred loan fees, loan discounts, and loans in process.
2 Includes tax-free securities, mortgage-backed securities, and asset-backed securities.

GENERAL

Return on average assets and return on average equity are common methods of measuring operating results.  Annualized return on average assets decreased to 1.49% from 1.52% for the three months ended September 30, 2019 and 2018, respectively.  Annualized return on average equity decreased to 17.00% for the three months ended September 30, 2019 as compared to 17.92% for the three months ended September 30, 2018.  The decrease in return on average assets and average equity was primarily the result of balance sheet growth outpacing the growth in net income.  Net income amounted to $4.9 million and $4.4 million for the three months ended September 30, 2019 and 2018, respectively.  Average assets increased $155.3 million, or 13.5%, to $1.3 billion for the three months ended September 30, 2019 as compared to $1.2 billion for the three months ended September 30, 2018.  Average equity increased $16.7 million, or 17.1%, to $114.4 million for the three months ended September 30, 2019 as compared to $97.7 million for the three months ended September 30, 2018.

40

INTEREST INCOME

Interest income amounted to $12.6 million for the three months ended September 30, 2019 as compared to $11.0 million for the three months ended September 30, 2018, an increase of $1.6 million, or 14.5%.  The increase in average loan and securities balances had the greatest impact on interest income when comparing the three months ended September 30, 2019 and 2018, which was complemented by an increase in the yield on interest earning assets during the September 30, 2019 quarter. Average loan balances increased $79.4 million and the yield on loans increased 10 basis points when comparing the three months ended September 30, 2019 and 2018.   Average securities increased $42.7 million and the yield on such securities increased five basis points when comparing the three months ended September 30, 2019 and 2018.

INTEREST EXPENSE

Interest expense amounted to $2.1 million for the three months ended September 30, 2019 as compared to $1.3 million for the three months ended September 30, 2018, an increase of $768,000 or 57.3%.  Increases in the rate paid had the greatest impact on interest expense.  As illustrated in the rate/volume table, interest expense increased $677,000 due to a 22 basis point increase in the rate paid on interest-bearing liabilities to 0.79% for the three months ended September 30, 2019 compared to 0.57% for the three months ended September 30, 2018.  Interest expense also increased $91,000 due to a $129.3 million increase in the average balances on interest-bearing liabilities for the three months ended September 30, 2019 compared to September 30, 2018.   The average balance of NOW deposits grew by $188.9 million, and the rate paid on these accounts increased by 41 basis points when comparing the three months ended September 30, 2019 and 2018. The average balance of savings and money market deposits decreased $13.3 million and average balance of certificates of deposit decreased $2.6 million when comparing the three months ended September 30, 2019 and 2018. The average balance on borrowings decreased $43.7 million, and the rate decreased 43 basis points when comparing the three months ended September 30, 2019 and 2018.

NET INTEREST INCOME

Net interest income increased $843,000 to $10.5 million for the three months ended September 30, 2019 from $9.7 million for the three months ended September 30, 2018.  Net interest spread decreased 18 basis points to 3.13% as compared to 3.31% when comparing the three months ended September 30, 2019 and 2018, respectively.  Net interest margin decreased 15 basis points to 3.26% for the three months ended September 30, 2019 as compared to 3.41% for the three months ended September 30, 2018.  The higher cost of interest-bearing liabilities, partially offset by growth in average loan and securities balances, led to the decrease in spread and margin when comparing the three months ended September 30, 2019 and 2018.

Net interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if the Company’s investment in tax-exempt securities and loans had been subject to federal and New York State income taxes yielding the same after-tax income. Tax equivalent net interest margin was 3.44% and 3.57% for the three months ended September 30, 2019 and 2018, respectively.

Due to the large portion of fixed-rate residential mortgages in the Company’s portfolio, interest rate risk is a concern and the Company will continue to monitor and adjust the asset and liability mix as much as possible to take advantage of the benefits and reduce the risks or potential negative effects of a rising rate environment.  Management attempts to mitigate the interest rate risk through balance sheet composition.  Several strategies are used to help manage interest rate risk such as maintaining a high level of liquid assets such as short-term federal funds sold and various investment securities and maintaining a high concentration of less interest-rate sensitive and lower-costing core deposits.

PROVISION FOR LOAN LOSSES

Management continues to closely monitor asset quality and adjust the level of the allowance for loan losses when necessary.  The amount recognized for the provision for loan losses is determined by management based on its ongoing analysis of the adequacy of the allowance for loan losses.

Provision for loan losses amounted to $551,000 and $354,000 for the three months ended September 30, 2019 and 2018, respectively. This increase was due to the growth in gross loans, an increase in charge-off activity, as well as an increase in loans adversely classified.  Loans classified as substandard or special mention totaled $22.7 million at September 30, 2019, compared to $17.1 million at June 30, 2019, an increase of $5.6 million. During the three months ended September 30, 2019, the Company downgraded a construction loan to special mention as a result of project cost overruns and several delinquent payments. At September 30, 2019, this loan was performing.  Management continues to monitor this loan relationship closely.  Reserves on loans classified as substandard or special mention totaled $1.9 million at September 30, 2019 compared to $1.5 million at June 30, 2019, an increase of $362,000.  No loans were classified as doubtful or loss at September 30, 2019 or June 30, 2019.

41

Net charge-offs amounted to $307,000 and $70,000 for the three months ended September 30, 2019 and 2018, respectively, an increase of $237,000. This increase in charge-off activity was primarily within the commercial loan and residential real estate portfolios. Allowance for loan losses to total loans receivable was 1.64% at September 30, 2019, and 1.65% at June 30, 2019.

Nonperforming loans amounted to $3.5 million and $3.6 million at September 30, 2019 and June 30, 2019, respectively. At September 30, 2019 and June 30, 2019, respectively, nonperforming assets were 0.27% and 0.29% of total assets, and nonperforming loans were 0.44% and 0.46% of net loans. At September 30, 2018, nonperforming assets to total assets were 0.29% and nonperforming loans to net loans were 0.47%. The Company has not been an originator of “no documentation” mortgage loans, and the loan portfolio does not include any mortgage loans that the Company classifies as sub-prime.

NONINTEREST INCOME
   
For the three months
ended September 30,
   
Change from
Prior Year
 
Noninterest income:
 
2019
   
2018
   
Amount
   
Percent
 
Service charges on deposit accounts
 
$
1,125
   
$
1,037
   
$
88
     
8.49
%
Debit card fees
   
743
     
640
     
103
     
16.09
 
Investment services
   
145
     
115
     
30
     
26.09
 
E-commerce fees
   
35
     
37
     
(2
)
   
(5.41
)
Other operating income
   
218
     
223
     
(5
)
   
(2.24
)
Total noninterest income
 
$
2,266
   
$
2,052
   
$
214
     
10.43
%

Noninterest income increased $214,000, or 10.4%, and totaled $2.3 million and $2.1 million for the three months ended September 30, 2019 and 2018. This increase was primarily due to increases in debit card fees and service charges on deposit accounts resulting from continued growth in the number of checking accounts with debit cards. Investment services income also increased during the period due to higher sales volume of investment products.

NONINTEREST EXPENSE
   
For the three months
ended September 30,
   
Change from
Prior Year
 
Noninterest expense:
 
2019
   
2018
   
Amount
   
Percent
 
Salaries and employee benefits
 
$
3,942
   
$
3,478
   
$
464
     
13.34
%
Occupancy expense
   
466
     
402
     
64
     
15.92
 
Equipment and furniture expense
   
281
     
214
     
67
     
31.31
 
Service and data processing fees
   
574
     
495
     
79
     
15.96
 
Computer software, supplies and support
   
242
     
223
     
19
     
8.52
 
Advertising and promotion
   
116
     
120
     
(4
)
   
(3.33
)
FDIC insurance premiums
   
(39
)
   
127
     
(166
)
   
(130.71
)
Legal and professional fees
   
279
     
329
     
(50
)
   
(15.20
)
Other
   
561
     
573
     
(12
)
   
(2.09
)
Total noninterest expense
 
$
6,422
   
$
5,961
   
$
461
     
7.73
%

Noninterest expense increased $461,000 or 7.7%, to $6.4 million for the three months ended September 30, 2019 as compared to $6.0 million for the three months ended September 30, 2018. This increase was primarily due to an increase in salaries and employee benefits expenses, resulting from additional staffing for the addition of a new branch located in Kinderhook-Valatie, New York during the three months ended September 30, 2019. As the Company continues to grow, staffing was also increased within our lending department, customer service center and investment center. This increase was partially offset by a decrease in FDIC insurance premiums.  In January 2019, the FDIC provided notification to the Company that a credit in the amount of $177,144 was calculated for The Bank of Greene County, and a credit in the amount of $91,090 was calculated for Greene County Commercial Bank, based on a change in assessments under FDIC regulations resulting from the Deposit Insurance Fund Reserve Ratio reaching 1.36.  The Deposit Insurance Fund reserve ratio was above 1.38% as of June 30, 2019, and therefore, the FDIC offset regular deposit insurance assessments with credits on the September 2019 invoice.  The Company received a credit totaling $108,000 during the three months ended September 30, 2019.  This credit was applied against FDIC insurance premiums expense.

INCOME TAXES

The provision for income taxes directly reflects the expected tax associated with the pre-tax income generated for the given year and certain regulatory requirements.  The effective tax rate was 16.1% for the three months ended September 30, 2019, compared to 18.8% for the three months ended September 30, 2018.  The statutory tax rate is impacted by the benefits derived from tax exempt bond and loan income, the Company’s real estate investment trust subsidiary income, as well as the tax benefits derived from premiums paid to the Company’s pooled captive insurance subsidiary to arrive at the effective tax rate.

42

LIQUIDITY AND CAPITAL RESOURCES

Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates or prices such as interest rates, foreign currency exchange rates, commodity prices, and equity prices.  Greene County Bancorp, Inc.’s most significant form of market risk is interest rate risk since the majority of Greene County Bancorp, Inc.’s assets and liabilities are sensitive to changes in interest rates.  Greene County Bancorp, Inc.’s primary sources of funds are deposits and proceeds from principal and interest payments on loans, mortgage-backed securities and debt securities, with lines of credit available through the Federal Home Loan Bank and Atlantic Central Bankers Bank as needed.  While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit outflows, mortgage prepayments, and lending activities are greatly influenced by general interest rates, economic conditions and competition.

The Bank of Greene County’s unfunded loan commitments and unused lines of credit are as follows at September 30, 2019:

       
(In thousands)
 
2019
 
Unfunded loan commitments
 
$
97,791
 
Unused lines of credit
   
66,519
 
Total commitments
 
$
164,310
 

Greene County Bancorp, Inc. anticipates that it will have sufficient funds available to meet current loan commitments based on the level of cash and cash equivalents as well as the available-for-sale investment portfolio and borrowing capacity.

The Bank of Greene County and Greene County Commercial Bank met all applicable regulatory capital requirements at September 30, 2019 and June 30, 2019.  Consolidated shareholders’ equity represented 8.3% and 8.9% of total assets at September 30, 2019 and at June 30, 2019, respectively.

(Dollars in thousands)
 
Actual
   
For Capital
Adequacy
Purposes
   
To Be Well
Capitalized
Under
Prompt
Corrective
Action
Provisions
   
Capital Conservation
Buffer
 
The Bank of Greene County
 
Amount
   
Ratio
   
Amount
   
Ratio
   
Amount
   
Ratio
   
Actual
   
Required
 
As of September 30, 2019:
                                               
                                                 
Total risk-based capital
 
$
123,128
     
15.8
%
 
$
62,349
     
8.0
%
 
$
77,936
     
10.0
%
   
7.80
%
   
2.50
%
Tier 1 risk-based capital
   
113,341
     
14.5
     
46,762
     
6.0
     
62,349
     
8.0
     
8.54
     
2.50
 
Common equity tier 1 capital
   
113,341
     
14.5
     
35,071
     
4.5
     
50,659
     
6.5
     
10.04
     
2.50
 
Tier 1 leverage ratio
   
113,341
     
8.7
     
52,071
     
4.0
     
65,089
     
5.0
     
4.71
     
2.50
 
                                                                 
As of June 30, 2019:
                                                               
                                                                 
Total risk-based capital
 
$
118,113
     
15.8
%
 
$
59,842
     
8.0
%
 
$
74,802
     
10.0
%
   
7.79
%
   
2.50
%
Tier 1 risk-based capital
   
108,716
     
14.5
     
44,881
     
6.0
     
59,842
     
8.0
     
8.53
     
2.50
 
Common equity tier 1 capital
   
108,716
     
14.5
     
33,661
     
4.5
     
48,621
     
6.5
     
10.03
     
2.50
 
Tier 1 leverage ratio
   
108,716
     
8.7
     
50,049
     
4.0
     
62,561
     
5.0
     
4.69
     
2.50
 
                                                                 
Greene County Commercial Bank
                                                               
As of September 30, 2019:
                                                               
                                                                 
Total risk-based capital
 
$
49,156
     
41.3
%
 
$
9,513
     
8.0
%
 
$
11,891
     
10.0
%
   
33.34
%
   
2.50
%
Tier 1 risk-based capital
   
49,156
     
41.3
     
7,135
     
6.0
     
9,513
     
8.0
     
35.34
     
2.50
 
Common equity tier 1 capital
   
49,156
     
41.3
     
5,351
     
4.5
     
7,729
     
6.5
     
36.84
     
2.50
 
Tier 1 leverage ratio
   
49,156
     
9.7
     
20,205
     
4.0
     
25,256
     
5.0
     
5.73
     
2.50
 
                                                                 
As of June 30, 2019:
                                                               
                                                                 
Total risk-based capital
 
$
47,366
     
47.4
%
 
$
7,996
     
8.0
%
 
$
9,996
     
10.0
%
   
39.39
%
   
2.50
%
Tier 1 risk-based capital
   
47,366
     
47.4
     
5,997
     
6.0
     
7,996
     
8.0
     
41.39
     
2.50
 
Common equity tier 1 capital
   
47,366
     
47.4
     
4,498
     
4.5
     
6,497
     
6.5
     
42.89
     
2.50
 
Tier 1 leverage ratio
   
47,366
     
9.6
     
19,678
     
4.0
     
24,597
     
5.0
     
5.63
     
2.50
 

43

Item 3.
Quantitative and Qualitative Disclosures About Market Risk

Not applicable to smaller reporting companies.

Item 4.
Controls and Procedures

Under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the  Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and in timely altering them to material information relating to the Company (or its consolidated subsidiaries) required to be filed in its periodic SEC filings.

There has been no change in the Company's internal control over financial reporting in connection with the quarterly evaluation that occurred during the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Part II.
Other Information

  Item 1.
Legal Proceedings
 Greene County Bancorp, Inc. and its subsidiaries are not engaged in any material legal proceedings at the present time.


Item 1A.
Risk Factors
Not applicable to smaller reporting companies.


Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

a)
Not applicable

b)
Not applicable

c)
Not applicable


Item 3.
Defaults Upon Senior Securities
Not applicable


Item 4.
Mine Safety Disclosures
Not applicable


Item 5.
Other Information

a)
Not applicable

b)
There were no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors during the period covered by this Form 10-Q.


Item 6.
Exhibits

 
Exhibits
 
Certification of Chief Executive Officer, adopted pursuant to Rule 13a-14(a)/15d-14(a)
 
Certification of Chief Financial Officer, adopted pursuant to Rule 13a-14(a)/15d-14(a)
 
Statement of Chief Executive Officer, furnished pursuant to U.S.C. Section 1350
 
Statement of Chief Financial Officer, furnished pursuant to U.S.C. Section 1350
 
101
The following materials from Greene County Bancorp, Inc. Form 10-Q for the quarter ended September 30, 2019, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Financial Condition, (iii) Consolidated Statements of Cash Flows and (iv) related notes, tagged as blocks of text.

44

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned thereunto duly authorized.

Greene County Bancorp, Inc.

Date:  November 8, 2019

By: /s/ Donald E. Gibson

Donald E. Gibson
President and Chief Executive Officer

Date:  November 8, 2019

By: /s/ Michelle M. Plummer

Michelle M. Plummer, CPA, CGMA
Executive Vice President, Chief Financial Officer, and Chief Operating Officer


45


EXHIBIT 31.1

Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Donald E. Gibson, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Greene County Bancorp, Inc.;

2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects the consolidated financial condition, consolidated results of operations and consolidated cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2019
/s/ Donald E. Gibson
 
 
Donald E. Gibson,
 
President and Chief Executive Officer




EXHIBIT 31.2

Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Michelle M. Plummer, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Greene County Bancorp, Inc.;

2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects the consolidated financial condition, consolidated results of operations and consolidated cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2019
/s/ Michelle M. Plummer
 
 
Michelle M. Plummer, CPA, CGMA
 
Executive Vice President, Chief Financial Officer
and Chief Operating Officer
 




EXHIBIT 32.1

Statement of Chief Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Donald E. Gibson, President and Chief Executive Officer, of Greene County Bancorp, Inc. (the “Company”) certifies in his capacity as an officer of the Company that he has reviewed the Quarterly Report of the Company on Form 10-Q for the quarter ended September 30, 2019 and that to the best of his knowledge:


a.
the report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


b.
the information contained in the report fairly presents, in all material respects, the consolidated financial condition and consolidated results of operations of the Company as of the dates and for the periods covered by the report.

This statement is authorized to be attached as an exhibit to the report so that this statement will accompany the report at such time as the report is filed with the Securities and Exchange Commission pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 USC 1350.  It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934, as amended.

Date: November 8, 2019
/s/ Donald E. Gibson
 
 
Donald E. Gibson,
 
President and Chief Executive Officer




EXHIBIT 32.2

Statement of Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Michelle M. Plummer, Chief Financial Officer, of Greene County Bancorp, Inc. (the “Company”) certifies in her capacity as an officer of the Company that he or she has reviewed the Quarterly Report of the Company on Form 10-Q for the quarter ended September 30, 2019 and that to the best of her knowledge:


a.
the report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


b.
the information contained in the report fairly presents, in all material respects, the consolidated financial condition and consolidated results of operations of the Company as of the dates and for the periods covered by the report.

This statement is authorized to be attached as an exhibit to the report so that this statement will accompany the report at such time as the report is filed with the Securities and Exchange Commission pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 USC 1350.  It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934, as amended.

Date: November 8, 2019
/s/ Michelle M. Plummer
 
 
Michelle M. Plummer, CPA, CGMA
 
Executive Vice President, Chief Financial Officer
and Chief Operating Officer
 



v3.19.3
Securities, Federal Home Loan Bank Stock (Details) - USD ($)
$ in Millions
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Federal Home Loan Bank Stock [Member]    
Federal Home Loan Bank Stock [Abstract]    
Other-than-temporary impairment losses $ 0 $ 0
v3.19.3
Loans and Allowance for Loan Losses, Nonaccrual Loans, Interest Income Data (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Loans and Allowance for Loan Losses [Abstract]    
Interest income that would have been recorded if loans had been performing in accordance with original terms $ 101 $ 71
Interest income that was recorded on nonaccrual loans $ 50 $ 32
v3.19.3
Loans and Allowance for Loan Losses, Foreclosed Real Estate (FRE) (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Jun. 30, 2019
Foreclosed Real Estate [Abstract]    
Foreclosed real estate $ 303 $ 53
Residential Real Estate [Member]    
Foreclosed Real Estate [Abstract]    
Foreclosed real estate $ 303 $ 53
v3.19.3
Operating leases, Undiscounted Cash Flows (Details)
$ in Thousands
Sep. 30, 2019
USD ($)
Undiscounted Cash Flows of Operating Lease Liabilities [Abstract]  
2020 $ 288
2021 283
2022 245
2023 205
2024 218
Thereafter 722
Total undiscounted cash flow 1,961
Less net present value adjustment (188)
Lease Liability $ 1,773
v3.19.3
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Cash flows from operating activities:    
Net Income $ 4,863 $ 4,380
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation 175 154
Deferred income tax benefit (380) (388)
Net amortization of premiums and discounts 120 81
Net amortization of deferred loan costs and fees 143 110
Provision for loan losses 551 354
Net loss (gain) on equity securities 2 (15)
(Income) losses on sale of foreclosed real estate (76) 9
Net increase in accrued income taxes 558 426
Net increase in accrued interest receivable (117) (380)
Net (increase) decrease in prepaid and other assets (1,450) 255
Net increase (decrease) in other liabilities 1,428 (2,082)
Net cash provided by operating activities 5,817 2,904
Securities available-for-sale:    
Proceeds from maturities 30,178 32,825
Purchases of securities (68,828) (32,921)
Principal payments on securities 1,739 1,191
Securities held-to-maturity:    
Proceeds from maturities 14,129 4,519
Purchases of securities (21,466) (23,918)
Principal payments on securities 6,852 13,102
Net redemption (purchase) of Federal Home Loan Bank Stock 360 (2,602)
Purchase of long term certificate of deposit (751) 0
Net increase in loans receivable (20,710) (20,593)
Proceeds from sale of foreclosed real estate 41 65
Purchases of premises and equipment (256) (117)
Net cash used by investing activities (58,712) (28,449)
Cash flows from financing activities:    
Net (decrease) increase in short-term advances (8,000) 58,800
Repayment of long-term FHLB advances 0 (1,000)
Payment of cash dividends (432) (854)
Net (decrease) increase in deposits 142,641 (22,773)
Net cash provided by financing activities 134,209 34,173
Net increase in cash and cash equivalents 81,314 8,628
Cash and cash equivalents at beginning of period 29,538 26,504
Cash and cash equivalents at end of period 110,852 35,132
Non-cash investing activities:    
Foreclosed loans transferred to foreclosed real estate 215 34
Cash paid during period for:    
Interest 2,094 1,332
Income taxes $ 752 $ 975
v3.19.3
Consolidated Statements of Income (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Interest income:    
Loans $ 9,405 $ 8,298
Investment securities - taxable 159 194
Mortgage-backed securities 1,244 1,114
Investment securities - tax exempt 1,602 1,360
Interest-bearing deposits and federal funds sold 198 31
Total interest income 12,608 10,997
Interest expense:    
Interest on deposits 2,050 1,036
Interest on borrowings 58 304
Total interest expense 2,108 1,340
Net interest income 10,500 9,657
Provision for loan losses 551 354
Net interest income after provision for loan losses 9,949 9,303
Noninterest income:    
Service charges on deposit accounts 1,125 1,037
Debit card fees 743 640
Investment services 145 115
E-commerce fees 35 37
Other operating income 218 223
Total noninterest income 2,266 2,052
Noninterest expense:    
Salaries and employee benefits 3,942 3,478
Occupancy expense 466 402
Equipment and furniture expense 281 214
Service and data processing fees 574 495
Computer software, supplies and support 242 223
Advertising and promotion 116 120
FDIC insurance premiums (39) 127
Legal and professional fees 279 329
Other 561 573
Total noninterest expense 6,422 5,961
Income before provision for income taxes 5,793 5,394
Provision for income taxes 930 1,014
Net income $ 4,863 $ 4,380
Basic and diluted earnings per share (in dollars per share) $ 0.57 $ 0.51
Basic and diluted average shares outstanding (in shares) 8,537,814 8,537,814
Dividends per share (in dollars per share) $ 0.11 $ 0.10
v3.19.3
Securities (Tables)
3 Months Ended
Sep. 30, 2019
Securities [Abstract]  
Components of Securities
Securities at September 30, 2019 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
 
$
4,517
  
$
28
  
$
-
  
$
4,545
 
State and political subdivisions
  
120,630
   
346
   
-
   
120,976
 
Mortgage-backed securities-residential
  
8,589
   
51
   
19
   
8,621
 
Mortgage-backed securities-multi-family
  
20,256
   
323
   
1
   
20,578
 
Corporate debt securities
  
4,512
   
61
   
30
   
4,543
 
Total securities available-for-sale
  
158,504
   
809
   
50
   
159,263
 
Securities held-to-maturity:
                
U.S. government sponsored enterprises
  
2,000
   
-
   
12
   
1,988
 
State and political subdivisions
  
155,729
   
6,383
   
70
   
162,042
 
Mortgage-backed securities-residential
  
10,154
   
164
   
-
   
10,318
 
Mortgage-backed securities-multi-family
  
132,795
   
4,257
   
2
   
137,050
 
Corporate debt securities
  
1,480
   
12
   
28
   
1,464
 
Other securities
  
2,424
   
36
   
-
   
2,460
 
Total securities held-to-maturity
  
304,582
   
10,852
   
112
   
315,322
 
Total securities
 
$
463,086
  
$
11,661
  
$
162
  
$
474,585
 

Securities at June 30, 2019 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
 
$
5,522
  
$
31
  
$
-
  
$
5,553
 
State and political subdivisions
  
95,782
   
788
   
-
   
96,570
 
Mortgage-backed securities-residential
  
2,634
   
31
   
20
   
2,645
 
Mortgage-backed securities-multi-family
  
16,151
   
259
   
-
   
16,410
 
Corporate debt securities
  
1,513
   
37
   
-
   
1,550
 
Total securities available-for-sale
  
121,602
   
1,146
   
20
   
122,728
 
Securities held-to-maturity:
                
U.S. government sponsored enterprises
  
9,249
   
1
   
14
   
9,236
 
State and political subdivisions
  
152,358
   
6,212
   
23
   
158,547
 
Mortgage-backed securities-residential
  
4,570
   
97
   
-
   
4,667
 
Mortgage-backed securities-multi-family
  
134,970
   
3,122
   
17
   
138,075
 
Corporate debt securities
  
1,478
   
18
   
25
   
1,471
 
Other securities
  
1,583
   
34
   
-
   
1,617
 
Total securities held-to-maturity
  
304,208
   
9,484
   
79
   
313,613
 
Total securities
 
$
425,810
  
$
10,630
  
$
99
  
$
436,341
 
Securities in Continuous Unrealized Loss Position
The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2019.

  
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
 
$
3,078
  
$
2
   
1
  
$
803
  
$
17
   
1
  
$
3,881
  
$
19
   
2
 
Mortgage-backed securities-multi-family
  
3,085
   
1
   
1
   
-
   
-
   
-
   
3,085
   
1
   
1
 
Corporate debt securities
  
2,970
   
30
   
5
   
-
   
-
   
-
   
2,970
   
30
   
5
 
Total securities available-for-sale
  
9,133
   
33
   
7
   
803
   
17
   
1
   
9,936
   
50
   
8
 
Securities held-to-maturity:
                                    
U.S. government sponsored enterprises
  
-
   
-
   
-
   
1,988
   
12
   
1
   
1,988
   
12
   
1
 
State and political subdivisions
  
10,966
   
58
   
94
   
2,424
   
12
   
16
   
13,390
   
70
   
110
 
Mortgage-backed securities-multi-family
  
2,764
   
2
   
2
   
-
   
-
   
-
   
2,764
   
2
   
2
 
Corporate debt securities
  
-
   
-
   
-
   
452
   
28
   
1
   
452
   
28
   
1
 
Total securities held-to-maturity
  
13,730
   
60
   
96
   
4,864
   
52
   
18
   
18,594
   
112
   
114
 
Total securities
 
$
22,863
  
$
93
   
103
  
$
5,667
  
$
69
   
19
  
$
28,530
  
$
162
   
122
 

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, 2019.

  
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
 
$
856
  
$
20
   
1
  
$
-
  
$
-
   
-
  
$
856
  
$
20
   
1
 
Total securities available-for-sale
  
856
   
20
   
1
   
-
   
-
   
-
   
856
   
20
   
1
 
Securities held-to-maturity:
                                    
U.S. government sponsored enterprises
  
-
   
-
   
-
   
1,986
   
14
   
1
   
1,986
   
14
   
1
 
State and political subdivisions
  
3,541
   
17
   
22
   
2,111
   
6
   
13
   
5,652
   
23
   
35
 
Mortgage-backed securities-multi-family
  
1,250
   
6
   
1
   
3,799
   
11
   
3
   
5,049
   
17
   
4
 
Corporate debt securities
  
-
   
-
   
-
   
452
   
25
   
1
   
452
   
25
   
1
 
Total securities held-to-maturity
  
4,791
   
23
   
23
   
8,348
   
56
   
18
   
13,139
   
79
   
41
 
Total securities
 
$
5,647
  
$
43
   
24
  
$
8,348
  
$
56
   
18
  
$
13,995
  
$
99
   
42
 
Investments Classified by Contractual Maturity Date
The estimated fair values of debt securities at September 30, 2019, 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
 
$
125,147
  
$
125,521
 
After one year through five years
  
510
   
526
 
After five years through ten years
  
2,002
   
2,046
 
After ten years
  
2,000
   
1,971
 
Total available-for-sale debt securities
  
129,659
   
130,064
 
Mortgage-backed securities
  
28,845
   
29,199
 
Total available-for-sale securities
  
158,504
   
159,263
 
         
Held-to-maturity debt securities
        
Within one year
  
25,105
   
25,395
 
After one year through five years
  
74,861
   
76,755
 
After five years through ten years
  
43,093
   
45,660
 
After ten years
  
18,574
   
20,144
 
Total held-to-maturity debt securities
  
161,633
   
167,954
 
Mortgage-backed securities
  
142,949
   
147,368
 
Total held-to-maturity securities
  
304,582
   
315,322
 
Total debt securities
 
$
463,086
  
$
474,585
 
v3.19.3
Basis of Presentation (Policies)
3 Months Ended
Sep. 30, 2019
Basis of Presentation [Abstract]  
Basis of Presentation
Within the accompanying unaudited consolidated statement of financial condition, and related notes to the consolidated financial statements, June 30, 2019 data 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 three months ended September 30, 2019 and 2018 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, 2019, 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.   The Company had no reclassifications from amounts in the prior year’s consolidated financial statements to conform to the current year’s presentation.  All material inter-company accounts and transactions have been eliminated in the consolidation. The results of operations and other data for the three months ended September 30, 2019 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2020.   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 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 collectability 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. There have been no significant changes in the application of this critical accounting policy during the three months ended September 30, 2019.

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 equity security for a period of time sufficient for a recovery in value; recent events specific to the issuer or industry; and for debt securities, the 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 write-downs to fair value 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.
v3.19.3
Accumulated Other Comprehensive Loss
3 Months Ended
Sep. 30, 2019
Accumulated Other Comprehensive Loss [Abstract]  
Accumulated Other Comprehensive Loss
(12)
Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss at September 30, 2019 and 2018 are presented in the following table:

(In thousands)
 
Unrealized
gain (losses)
on securities
available-for-
sale
  
Pension
benefits
  
Total
 
Balance - June 30, 2018
 
$
10
  
$
(1,633
)
 
$
(1,623
)
Other comprehensive loss before reclassification
  
(76
)
  
-
   
(76
)
Other comprehensive loss for the three months ended September 30, 2018
  
(76
)
  
-
   
(76
)
Reclassification for change in accounting(1)
  
(114
)
  
-
   
(114
)
Balance - September 30, 2018
 
$
(180
)
 
$
(1,633
)
 
$
(1,813
)
             
Balance - June 30, 2019
 
$
832
  
$
(1,838
)
 
$
(1,006
)
Other comprehensive loss before reclassification
  
(271
)
  
-
   
(271
)
Other comprehensive loss for the three months ended September 30, 2019
  
(271
)
  
-
   
(271
)
Balance - September 30, 2019
 
$
561
  
$
(1,838
)
 
$
(1,277
)


(1)
Adoption of ASU 2016-01 – cumulative effect of change in measurement of equity securities.
v3.19.3
Dividends
3 Months Ended
Sep. 30, 2019
Dividends [Abstract]  
Dividends
(8)
Dividends

On July 17, 2019, Greene County Bancorp, Inc. announced that its Board of Directors had approved a quarterly cash dividend of $0.11 per share on the Company’s common stock. The dividend reflects an annual cash dividend rate of $0.44 per share which represents a 10.0% increase from the previous annual cash dividend rate of $0.40 per share. The dividend was payable to stockholders of record as of August 15, 2019, and was paid on August 30, 2019.  Greene County Bancorp, MHC waived its right to receive this dividend.
v3.19.3
Securities
3 Months Ended
Sep. 30, 2019
Securities [Abstract]  
Securities
(4)
Securities

Securities at September 30, 2019 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
 
$
4,517
  
$
28
  
$
-
  
$
4,545
 
State and political subdivisions
  
120,630
   
346
   
-
   
120,976
 
Mortgage-backed securities-residential
  
8,589
   
51
   
19
   
8,621
 
Mortgage-backed securities-multi-family
  
20,256
   
323
   
1
   
20,578
 
Corporate debt securities
  
4,512
   
61
   
30
   
4,543
 
Total securities available-for-sale
  
158,504
   
809
   
50
   
159,263
 
Securities held-to-maturity:
                
U.S. government sponsored enterprises
  
2,000
   
-
   
12
   
1,988
 
State and political subdivisions
  
155,729
   
6,383
   
70
   
162,042
 
Mortgage-backed securities-residential
  
10,154
   
164
   
-
   
10,318
 
Mortgage-backed securities-multi-family
  
132,795
   
4,257
   
2
   
137,050
 
Corporate debt securities
  
1,480
   
12
   
28
   
1,464
 
Other securities
  
2,424
   
36
   
-
   
2,460
 
Total securities held-to-maturity
  
304,582
   
10,852
   
112
   
315,322
 
Total securities
 
$
463,086
  
$
11,661
  
$
162
  
$
474,585
 

Securities at June 30, 2019 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
 
$
5,522
  
$
31
  
$
-
  
$
5,553
 
State and political subdivisions
  
95,782
   
788
   
-
   
96,570
 
Mortgage-backed securities-residential
  
2,634
   
31
   
20
   
2,645
 
Mortgage-backed securities-multi-family
  
16,151
   
259
   
-
   
16,410
 
Corporate debt securities
  
1,513
   
37
   
-
   
1,550
 
Total securities available-for-sale
  
121,602
   
1,146
   
20
   
122,728
 
Securities held-to-maturity:
                
U.S. government sponsored enterprises
  
9,249
   
1
   
14
   
9,236
 
State and political subdivisions
  
152,358
   
6,212
   
23
   
158,547
 
Mortgage-backed securities-residential
  
4,570
   
97
   
-
   
4,667
 
Mortgage-backed securities-multi-family
  
134,970
   
3,122
   
17
   
138,075
 
Corporate debt securities
  
1,478
   
18
   
25
   
1,471
 
Other securities
  
1,583
   
34
   
-
   
1,617
 
Total securities held-to-maturity
  
304,208
   
9,484
   
79
   
313,613
 
Total securities
 
$
425,810
  
$
10,630
  
$
99
  
$
436,341
 

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.  At September 30, 2019, all mortgage-backed securities including collateralized mortgage obligations were securities of government sponsored enterprises, no private-label mortgage-backed securities or collateralized mortgage obligations were held in the securities portfolio.  The Company’s investments in state and political subdivisions securities generally are municipal obligations that are general obligations supported by the general taxing authority of the issuer, and in some cases are insured.  The obligations issued by school districts are supported by state aid.  Primarily, these investments are issued by municipalities within New York State.

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

The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2019.

  
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
 
$
3,078
  
$
2
   
1
  
$
803
  
$
17
   
1
  
$
3,881
  
$
19
   
2
 
Mortgage-backed securities-multi-family
  
3,085
   
1
   
1
   
-
   
-
   
-
   
3,085
   
1
   
1
 
Corporate debt securities
  
2,970
   
30
   
5
   
-
   
-
   
-
   
2,970
   
30
   
5
 
Total securities available-for-sale
  
9,133
   
33
   
7
   
803
   
17
   
1
   
9,936
   
50
   
8
 
Securities held-to-maturity:
                                    
U.S. government sponsored enterprises
  
-
   
-
   
-
   
1,988
   
12
   
1
   
1,988
   
12
   
1
 
State and political subdivisions
  
10,966
   
58
   
94
   
2,424
   
12
   
16
   
13,390
   
70
   
110
 
Mortgage-backed securities-multi-family
  
2,764
   
2
   
2
   
-
   
-
   
-
   
2,764
   
2
   
2
 
Corporate debt securities
  
-
   
-
   
-
   
452
   
28
   
1
   
452
   
28
   
1
 
Total securities held-to-maturity
  
13,730
   
60
   
96
   
4,864
   
52
   
18
   
18,594
   
112
   
114
 
Total securities
 
$
22,863
  
$
93
   
103
  
$
5,667
  
$
69
   
19
  
$
28,530
  
$
162
   
122
 

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, 2019.

  
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
 
$
856
  
$
20
   
1
  
$
-
  
$
-
   
-
  
$
856
  
$
20
   
1
 
Total securities available-for-sale
  
856
   
20
   
1
   
-
   
-
   
-
   
856
   
20
   
1
 
Securities held-to-maturity:
                                    
U.S. government sponsored enterprises
  
-
   
-
   
-
   
1,986
   
14
   
1
   
1,986
   
14
   
1
 
State and political subdivisions
  
3,541
   
17
   
22
   
2,111
   
6
   
13
   
5,652
   
23
   
35
 
Mortgage-backed securities-multi-family
  
1,250
   
6
   
1
   
3,799
   
11
   
3
   
5,049
   
17
   
4
 
Corporate debt securities
  
-
   
-
   
-
   
452
   
25
   
1
   
452
   
25
   
1
 
Total securities held-to-maturity
  
4,791
   
23
   
23
   
8,348
   
56
   
18
   
13,139
   
79
   
41
 
Total securities
 
$
5,647
  
$
43
   
24
  
$
8,348
  
$
56
   
18
  
$
13,995
  
$
99
   
42
 

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 before recovery of its amortized cost basis, (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 earnings while noncredit-related OTTI on securities not expected to be sold is recognized in other comprehensive income/loss (“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.  Management evaluated securities considering the factors as outlined above, and based on this evaluation the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2019.  Management believes that the reasons for the decline in fair value are due to interest rates, widening credit spreads and market illiquidity at the reporting date.

There were no transfers of securities available-for-sale to held-to-maturity during the three months ended September 30, 2019 or 2018. During the three months ended September 30, 2019 and 2018, there were no sales of securities and no gains or losses were recognized.  There was no other-than-temporary impairment loss recognized during the three months ended September 30, 2019 and 2018.

The estimated fair values of debt securities at September 30, 2019, 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
 
$
125,147
  
$
125,521
 
After one year through five years
  
510
   
526
 
After five years through ten years
  
2,002
   
2,046
 
After ten years
  
2,000
   
1,971
 
Total available-for-sale debt securities
  
129,659
   
130,064
 
Mortgage-backed securities
  
28,845
   
29,199
 
Total available-for-sale securities
  
158,504
   
159,263
 
         
Held-to-maturity debt securities
        
Within one year
  
25,105
   
25,395
 
After one year through five years
  
74,861
   
76,755
 
After five years through ten years
  
43,093
   
45,660
 
After ten years
  
18,574
   
20,144
 
Total held-to-maturity debt securities
  
161,633
   
167,954
 
Mortgage-backed securities
  
142,949
   
147,368
 
Total held-to-maturity securities
  
304,582
   
315,322
 
Total debt securities
 
$
463,086
  
$
474,585
 

At September 30, 2019 and June 30, 2019, respectively, securities with an aggregate fair value of $460.9 million and $425.7 million were pledged as collateral for deposits in excess of FDIC insurance limits for various municipalities placing deposits with Greene County Commercial Bank.  At September 30, 2019 and June 30, 2019, securities with an aggregate fair value of $4.5 million and $1.5 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 quarters ended September 30, 2019 or 2018.

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 three months ended September 30, 2019 or 2018.

(5)
Loans and Allowance for Loan Losses

Loan segments and classes at September 30, 2019 and June 30, 2019 are summarized as follows:
(In thousands)
 
September 30, 2019
  
June 30, 2019
 
Residential real estate:
      
Residential real estate
 
$
267,245
  
$
267,802
 
Residential construction and land
  
8,377
   
7,462
 
Multi-family
  
25,021
   
24,592
 
Commercial real estate:
        
Commercial real estate
  
332,185
   
329,668
 
Commercial construction
  
48,751
   
36,361
 
Consumer loan:
        
Home equity
  
23,288
   
23,185
 
Consumer installment
  
5,677
   
5,481
 
Commercial loans
  
107,632
   
103,554
 
Total gross loans
  
818,176
   
798,105
 
Allowance for loan losses
  
(13,444
)
  
(13,200
)
Unearned origination fees and costs, net
  
807
   
833
 
Loans receivable, net
 
$
805,539
  
$
785,738
 

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 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. The inherent risk within the loan portfolio varies depending upon each of these loan types.

The Bank of Greene County’s primary lending activity historically has been 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 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.  Over the past few years, The Bank of Greene County has shifted more focus on the origination of commercial loans including commercial real estate.  The Bank of Greene County has also formed relationships with other community banks within our region to participate in larger commercial loan relationships.  These types of loans are generally considered to be riskier due to the size and complexity of the loan relationship.  By entering into a participation agreement with the other bank, The Bank of Greene County can obtain the loan relationship while limiting its exposure to credit loss.  Management completes its due diligence in underwriting these loans and monitors the servicing of these loans.

Loan balances by internal credit quality indicator at September 30, 2019 are shown below.

(In thousands)
 
Performing
  
Watch
  
Special Mention
  
Substandard
  
Total
 
Residential real estate
 
$
264,257
  
$
496
  
$
209
  
$
2,283
  
$
267,245
 
Residential construction and land
  
8,377
   
-
   
-
   
-
   
8,377
 
Multi-family
  
23,127
   
-
   
1,759
   
135
   
25,021
 
Commercial real estate
  
321,306
   
161
   
7,569
   
3,149
   
332,185
 
Commercial construction
  
43,957
   
-
   
4,692
   
102
   
48,751
 
Home equity
  
22,624
   
75
   
-
   
589
   
23,288
 
Consumer installment
  
5,659
   
18
   
-
   
-
   
5,677
 
Commercial loans
  
105,389
   
-
   
1,936
   
307
   
107,632
 
Total gross loans
 
$
794,697
  
$
750
  
$
16,165
  
$
6,564
  
$
818,176
 

Loan balances by internal credit quality indicator at June 30, 2019 are shown below.

(In thousands)
 
Performing
  
Watch
  
Special
Mention
  
Substandard
  
Total
 
Residential real estate
 
$
264,138
  
$
874
  
$
86
  
$
2,704
  
$
267,802
 
Residential construction and land
  
7,462
   
-
   
-
   
-
   
7,462
 
Multi-family
  
22,544
   
137
   
1,835
   
76
   
24,592
 
Commercial real estate
  
318,703
   
616
   
7,435
   
2,914
   
329,668
 
Commercial construction
  
36,259
   
-
   
-
   
102
   
36,361
 
Home equity
  
22,392
   
20
   
-
   
773
   
23,185
 
Consumer installment
  
5,461
   
14
   
-
   
6
   
5,481
 
Commercial loans
  
102,103
   
261
   
1,082
   
108
   
103,554
 
Total gross loans
 
$
779,062
  
$
1,922
  
$
10,438
  
$
6,683
  
$
798,105
 

The Company had no loans classified doubtful or loss at September 30, 2019 or June 30, 2019.  During the three months ended September 30, 2019 the Company downgraded a construction loan to special mention as a result of project cost overruns and several delinquent payments. At September 30, 2019, this loan was performing. Management continues to monitor this loan relationship closely.

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 September 30, 2019 and June 30, 2019.  Loans on nonaccrual status totaled $3.5 million at September 30, 2019 of which $1.1 million were in the process of foreclosure. At September 30, 2019, there were 9 residential loans in the process of foreclosure totaling $938,000.  Included in nonaccrual loans were $1.8 million of loans which were less than 90 days past due at September 30, 2019, 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 $150,000 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 $3.6 million at June 30, 2019 of which $1.6 million were in the process of foreclosure.  At June 30, 2019, there were 12 residential loans in the process of foreclosure totaling $1.5 million.  Included in nonaccrual loans were $1.8 million of loans which were less than 90 days past due at June 30, 2019, 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 at September 30, 2019:

(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
 
$
1,906
  
$
212
  
$
986
  
$
3,104
  
$
264,141
  
$
267,245
  
$
2,026
 
Residential construction and land
  
-
   
-
   
-
   
-
   
8,377
   
8,377
   
-
 
Multi-family
  
-
   
-
   
134
   
134
   
24,887
   
25,021
   
134
 
Commercial real estate
  
1,083
   
474
   
114
   
1,671
   
330,514
   
332,185
   
847
 
Commercial construction
  
-
   
-
   
-
   
-
   
48,751
   
48,751
   
-
 
Home equity
  
124
   
75
   
243
   
442
   
22,846
   
23,288
   
268
 
Consumer installment
  
66
   
18
   
-
   
84
   
5,593
   
5,677
   
-
 
Commercial loans
  
174
   
-
   
237
   
411
   
107,221
   
107,632
   
247
 
Total gross loans
 
$
3,353
  
$
779
  
$
1,714
  
$
5,846
  
$
812,330
  
$
818,176
  
$
3,522
 

The following table sets forth information regarding delinquent and/or nonaccrual loans at June 30, 2019:

(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
 
$
2,144
  
$
870
  
$
1,385
  
$
4,399
  
$
263,403
  
$
267,802
  
$
2,474
 
Residential construction and land
  
-
   
-
   
-
   
-
   
7,462
   
7,462
   
-
 
Multi-family
  
1
   
137
   
-
   
138
   
24,454
   
24,592
   
-
 
Commercial real estate
  
280
   
1,108
   
102
   
1,490
   
328,178
   
329,668
   
598
 
Commercial construction
  
-
   
-
   
-
   
-
   
36,361
   
36,361
   
-
 
Home equity
  
16
   
136
   
309
   
461
   
22,724
   
23,185
   
452
 
Consumer installment
  
32
   
14
   
6
   
52
   
5,429
   
5,481
   
6
 
Commercial loans
  
430
   
342
   
28
   
800
   
102,754
   
103,554
   
108
 
Total gross loans
 
$
2,903
  
$
2,607
  
$
1,830
  
$
7,340
  
$
790,765
  
$
798,105
  
$
3,638
 

The Bank of Greene County had no accruing loans delinquent more than 90 days at September 30, 2019 or June 30, 2019, 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 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 three months ended September 30:

(In thousands)
 
2019
  
2018
 
Interest income that would have been recorded if loans had been performing in accordance with original terms
 
$
101
  
$
71
 
Interest income that was recorded on nonaccrual loans
  
50
   
32
 

Impaired Loan Analysis

The Company identifies impaired loans and measures the impairment in accordance with FASB 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.  Generally, The Bank of Greene County considers residential mortgages, home equity 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, business loans and select larger balance residential mortgage loans are reviewed 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.  Based on this evaluation, a delinquent loan’s risk rating may be downgraded to either pass-watch, 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.

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

  
At September 30, 2019
  
For the three months ended
September 30, 2019
 
(In thousands)
 
Recorded
Investment
  
Unpaid
Principal
  
Related
Allowance
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
With no related allowance recorded:
          
Residential real estate
 
$
674
  
$
674
  
$
-
  
$
692
  
$
30
 
Commercial real estate
  
697
   
697
   
-
   
704
   
7
 
Home equity
  
153
   
153
   
-
   
266
   
-
 
Commercial loans
  
135
   
135
   
-
   
137
   
-
 
Total impaired loans with no allowance
  
1,659
   
1,659
   
-
   
1,799
   
37
 
                     
With an allowance recorded:
                    
Residential real estate
  
830
   
830
   
91
   
1,087
   
24
 
Commercial construction
  
102
   
102
   
2
   
102
   
-
 
Home equity
  
321
   
321
   
73
   
330
   
5
 
Commercial loans
  
130
   
130
   
12
   
130
   
1
 
Total impaired loans with allowance
  
1,383
   
1,383
   
178
   
1,649
   
30
 
                     
Total impaired:
                    
Residential real estate
  
1,504
   
1,504
   
91
   
1,779
   
54
 
Commercial real estate
  
697
   
697
   
-
   
704
   
7
 
Commercial construction
  
102
   
102
   
2
   
102
   
-
 
Home equity
  
474
   
474
   
73
   
596
   
5
 
Commercial loans
  
265
   
265
   
12
   
267
   
1
 
Total impaired loans
 
$
3,042
  
$
3,042
  
$
178
  
$
3,448
  
$
67
 

  
At June 30, 2019
  
For the three months ended
September 30, 2018
 
(In thousands)
 
Recorded
Investment
  
Unpaid
Principal
  
Related
Allowance
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
With no related allowance recorded:
          
Residential real estate
 
$
727
  
$
727
  
$
-
  
$
7
  
$
3
 
Commercial real estate
  
717
   
717
   
-
   
796
   
8
 
Home equity
  
309
   
309
   
-
   
224
   
-
 
Commercial loans
  
141
   
141
   
-
   
157
   
-
 
Impaired loans with no allowance
  
1,894
   
1,894
   
-
   
1,184
   
11
 
                     
With an allowance recorded:
                    
Residential real estate
  
1,420
   
1,420
   
188
   
1,855
   
23
 
Commercial real estate
  
-
   
-
   
-
   
365
   
-
 
Commercial construction
  
102
   
102
   
2
   
176
   
-
 
Home equity
  
348
   
348
   
59
   
322
   
4
 
Commercial Loans
  
130
   
130
   
13
   
-
   
-
 
Impaired loans with allowance
  
2,000
   
2,000
   
262
   
2,718
   
27
 
                     
Total impaired:
                    
Residential real estate
  
2,147
   
2,147
   
188
   
1,862
   
26
 
Commercial real estate
  
717
   
717
   
-
   
1,161
   
8
 
Commercial construction
  
102
   
102
   
2
   
176
   
-
 
Home equity
  
657
   
657
   
59
   
546
   
4
 
Commercial loans
  
271
   
271
   
13
   
157
   
-
 
Total impaired loans
 
$
3,894
  
$
3,894
  
$
262
  
$
3,902
  
$
38
 

There were no loans that have been modified as a troubled debt restructuring during the three months ended September 30, 2019 or 2018.   There were no loans that had been modified as a troubled debt restructuring during the twelve months prior to June 30, 2019 or 2018 which have subsequently defaulted during the three months ended September 30, 2019 or 2018, respectively.

Allowance for Loan Losses

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 loan portfolio, specific impaired loans and current economic conditions.  Such evaluation, which includes a review of certain identified loans on which full collectability may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, payment status of the loan, historical loan loss experience and other factors that warrant recognition in providing for the loan loss allowance.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review The Bank of Greene County’s allowance for loan losses.  Such agencies may require The Bank of Greene County to recognize additions to the allowance based on their judgment about information available to them at the time of their examination. The Bank of Greene County considers smaller balance residential mortgages, home equity loans, commercial loans and installment loans to customers as small, homogeneous loans, which are evaluated for impairment collectively based on historical loss experience.  Larger balance residential, commercial mortgage and business 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 agreements.  The measurement of impaired loans is generally based on the fair value of the underlying collateral.  The Bank of Greene County charges loans off against the allowance for credit losses when it becomes evident that a loan cannot be collected within a reasonable amount of time or that it will cost the Bank more than it will receive, and all possible avenues of repayment have been analyzed, including the potential of future cash flow, the value of the underlying collateral, and strength of any guarantors or co-borrowers.  Generally, consumer loans and smaller commercial loans (not secured by real estate) in excess of 90 days are charged-off against the allowance for loan losses, unless equitable arrangements are made. Included within consumer installment loan charge-offs and recoveries are deposit accounts that have been overdrawn in excess of 60 days. With continued growth in the number of deposit accounts, charge-off activity within this category has also grown, as can be seen from the tables below. For loans secured by real estate, a charge-off is recorded when it is determined that the collection of all or a portion of a loan may not be collected and the amount of that loss can be reasonably estimated. The allowance for loan losses is increased by a provision for loan losses (which results in a charge to expense) and recoveries of loans previously charged off and is reduced by charge-offs.

The following tables set forth the activity and allocation of the allowance for loan losses by loan category during and at the periods indicated.  The allowance is allocated to each loan category based on historical loss experience and economic conditions.

  
Activity for the three months ended September 30, 2019
 
(In thousands)
 
Balance at
June 30, 2019
  
Charge-offs
  
Recoveries
  
Provision
  
Balance at
September 30,
2019
 
Residential real estate
 
$
2,026
  
$
53
  
$
-
  
$
(461
)
 
$
1,512
 
Residential construction and land
  
87
   
-
   
-
   
12
   
99
 
Multi-family
  
180
   
-
   
-
   
25
   
205
 
Commercial real estate
  
7,110
   
-
   
-
   
49
   
7,159
 
Commercial construction
  
872
   
-
   
-
   
419
   
1,291
 
Home equity
  
314
   
-
   
-
   
(7
)
  
307
 
Consumer installment
  
250
   
109
   
24
   
154
   
319
 
Commercial loans
  
2,361
   
199
   
30
   
360
   
2,552
 
Total
 
$
13,200
  
$
361
  
$
54
  
$
551
  
$
13,444
 

  
Allowance for Loan Losses
  
Loans Receivable
 
  
Ending Balance At September 30, 2019
Impairment Analysis
  
Ending Balance At September 30, 2019
Impairment Analysis
 
(In thousands)
 
Individually
Evaluated
  
Collectively
Evaluated
  
Individually
Evaluated
  
Collectively
Evaluated
 
Residential real estate
 
$
91
  
$
1,421
  
$
1,504
  
$
265,741
 
Residential construction and land
  
-
   
99
   
-
   
8,377
 
Multi-family
  
-
   
205
   
-
   
25,021
 
Commercial real estate
  
-
   
7,159
   
697
   
331,488
 
Commercial construction
  
2
   
1,289
   
102
   
48,649
 
Home equity
  
73
   
234
   
474
   
22,814
 
Consumer installment
  
-
   
319
   
-
   
5,677
 
Commercial loans
  
12
   
2,540
   
265
   
107,367
 
Unallocated
  
-
   
-
   
-
   
-
 
Total
 
$
178
  
$
13,266
  
$
3,042
  
$
815,134
 

  
Activity for the three months ended September 30, 2018
 
(In thousands)
 
Balance at
June 30, 2018
  
Charge-offs
  
Recoveries
  
Provision
  
Balance at
September 30,
2018
 
Residential real estate
 
$
2,116
  
$
21
  
$
13
  
$
-
  
$
2,108
 
Residential construction and land
  
114
   
-
   
-
   
2
   
116
 
Multi-family
  
162
   
-
   
-
   
9
   
171
 
Commercial real estate
  
5,979
   
-
   
-
   
44
   
6,023
 
Commercial construction
  
950
   
-
   
-
   
7
   
957
 
Home equity
  
317
   
-
   
-
   
-
   
317
 
Consumer installment
  
224
   
99
   
37
   
67
   
229
 
Commercial loans
  
2,128
   
-
   
-
   
5
   
2,133
 
Unallocated
  
34
   
-
   
-
   
220
   
254
 
Total
 
$
12,024
  
$
120
  
$
50
  
$
354
  
$
12,308
 

  
Allowance for Loan Losses
  
Loans Receivable
 
  
Ending Balance June 30, 2019
Impairment Analysis
  
Ending Balance June 30, 2019
Impairment Analysis
 
(In thousands)
 
Individually
Evaluated
  
Collectively
Evaluated
  
Individually
Evaluated
  
Collectively
Evaluated
 
Residential real estate
 
$
188
  
$
1,838
  
$
2,147
  
$
265,655
 
Residential construction and land
  
-
   
87
   
-
   
7,462
 
Multi-family
  
-
   
180
   
-
   
24,592
 
Commercial real estate
  
-
   
7,110
   
717
   
328,951
 
Commercial construction
  
2
   
870
   
102
   
36,259
 
Home equity
  
59
   
255
   
657
   
22,528
 
Consumer installment
  
-
   
250
   
-
   
5,481
 
Commercial loans
  
13
   
2,348
   
271
   
103,283
 
Unallocated
  
-
   
-
   
-
   
-
 
Total
 
$
262
  
$
12,938
  
$
3,894
  
$
794,211
 

Foreclosed real estate (FRE)

FRE consists of properties acquired through mortgage loan foreclosure proceedings or in full or partial satisfaction of loans. The following table sets forth information regarding FRE at September 30, 2019 and June 30, 2019:

(in thousands)
 
September 30, 2019
  
June 30, 2019
 
Residential real estate
 
$
303
  
$
53
 
Total foreclosed real estate
 
$
303
  
$
53
 
v3.19.3
Earnings Per Share (Tables)
3 Months Ended
Sep. 30, 2019
Earnings Per Share [Abstract]  
Earnings Per Share, Basic and Diluted
There were no dilutive or anti-dilutive securities or contracts outstanding during the three months ended September 30, 2019 and 2018.

  
For the three months ended September 30,
 
  
2019
  
2018
 
       
Net Income
 
$
4,863,000
  
$
4,380,000
 
Weighted Average Shares – Basic
  
8,537,814
   
8,537,814
 
Weighted Average Shares - Diluted
  
8,537,814
   
8,537,814
 
         
Earnings per share - Basic
 
$
0.57
  
$
0.51
 
Earnings per share - Diluted
 
$
0.57
  
$
0.51
 
v3.19.3
Revenue from Contracts with Customers (Tables)
3 Months Ended
Sep. 30, 2019
Revenue from Contracts with Customers [Abstract]  
Revenues Subject to ASC 606
The following table presents revenues subject to ASC 606 for the three months ended September 30, 2019 and 2018, respectively.

  
For the three months ended
September 30,
 
(In thousands)
 
2019
  
2018
 
Service charges on deposit accounts
      
Insufficient funds fees
 
$
1,019
  
$
930
 
Deposit related fees
  
38
   
37
 
ATM/point of sale fees
  
68
   
70
 
Total service charges
  
1,125
   
1,037
 
Interchange fee income
        
Debit card interchange fees
  
743
   
640
 
E-commerce fee income
        
E-commerce fees
  
35
   
37
 
Investment services income
        
Investment services
  
145
   
115
 
Sales of assets
        
Net gain (loss) on sale of foreclosed real estate
  
76
   
(9
)
v3.19.3
Securities, Securities in Continuous Unrealized Loss Position (Details)
$ in Thousands
3 Months Ended
Sep. 30, 2019
USD ($)
Security
Sep. 30, 2018
USD ($)
Jun. 30, 2019
USD ($)
Security
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]      
Less than 12 months, fair value $ 9,133   $ 856
Less than 12 months, unrealized losses $ 33   $ 20
Less than 12 months, number of securities | Security 7   1
More than 12 months, fair value $ 803   $ 0
More than 12 months, unrealized losses $ 17   $ 0
More than 12 months, number of securities | Security 1   0
Total, fair value $ 9,936   $ 856
Total, unrealized losses $ 50   $ 20
Total, number of securities | Security 8   1
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]      
Less than 12 months, fair value $ 13,730   $ 4,791
Less than 12 months, unrealized losses $ 60   $ 23
Less than 12 months, number of securities | Security 96   23
More than 12 months, fair value $ 4,864   $ 8,348
More than 12 months, unrealized losses $ 52   $ 56
More than 12 months, number of securities | Security 18   18
Total, fair value $ 18,594   $ 13,139
Total, unrealized losses $ 112   $ 79
Total, number of securities | Security 114   41
Total Securities, Continuous Unrealized Loss Position [Abstract]      
Less than 12 months, fair value $ 22,863   $ 5,647
Less than 12 months, unrealized losses $ 93   $ 43
Less than 12 months, number of securities | Security 103   24
More than 12 months, fair value $ 5,667   $ 8,348
More than 12 months, unrealized losses $ 69   $ 56
More than 12 months, number of securities | Security 19   18
Total, fair value $ 28,530   $ 13,995
Total, unrealized losses $ 162   $ 99
Total, number of securities | Security 122   42
Proceeds from sale of available-for-sale securities $ 0 $ 0  
Gross realized gains (losses) on sale of available-for-sale securities 0 0  
Other-than-temporary impairment losses 0 $ 0  
U.S. Government Sponsored Enterprises [Member]      
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]      
Less than 12 months, fair value 0   $ 0
Less than 12 months, unrealized losses $ 0   $ 0
Less than 12 months, number of securities | Security 0   0
More than 12 months, fair value $ 1,988   $ 1,986
More than 12 months, unrealized losses $ 12   $ 14
More than 12 months, number of securities | Security 1   1
Total, fair value $ 1,988   $ 1,986
Total, unrealized losses $ 12   $ 14
Total, number of securities | Security 1   1
State and Political Subdivisions [Member]      
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]      
Less than 12 months, fair value $ 10,966   $ 3,541
Less than 12 months, unrealized losses $ 58   $ 17
Less than 12 months, number of securities | Security 94   22
More than 12 months, fair value $ 2,424   $ 2,111
More than 12 months, unrealized losses $ 12   $ 6
More than 12 months, number of securities | Security 16   13
Total, fair value $ 13,390   $ 5,652
Total, unrealized losses $ 70   $ 23
Total, number of securities | Security 110   35
Mortgage-backed Securities-Residential [Member]      
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]      
Less than 12 months, fair value $ 3,078   $ 856
Less than 12 months, unrealized losses $ 2   $ 20
Less than 12 months, number of securities | Security 1   1
More than 12 months, fair value $ 803   $ 0
More than 12 months, unrealized losses $ 17   $ 0
More than 12 months, number of securities | Security 1   0
Total, fair value $ 3,881   $ 856
Total, unrealized losses $ 19   $ 20
Total, number of securities | Security 2   1
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]      
Total, unrealized losses $ 0   $ 0
Mortgage-backed Securities-Multi-family [Member]      
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]      
Less than 12 months, fair value 3,085    
Less than 12 months, unrealized losses $ 1    
Less than 12 months, number of securities | Security 1    
More than 12 months, fair value $ 0    
More than 12 months, unrealized losses $ 0    
More than 12 months, number of securities | Security 0    
Total, fair value $ 3,085    
Total, unrealized losses $ 1    
Total, number of securities | Security 1    
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]      
Less than 12 months, fair value $ 2,764   1,250
Less than 12 months, unrealized losses $ 2   $ 6
Less than 12 months, number of securities | Security 2   1
More than 12 months, fair value $ 0   $ 3,799
More than 12 months, unrealized losses $ 0   $ 11
More than 12 months, number of securities | Security 0   3
Total, fair value $ 2,764   $ 5,049
Total, unrealized losses $ 2   $ 17
Total, number of securities | Security 2   4
Corporate Debt Securities [Member]      
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]      
Less than 12 months, fair value $ 2,970    
Less than 12 months, unrealized losses $ 30    
Less than 12 months, number of securities | Security 5    
More than 12 months, fair value $ 0    
More than 12 months, unrealized losses $ 0    
More than 12 months, number of securities | Security 0    
Total, fair value $ 2,970    
Total, unrealized losses $ 30    
Total, number of securities | Security 5    
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]      
Less than 12 months, fair value $ 0   $ 0
Less than 12 months, unrealized losses $ 0   $ 0
Less than 12 months, number of securities | Security 0   0
More than 12 months, fair value $ 452   $ 452
More than 12 months, unrealized losses $ 28   $ 25
More than 12 months, number of securities | Security 1   1
Total, fair value $ 452   $ 452
Total, unrealized losses $ 28   $ 25
Total, number of securities | Security 1   1
v3.19.3
Stock-Based Compensation, Phantom Stock Option Plan and Long-term Incentive Plan (Details) - 2011 Phantom Stock Option and Long-term Incentive Plan [Member] - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Jun. 30, 2019
Stock option activity, shares [Roll Forward]      
Outstanding at beginning of year (in shares) 1,711,600 1,634,160  
Options granted (in shares) 614,700 592,700  
Options forfeited (in shares) (7,000) 0  
Options paid in cash (in shares) 0 (484,760)  
Outstanding at period end (in shares) 2,319,300 1,742,100  
Stock option related information [Abstract]      
Cash paid out on options vested $ 0 $ 1,704  
Compensation expense recognized 645 $ 516  
Total liability for the Plan $ 4,800   $ 4,100
v3.19.3
Earnings Per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Earnings Per Share [Abstract]    
Dilutive securities or contracts outstanding (in shares) 0 0
Anti-dilutive securities or contracts outstanding (in shares) 0 0
Net Income $ 4,863 $ 4,380
Weighted Average Shares - Basic (in shares) 8,537,814 8,537,814
Weighted Average Shares - Diluted (in shares) 8,537,814 8,537,814
Earnings per share - Basic (in dollars per share) $ 0.57 $ 0.51
Earnings per share - Diluted (in dollars per share) $ 0.57 $ 0.51
v3.19.3
Fair Value Measurements and Fair Value of Financial Instruments, Assets Measured on Recurring Basis (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Jun. 30, 2019
Assets [Abstract]    
Securities available-for-sale $ 159,263 $ 122,728
Equity securities 251 253
Recurring [Member]    
Assets [Abstract]    
Securities available-for-sale 159,263 122,728
Equity securities 251 253
Total securities measured at fair value 159,514 122,981
Recurring [Member] | U.S. Government Sponsored Enterprises [Member]    
Assets [Abstract]    
Securities available-for-sale 4,545 5,553
Recurring [Member] | State and Political Subdivisions [Member]    
Assets [Abstract]    
Securities available-for-sale 120,976 96,570
Recurring [Member] | Mortgage-backed Securities-Residential [Member]    
Assets [Abstract]    
Securities available-for-sale 8,621 2,645
Recurring [Member] | Mortgage-backed Securities-Multi-family [Member]    
Assets [Abstract]    
Securities available-for-sale 20,578 16,410
Recurring [Member] | Corporate Debt Securities [Member]    
Assets [Abstract]    
Securities available-for-sale 4,543 1,550
Recurring [Member] | Level 1 [Member]    
Assets [Abstract]    
Securities available-for-sale 4,543 1,550
Equity securities 251 253
Total securities measured at fair value 4,794 1,803
Recurring [Member] | Level 1 [Member] | U.S. Government Sponsored Enterprises [Member]    
Assets [Abstract]    
Securities available-for-sale 0 0
Recurring [Member] | Level 1 [Member] | State and Political Subdivisions [Member]    
Assets [Abstract]    
Securities available-for-sale 0 0
Recurring [Member] | Level 1 [Member] | Mortgage-backed Securities-Residential [Member]    
Assets [Abstract]    
Securities available-for-sale 0 0
Recurring [Member] | Level 1 [Member] | Mortgage-backed Securities-Multi-family [Member]    
Assets [Abstract]    
Securities available-for-sale 0 0
Recurring [Member] | Level 1 [Member] | Corporate Debt Securities [Member]    
Assets [Abstract]    
Securities available-for-sale 4,543 1,550
Recurring [Member] | Level 2 [Member]    
Assets [Abstract]    
Securities available-for-sale 154,720 121,178
Equity securities 0 0
Total securities measured at fair value 154,720 121,178
Recurring [Member] | Level 2 [Member] | U.S. Government Sponsored Enterprises [Member]    
Assets [Abstract]    
Securities available-for-sale 4,545 5,553
Recurring [Member] | Level 2 [Member] | State and Political Subdivisions [Member]    
Assets [Abstract]    
Securities available-for-sale 120,976 96,570
Recurring [Member] | Level 2 [Member] | Mortgage-backed Securities-Residential [Member]    
Assets [Abstract]    
Securities available-for-sale 8,621 2,645
Recurring [Member] | Level 2 [Member] | Mortgage-backed Securities-Multi-family [Member]    
Assets [Abstract]    
Securities available-for-sale 20,578 16,410
Recurring [Member] | Level 2 [Member] | Corporate Debt Securities [Member]    
Assets [Abstract]    
Securities available-for-sale 0 0
Recurring [Member] | Level 3 [Member]    
Assets [Abstract]    
Securities available-for-sale 0 0
Equity securities 0 0
Total securities measured at fair value 0 0
Recurring [Member] | Level 3 [Member] | U.S. Government Sponsored Enterprises [Member]    
Assets [Abstract]    
Securities available-for-sale 0 0
Recurring [Member] | Level 3 [Member] | State and Political Subdivisions [Member]    
Assets [Abstract]    
Securities available-for-sale 0 0
Recurring [Member] | Level 3 [Member] | Mortgage-backed Securities-Residential [Member]    
Assets [Abstract]    
Securities available-for-sale 0 0
Recurring [Member] | Level 3 [Member] | Mortgage-backed Securities-Multi-family [Member]    
Assets [Abstract]    
Securities available-for-sale 0 0
Recurring [Member] | Level 3 [Member] | Corporate Debt Securities [Member]    
Assets [Abstract]    
Securities available-for-sale $ 0 $ 0
v3.19.3
Impact of Recent Accounting Pronouncements
3 Months Ended
Sep. 30, 2019
Impact of Recent Accounting Pronouncements [Abstract]  
Impact of Recent Accounting Pronouncements
(9)
Impact of Recent Accounting Pronouncements

Accounting Pronouncements Recently Adopted

The following accounting standards have been adopted in the first quarter ended September 30, 2019:

On July 1, 2019, the Company adopted ASU 2016-02 Leases and all subsequent amendments (collectively, “ASU 2016-02”). The objective of this ASU is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements to meet that objective.  The main difference between previous GAAP and this ASU is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP.  Under this new guidance, a lessee should recognize in the statement of financial position a liability to make lease payments and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term.  The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP.  ASU 2016-02 required a modified retrospective transition approach, applying the new standard to all leases existing at the date of initial application. The Company elected to use the effective date, July 1, 2019, as our date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before July 1, 2019.  In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. Under ASU 2016-02, leases are classified as finance or operating, with the classification affecting the pattern and classification of expense recognition in the income statement. The Company’s leases, consisting of property leases for certain of our bank branches, are classified as operating leases. Operating lease ROU assets and liabilities were recognized in the amount of $1.7 million at commencement date, with no adjustment to retained earnings, based on the present value of lease payments over the lease term. As these leases do not provide an implicit rate, we use our incremental borrowing rate from the Federal Home Loan Bank of New York in determining the present value of lease payments. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for lease payments is recognized on a straight-line basis over the lease term. ASU 2016-02 did not have a material impact on the consolidated statements of income or the consolidated statements of cash flows.

On July 1, 2019, the Company adopted ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20) related to premium amortization on purchased callable debt securities. This Update shortens the amortization period for certain callable debt securities held at a premium.  Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity.  For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  Early adoption was permitted, including adoption in an interim period.  If an entity early adopted the amendments in an interim period, any adjustments were reflected as of the beginning of the fiscal year that includes that interim period.  An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption.  The adoption of this guidance did not have a material impact on our consolidated results of operations or financial position.
 
Accounting Pronouncements to be adopted in future periods

In June 2016, the FASB issued an Update (ASU 2016-13) to its guidance on “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 requires credit losses on most financial assets measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected credit loss (CECL) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications unless reasonable expectation of a troubled debt restructuring exists) from the date of initial recognition of that instrument. The ASU also replaces the current accounting model for purchased credit impaired loans and debt securities. The allowance for credit losses for purchased financial assets with a more-than insignificant amount of credit deterioration since origination (“PCD assets”), should be determined in a similar manner to other financial assets measured on an amortized cost basis. However, upon initial recognition, the allowance for credit losses is added to the purchase price (“gross up approach”) to determine the initial amortized cost basis. The subsequent accounting for PCD financial assets is the same expected loss model described above. Further, the ASU made certain targeted amendments to the existing impairment model for available-for-sale (AFS) debt securities. For an AFS debt security for which there is neither the intent nor a more-likely-than-not requirement to sell, an entity will record credit losses as an allowance rather than a write-down of the amortized cost basis.  An entity will apply the amendments in this Update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which aligns the implementation date for nonpublic entities’ annual financial statements with the implementation date for their interim financial statements and clarifies the scope of the guidance in the amendments in ASU 2016-13.  In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.  ASU 2019-04 clarifies or addresses stakeholders’ specific issues about certain aspects of the amendments in Update 2016-13 related to measuring the allowance for loan losses under the new guidance. The effective dates and transition requirements for the amendments related to this Update are the same as the effective dates and transition requirements in Update 2016-13. The Company is currently evaluating the potential impact on our consolidated results of operations or financial position. The initial adjustment will not be reported in earnings and therefore will not have any material impact on our consolidated results of operations, but it is expected that it will have an impact on our consolidated financial position at the date of adoption of this Update.  At this time, we have not calculated the estimated impact that this Update will have on our Allowance for Loan Losses, however, we anticipate it will have a significant impact on the methodology process we utilize to calculate the allowance.  A vendor has been selected and alternative methodologies are currently being considered.  Data requirements and integrity are being reviewed and enhancements incorporated into standard processes.  For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, excluding small reporting companies such as the Company, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  On October 16, 2019, FASB approved a proposed ASU, to be issued in mid-November 2019, to topic 326, Financial Instruments – Credit Losses which amends the implementation effective date for small reporting companies, such as the Company, and non-public business entities, for fiscal years beginning after December 15, 2022. All entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.   The Company is in the early stages of evaluation and implementation of the guidance.
 
In August 2018, the FASB issued an Update (ASU 2018-13) to its guidance on “Fair Value Measurement (Topic 820)”.  This update modifies the disclosure requirements on fair value measurements. The following disclosure requirements were removed from Topic 820:  (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (2) the policy for timing of transfers between levels; (3) the valuation processes for Level 3 fair value measurements; and (4) for nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting period.  The following disclosure requirements were modified in Topic 820: (1) in lieu of a rollforward for Level 3 fair value measurements, a nonpublic entity is required to disclose transfers into and out of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities; (2) for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and (3) the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The following disclosure requirements were added to Topic 820; however, the disclosures are not required for non-public entities: (1) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.  In addition, the amendments eliminate at a minimum from the phrase “an entity shall disclose at a minimum” to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements. The amendments in ASU No. 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date.  Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU No. 2018-13 and delay adoption of the additional disclosures until their effective date.  The adoption of this guidance is not expected to have a material impact on our consolidated results of operations or financial position.

In August 2018, the FASB has issued an Update (ASU No. 2018-14), “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans”, that applies to all employers that sponsor defined benefit pension or other postretirement plans.  The amendments modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The following disclosure requirements were removed from Subtopic 715-20: (1) the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year; (2) the amount and timing of plan assets expected to be returned to the employer; (3) the disclosures related to the June 2001 amendments to the Japanese Welfare Pension Insurance Law; related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan; (4) for nonpublic entities, the reconciliation of the opening balances to the closing balances of plan assets measured on a recurring basis in Level 3 of the fair value hierarchy. However, nonpublic entities will be required to disclose separately the amounts of transfers into and out of Level 3 of the fair value hierarchy and purchases of Level 3 plan assets; and (5) for public entities, the effects of a one-percentage-point change in assumed health care cost trend rates on the (a) aggregate of the service and interest cost components of net periodic benefit costs and (b) benefit obligation for postretirement health care benefits. The following disclosure requirements were added to Subtopic 715-20: (1) the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates; and (2) an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The amendments also clarify the disclosure requirements in paragraph 715-20-50-3, which state that the following information for defined benefit pension plans should be disclosed: (1) the projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets; and (2) the accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets.  ASU No. 2018-14 is effective for fiscal years ending after December 15, 2020, for public business entities and for fiscal years ending after December 15, 2021, for all other entities. Early adoption is permitted for all entities. The adoption of this guidance is not expected to have a material impact on our consolidated results of operations or financial position.

In April 2019, the FASB issued an Update (ASU 2019-04), Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.  The amendments to Topic 326 and other topics in this Update include items related to the amendments in Update 2016-13 discussed at the June 2018 and November 2018 Credit Losses TRG meetings. The amendments clarify or address stakeholders’ specific issues about certain aspects of the amendments in Update 2016-13 on a number of different topics, including the following:  Accrued Interest, Transfers between Classifications or Categories for Loans and Debt Securities, Recoveries, Consideration of Prepayments in Determining the Effective Interest Rate, Consideration of Estimated Costs to Sell When Foreclosure Is Probable, Vintage Disclosures— Line-of-Credit Arrangements Converted to Term Loans, and Contractual Extensions and Renewals.   The ASU also covered a number of issues that related to hedge accounting including: Partial-Term Fair Value Hedges of Interest Rate Risk, Amortization of Fair Value Hedge Basis Adjustments, Disclosure of Fair Value Hedge Basis Adjustments, Consideration of the Hedged Contractually Specified Interest Rate under the Hypothetical Derivative Method, Scoping for Not-for-Profit Entities, Hedge Accounting Provisions Applicable to Certain Private Companies and Not-for-Profit Entities, Application of a First-Payments-Received Cash Flow Hedging Technique to Overall Cash Flows on a Group of Variable Interest Payments, and Transition Guidance  For Codification Improvements specific to ASU 2016-01. The following topics were covered within ASU 2019-04: Scope Clarifications, Held-to-Maturity Debt Securities Fair Value Disclosures, Applicability of Topic 820 to the Measurement Alternative, and Remeasurement of Equity Securities at Historical Exchange Rates. ASU 2019-04 has various implementation dates dependent on a number of factors as it pertains to the above items. The Company is in the early stages of evaluation of the guidance.
v3.19.3
Loans and Allowance for Loan Losses
3 Months Ended
Sep. 30, 2019
Loans and Allowance for Loan Losses [Abstract]  
Loans and Allowance for Loan Losses
(5)
Loans and Allowance for Loan Losses

Loan segments and classes at September 30, 2019 and June 30, 2019 are summarized as follows:
(In thousands)
 
September 30, 2019
  
June 30, 2019
 
Residential real estate:
      
Residential real estate
 
$
267,245
  
$
267,802
 
Residential construction and land
  
8,377
   
7,462
 
Multi-family
  
25,021
   
24,592
 
Commercial real estate:
        
Commercial real estate
  
332,185
   
329,668
 
Commercial construction
  
48,751
   
36,361
 
Consumer loan:
        
Home equity
  
23,288
   
23,185
 
Consumer installment
  
5,677
   
5,481
 
Commercial loans
  
107,632
   
103,554
 
Total gross loans
  
818,176
   
798,105
 
Allowance for loan losses
  
(13,444
)
  
(13,200
)
Unearned origination fees and costs, net
  
807
   
833
 
Loans receivable, net
 
$
805,539
  
$
785,738
 

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 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. The inherent risk within the loan portfolio varies depending upon each of these loan types.

The Bank of Greene County’s primary lending activity historically has been 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 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.  Over the past few years, The Bank of Greene County has shifted more focus on the origination of commercial loans including commercial real estate.  The Bank of Greene County has also formed relationships with other community banks within our region to participate in larger commercial loan relationships.  These types of loans are generally considered to be riskier due to the size and complexity of the loan relationship.  By entering into a participation agreement with the other bank, The Bank of Greene County can obtain the loan relationship while limiting its exposure to credit loss.  Management completes its due diligence in underwriting these loans and monitors the servicing of these loans.

Loan balances by internal credit quality indicator at September 30, 2019 are shown below.

(In thousands)
 
Performing
  
Watch
  
Special Mention
  
Substandard
  
Total
 
Residential real estate
 
$
264,257
  
$
496
  
$
209
  
$
2,283
  
$
267,245
 
Residential construction and land
  
8,377
   
-
   
-
   
-
   
8,377
 
Multi-family
  
23,127
   
-
   
1,759
   
135
   
25,021
 
Commercial real estate
  
321,306
   
161
   
7,569
   
3,149
   
332,185
 
Commercial construction
  
43,957
   
-
   
4,692
   
102
   
48,751
 
Home equity
  
22,624
   
75
   
-
   
589
   
23,288
 
Consumer installment
  
5,659
   
18
   
-
   
-
   
5,677
 
Commercial loans
  
105,389
   
-
   
1,936
   
307
   
107,632
 
Total gross loans
 
$
794,697
  
$
750
  
$
16,165
  
$
6,564
  
$
818,176
 

Loan balances by internal credit quality indicator at June 30, 2019 are shown below.

(In thousands)
 
Performing
  
Watch
  
Special
Mention
  
Substandard
  
Total
 
Residential real estate
 
$
264,138
  
$
874
  
$
86
  
$
2,704
  
$
267,802
 
Residential construction and land
  
7,462
   
-
   
-
   
-
   
7,462
 
Multi-family
  
22,544
   
137
   
1,835
   
76
   
24,592
 
Commercial real estate
  
318,703
   
616
   
7,435
   
2,914
   
329,668
 
Commercial construction
  
36,259
   
-
   
-
   
102
   
36,361
 
Home equity
  
22,392
   
20
   
-
   
773
   
23,185
 
Consumer installment
  
5,461
   
14
   
-
   
6
   
5,481
 
Commercial loans
  
102,103
   
261
   
1,082
   
108
   
103,554
 
Total gross loans
 
$
779,062
  
$
1,922
  
$
10,438
  
$
6,683
  
$
798,105
 

The Company had no loans classified doubtful or loss at September 30, 2019 or June 30, 2019.  During the three months ended September 30, 2019 the Company downgraded a construction loan to special mention as a result of project cost overruns and several delinquent payments. At September 30, 2019, this loan was performing. Management continues to monitor this loan relationship closely.

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 September 30, 2019 and June 30, 2019.  Loans on nonaccrual status totaled $3.5 million at September 30, 2019 of which $1.1 million were in the process of foreclosure. At September 30, 2019, there were 9 residential loans in the process of foreclosure totaling $938,000.  Included in nonaccrual loans were $1.8 million of loans which were less than 90 days past due at September 30, 2019, 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 $150,000 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 $3.6 million at June 30, 2019 of which $1.6 million were in the process of foreclosure.  At June 30, 2019, there were 12 residential loans in the process of foreclosure totaling $1.5 million.  Included in nonaccrual loans were $1.8 million of loans which were less than 90 days past due at June 30, 2019, 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 at September 30, 2019:

(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
 
$
1,906
  
$
212
  
$
986
  
$
3,104
  
$
264,141
  
$
267,245
  
$
2,026
 
Residential construction and land
  
-
   
-
   
-
   
-
   
8,377
   
8,377
   
-
 
Multi-family
  
-
   
-
   
134
   
134
   
24,887
   
25,021
   
134
 
Commercial real estate
  
1,083
   
474
   
114
   
1,671
   
330,514
   
332,185
   
847
 
Commercial construction
  
-
   
-
   
-
   
-
   
48,751
   
48,751
   
-
 
Home equity
  
124
   
75
   
243
   
442
   
22,846
   
23,288
   
268
 
Consumer installment
  
66
   
18
   
-
   
84
   
5,593
   
5,677
   
-
 
Commercial loans
  
174
   
-
   
237
   
411
   
107,221
   
107,632
   
247
 
Total gross loans
 
$
3,353
  
$
779
  
$
1,714
  
$
5,846
  
$
812,330
  
$
818,176
  
$
3,522
 

The following table sets forth information regarding delinquent and/or nonaccrual loans at June 30, 2019:

(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
 
$
2,144
  
$
870
  
$
1,385
  
$
4,399
  
$
263,403
  
$
267,802
  
$
2,474
 
Residential construction and land
  
-
   
-
   
-
   
-
   
7,462
   
7,462
   
-
 
Multi-family
  
1
   
137
   
-
   
138
   
24,454
   
24,592
   
-
 
Commercial real estate
  
280
   
1,108
   
102
   
1,490
   
328,178
   
329,668
   
598
 
Commercial construction
  
-
   
-
   
-
   
-
   
36,361
   
36,361
   
-
 
Home equity
  
16
   
136
   
309
   
461
   
22,724
   
23,185
   
452
 
Consumer installment
  
32
   
14
   
6
   
52
   
5,429
   
5,481
   
6
 
Commercial loans
  
430
   
342
   
28
   
800
   
102,754
   
103,554
   
108
 
Total gross loans
 
$
2,903
  
$
2,607
  
$
1,830
  
$
7,340
  
$
790,765
  
$
798,105
  
$
3,638
 

The Bank of Greene County had no accruing loans delinquent more than 90 days at September 30, 2019 or June 30, 2019, 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 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 three months ended September 30:

(In thousands)
 
2019
  
2018
 
Interest income that would have been recorded if loans had been performing in accordance with original terms
 
$
101
  
$
71
 
Interest income that was recorded on nonaccrual loans
  
50
   
32
 

Impaired Loan Analysis

The Company identifies impaired loans and measures the impairment in accordance with FASB 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.  Generally, The Bank of Greene County considers residential mortgages, home equity 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, business loans and select larger balance residential mortgage loans are reviewed 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.  Based on this evaluation, a delinquent loan’s risk rating may be downgraded to either pass-watch, 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.

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

  
At September 30, 2019
  
For the three months ended
September 30, 2019
 
(In thousands)
 
Recorded
Investment
  
Unpaid
Principal
  
Related
Allowance
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
With no related allowance recorded:
          
Residential real estate
 
$
674
  
$
674
  
$
-
  
$
692
  
$
30
 
Commercial real estate
  
697
   
697
   
-
   
704
   
7
 
Home equity
  
153
   
153
   
-
   
266
   
-
 
Commercial loans
  
135
   
135
   
-
   
137
   
-
 
Total impaired loans with no allowance
  
1,659
   
1,659
   
-
   
1,799
   
37
 
                     
With an allowance recorded:
                    
Residential real estate
  
830
   
830
   
91
   
1,087
   
24
 
Commercial construction
  
102
   
102
   
2
   
102
   
-
 
Home equity
  
321
   
321
   
73
   
330
   
5
 
Commercial loans
  
130
   
130
   
12
   
130
   
1
 
Total impaired loans with allowance
  
1,383
   
1,383
   
178
   
1,649
   
30
 
                     
Total impaired:
                    
Residential real estate
  
1,504
   
1,504
   
91
   
1,779
   
54
 
Commercial real estate
  
697
   
697
   
-
   
704
   
7
 
Commercial construction
  
102
   
102
   
2
   
102
   
-
 
Home equity
  
474
   
474
   
73
   
596
   
5
 
Commercial loans
  
265
   
265
   
12
   
267
   
1
 
Total impaired loans
 
$
3,042
  
$
3,042
  
$
178
  
$
3,448
  
$
67
 

  
At June 30, 2019
  
For the three months ended
September 30, 2018
 
(In thousands)
 
Recorded
Investment
  
Unpaid
Principal
  
Related
Allowance
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
With no related allowance recorded:
          
Residential real estate
 
$
727
  
$
727
  
$
-
  
$
7
  
$
3
 
Commercial real estate
  
717
   
717
   
-
   
796
   
8
 
Home equity
  
309
   
309
   
-
   
224
   
-
 
Commercial loans
  
141
   
141
   
-
   
157
   
-
 
Impaired loans with no allowance
  
1,894
   
1,894
   
-
   
1,184
   
11
 
                     
With an allowance recorded:
                    
Residential real estate
  
1,420
   
1,420
   
188
   
1,855
   
23
 
Commercial real estate
  
-
   
-
   
-
   
365
   
-
 
Commercial construction
  
102
   
102
   
2
   
176
   
-
 
Home equity
  
348
   
348
   
59
   
322
   
4
 
Commercial Loans
  
130
   
130
   
13
   
-
   
-
 
Impaired loans with allowance
  
2,000
   
2,000
   
262
   
2,718
   
27
 
                     
Total impaired:
                    
Residential real estate
  
2,147
   
2,147
   
188
   
1,862
   
26
 
Commercial real estate
  
717
   
717
   
-
   
1,161
   
8
 
Commercial construction
  
102
   
102
   
2
   
176
   
-
 
Home equity
  
657
   
657
   
59
   
546
   
4
 
Commercial loans
  
271
   
271
   
13
   
157
   
-
 
Total impaired loans
 
$
3,894
  
$
3,894
  
$
262
  
$
3,902
  
$
38
 

There were no loans that have been modified as a troubled debt restructuring during the three months ended September 30, 2019 or 2018.   There were no loans that had been modified as a troubled debt restructuring during the twelve months prior to June 30, 2019 or 2018 which have subsequently defaulted during the three months ended September 30, 2019 or 2018, respectively.

Allowance for Loan Losses

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 loan portfolio, specific impaired loans and current economic conditions.  Such evaluation, which includes a review of certain identified loans on which full collectability may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, payment status of the loan, historical loan loss experience and other factors that warrant recognition in providing for the loan loss allowance.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review The Bank of Greene County’s allowance for loan losses.  Such agencies may require The Bank of Greene County to recognize additions to the allowance based on their judgment about information available to them at the time of their examination. The Bank of Greene County considers smaller balance residential mortgages, home equity loans, commercial loans and installment loans to customers as small, homogeneous loans, which are evaluated for impairment collectively based on historical loss experience.  Larger balance residential, commercial mortgage and business 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 agreements.  The measurement of impaired loans is generally based on the fair value of the underlying collateral.  The Bank of Greene County charges loans off against the allowance for credit losses when it becomes evident that a loan cannot be collected within a reasonable amount of time or that it will cost the Bank more than it will receive, and all possible avenues of repayment have been analyzed, including the potential of future cash flow, the value of the underlying collateral, and strength of any guarantors or co-borrowers.  Generally, consumer loans and smaller commercial loans (not secured by real estate) in excess of 90 days are charged-off against the allowance for loan losses, unless equitable arrangements are made. Included within consumer installment loan charge-offs and recoveries are deposit accounts that have been overdrawn in excess of 60 days. With continued growth in the number of deposit accounts, charge-off activity within this category has also grown, as can be seen from the tables below. For loans secured by real estate, a charge-off is recorded when it is determined that the collection of all or a portion of a loan may not be collected and the amount of that loss can be reasonably estimated. The allowance for loan losses is increased by a provision for loan losses (which results in a charge to expense) and recoveries of loans previously charged off and is reduced by charge-offs.

The following tables set forth the activity and allocation of the allowance for loan losses by loan category during and at the periods indicated.  The allowance is allocated to each loan category based on historical loss experience and economic conditions.

  
Activity for the three months ended September 30, 2019
 
(In thousands)
 
Balance at
June 30, 2019
  
Charge-offs
  
Recoveries
  
Provision
  
Balance at
September 30,
2019
 
Residential real estate
 
$
2,026
  
$
53
  
$
-
  
$
(461
)
 
$
1,512
 
Residential construction and land
  
87
   
-
   
-
   
12
   
99
 
Multi-family
  
180
   
-
   
-
   
25
   
205
 
Commercial real estate
  
7,110
   
-
   
-
   
49
   
7,159
 
Commercial construction
  
872
   
-
   
-
   
419
   
1,291
 
Home equity
  
314
   
-
   
-
   
(7
)
  
307
 
Consumer installment
  
250
   
109
   
24
   
154
   
319
 
Commercial loans
  
2,361
   
199
   
30
   
360
   
2,552
 
Total
 
$
13,200
  
$
361
  
$
54
  
$
551
  
$
13,444
 

  
Allowance for Loan Losses
  
Loans Receivable
 
  
Ending Balance At September 30, 2019
Impairment Analysis
  
Ending Balance At September 30, 2019
Impairment Analysis
 
(In thousands)
 
Individually
Evaluated
  
Collectively
Evaluated
  
Individually
Evaluated
  
Collectively
Evaluated
 
Residential real estate
 
$
91
  
$
1,421
  
$
1,504
  
$
265,741
 
Residential construction and land
  
-
   
99
   
-
   
8,377
 
Multi-family
  
-
   
205
   
-
   
25,021
 
Commercial real estate
  
-
   
7,159
   
697
   
331,488
 
Commercial construction
  
2
   
1,289
   
102
   
48,649
 
Home equity
  
73
   
234
   
474
   
22,814
 
Consumer installment
  
-
   
319
   
-
   
5,677
 
Commercial loans
  
12
   
2,540
   
265
   
107,367
 
Unallocated
  
-
   
-
   
-
   
-
 
Total
 
$
178
  
$
13,266
  
$
3,042
  
$
815,134
 

  
Activity for the three months ended September 30, 2018
 
(In thousands)
 
Balance at
June 30, 2018
  
Charge-offs
  
Recoveries
  
Provision
  
Balance at
September 30,
2018
 
Residential real estate
 
$
2,116
  
$
21
  
$
13
  
$
-
  
$
2,108
 
Residential construction and land
  
114
   
-
   
-
   
2
   
116
 
Multi-family
  
162
   
-
   
-
   
9
   
171
 
Commercial real estate
  
5,979
   
-
   
-
   
44
   
6,023
 
Commercial construction
  
950
   
-
   
-
   
7
   
957
 
Home equity
  
317
   
-
   
-
   
-
   
317
 
Consumer installment
  
224
   
99
   
37
   
67
   
229
 
Commercial loans
  
2,128
   
-
   
-
   
5
   
2,133
 
Unallocated
  
34
   
-
   
-
   
220
   
254
 
Total
 
$
12,024
  
$
120
  
$
50
  
$
354
  
$
12,308
 

  
Allowance for Loan Losses
  
Loans Receivable
 
  
Ending Balance June 30, 2019
Impairment Analysis
  
Ending Balance June 30, 2019
Impairment Analysis
 
(In thousands)
 
Individually
Evaluated
  
Collectively
Evaluated
  
Individually
Evaluated
  
Collectively
Evaluated
 
Residential real estate
 
$
188
  
$
1,838
  
$
2,147
  
$
265,655
 
Residential construction and land
  
-
   
87
   
-
   
7,462
 
Multi-family
  
-
   
180
   
-
   
24,592
 
Commercial real estate
  
-
   
7,110
   
717
   
328,951
 
Commercial construction
  
2
   
870
   
102
   
36,259
 
Home equity
  
59
   
255
   
657
   
22,528
 
Consumer installment
  
-
   
250
   
-
   
5,481
 
Commercial loans
  
13
   
2,348
   
271
   
103,283
 
Unallocated
  
-
   
-
   
-
   
-
 
Total
 
$
262
  
$
12,938
  
$
3,894
  
$
794,211
 

Foreclosed real estate (FRE)

FRE consists of properties acquired through mortgage loan foreclosure proceedings or in full or partial satisfaction of loans. The following table sets forth information regarding FRE at September 30, 2019 and June 30, 2019:

(in thousands)
 
September 30, 2019
  
June 30, 2019
 
Residential real estate
 
$
303
  
$
53
 
Total foreclosed real estate
 
$
303
  
$
53
 
v3.19.3
Securities (Details)
$ in Thousands
3 Months Ended
Sep. 30, 2019
USD ($)
Category
Jun. 30, 2019
USD ($)
Available-for-sale debt securities [Abstract]    
Amortized cost $ 158,504 $ 121,602
Gross unrealized gains 809 1,146
Gross unrealized losses 50 20
Estimated fair value 159,263 122,728
Held-to-maturity securities [Abstract]    
Amortized cost 304,582 304,208
Gross unrealized gains 10,852 9,484
Gross unrealized losses 112 79
Estimated fair value 315,322 313,613
Total Securities [Abstract]    
Amortized cost 463,086 425,810
Gross unrealized gains 11,661 10,630
Gross unrealized losses 162 99
Estimated fair value $ 474,585 436,341
Number of categories utilized under risk management approach of diversified investing | Category 3  
U.S. Government Sponsored Enterprises [Member]    
Available-for-sale debt securities [Abstract]    
Amortized cost $ 4,517 5,522
Gross unrealized gains 28 31
Gross unrealized losses 0 0
Estimated fair value 4,545 5,553
Held-to-maturity securities [Abstract]    
Amortized cost 2,000 9,249
Gross unrealized gains 0 1
Gross unrealized losses 12 14
Estimated fair value 1,988 9,236
State and Political Subdivisions [Member]    
Available-for-sale debt securities [Abstract]    
Amortized cost 120,630 95,782
Gross unrealized gains 346 788
Gross unrealized losses 0 0
Estimated fair value 120,976 96,570
Held-to-maturity securities [Abstract]    
Amortized cost 155,729 152,358
Gross unrealized gains 6,383 6,212
Gross unrealized losses 70 23
Estimated fair value 162,042 158,547
Mortgage-backed Securities-Residential [Member]    
Available-for-sale debt securities [Abstract]    
Amortized cost 8,589 2,634
Gross unrealized gains 51 31
Gross unrealized losses 19 20
Estimated fair value 8,621 2,645
Held-to-maturity securities [Abstract]    
Amortized cost 10,154 4,570
Gross unrealized gains 164 97
Gross unrealized losses 0 0
Estimated fair value 10,318 4,667
Mortgage-backed Securities-Multi-family [Member]    
Available-for-sale debt securities [Abstract]    
Amortized cost 20,256 16,151
Gross unrealized gains 323 259
Gross unrealized losses 1 0
Estimated fair value 20,578 16,410
Held-to-maturity securities [Abstract]    
Amortized cost 132,795 134,970
Gross unrealized gains 4,257 3,122
Gross unrealized losses 2 17
Estimated fair value 137,050 138,075
Corporate Debt Securities [Member]    
Available-for-sale debt securities [Abstract]    
Amortized cost 4,512 1,513
Gross unrealized gains 61 37
Gross unrealized losses 30 0
Estimated fair value 4,543 1,550
Held-to-maturity securities [Abstract]    
Amortized cost 1,480 1,478
Gross unrealized gains 12 18
Gross unrealized losses 28 25
Estimated fair value 1,464 1,471
Other Securities [Member]    
Held-to-maturity securities [Abstract]    
Amortized cost 2,424 1,583
Gross unrealized gains 36 34
Gross unrealized losses 0 0
Estimated fair value $ 2,460 $ 1,617
v3.19.3
Fair Value Measurements and Fair Value of Financial Instruments (Tables)
3 Months Ended
Sep. 30, 2019
Fair Value Measurements and Fair Value of Financial Instruments [Abstract]  
Assets Measured at Fair Value on Recurring Basis
For assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used are as follows:

     
Fair Value Measurements Using
 
     
Quoted
Prices In
Active Markets
For Identical
Assets
  
Significant
Other
Observable
Inputs
  
Significant
Unobservable
Inputs
 
(In thousands)
 
September 30, 2019
  
(Level 1)
  
(Level 2)
  
(Level 3)
 
Assets:
            
U.S. Government sponsored enterprises
 
$
4,545
  
$
-
  
$
4,545
  
$
-
 
State and political subdivisions
  
120,976
   
-
   
120,976
   
-
 
Mortgage-backed securities-residential
  
8,621
   
-
   
8,621
   
-
 
Mortgage-backed securities-multi-family
  
20,578
   
-
   
20,578
   
-
 
Corporate debt securities
  
4,543
   
4,543
   
-
   
-
 
Securities available-for-sale
  
159,263
  
$
4,543
  
$
154,720
   
-
 
Equity securities
  
251
   
251
   
-
   
-
 
Total securities measured at fair value
 
$
159,514
  
$
4,794
  
$
154,720
  
$
-
 

     
Fair Value Measurements Using
 
     
Quoted Prices
In Active
Markets For
Identical Assets
  
Significant
Other Observable
Inputs
  
Significant
Unobservable
Inputs
 
(In thousands)
 
June 30, 2019
  
(Level 1)
  
(Level 2)
  
(Level 3)
 
Assets:
            
U.S. Government sponsored enterprises
 
$
5,553
  
$
-
  
$
5,553
  
$
-
 
State and political subdivisions
  
96,570
   
-
   
96,570
   
-
 
Mortgage-backed securities-residential
  
2,645
   
-
   
2,645
   
-
 
Mortgage-backed securities-multi-family
  
16,410
   
-
   
16,410
   
-
 
Corporate debt securities
  
1,550
   
1,550
   
-
   
-
 
Securities available-for-sale
  
122,728
   
1,550
   
121,178
   
-
 
Equity securities
  
253
   
253
   
-
   
-
 
Total securities measured at fair value
 
$
122,981
  
$
1,803
  
$
121,178
  
$
-
 
Assets and Liabilities Measured at Fair Value on Nonrecurring Basis
These measurements are classified as Level 3 within the fair value hierarchy.

           
Fair Value Measurements Using
 
(In thousands)
 
Recorded
Investment
  
Related
Allowance
  
Fair Value
  
(Level 1)
  
(Level 2)
  
(Level 3)
 
September 30, 2019
                  
Impaired loans
 
$
1,547
  
$
178
  
$
1,369
  
$
-
  
$
-
  
$
1,369
 
Foreclosed real estate
  
303
   
-
   
303
   
-
   
-
   
303
 
                         
June 30, 2019
                        
Impaired loans
 
$
2,335
  
$
262
  
$
2,073
  
$
-
  
$
-
  
$
2,073
 
Foreclosed real estate
  
53
   
-
   
53
   
-
   
-
   
53
 
Additional Quantitative Information about Assets Measured at Fair Value on Nonrecurring Basis
The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Level 3 inputs were utilized to determine fair value:

(Dollars in thousands)
 
Fair Value
 
Valuation Technique
Unobservable Input
 
Range
  
Weighted
Average
 
September 30, 2019
           
Impaired Loans
 
$
703
 
Appraisal of collateral(1)
Appraisal adjustments(2)
  
27.03%-41.67
%
  
35.97
%
        
Liquidation expenses(3)
  
3.98%-5.49
%
  
4.43
%
   
666
 
Discounted cash flow
Discount rate
  
4.19%-8.66
%
  
6.07
%
Foreclosed real estate
  
303
 
Appraisal of collateral(1)
Appraisal adjustments(2)
  
0.00-0.00
%
  
0.00
%
        
Liquidation expenses(3)
  
6.80
%
  
6.80
%
June 30, 2019
              
Impaired loans
 
$
1,403
 
Appraisal of collateral(1)
Appraisal adjustments(2)
  
0.00%-33.73
%
  
24.48
%
        
Liquidation expenses(3)
 
 3.98%-6.00
%
 
 4.53
%
   
670
 
Discounted cash flow
Discount rate
 
 4.19%-8.66
%
 
 6.07
%
Foreclosed real estate
  
53
 
Appraisal of collateral(1)
Appraisal adjustments(2)
 
 0.00%-0.00
%
 
 0.00
%
        
Liquidation expenses(3)
 
      10.41
%
  
10.41
%


(1)
Fair value is generally determined through independent third-party appraisals of the underlying collateral, which generally includes various Level 3 inputs which are not observable.

(2)
Appraisals may be adjusted downwards by management for qualitative factors such as economic conditions.  Higher downward adjustments are caused by negative changes to the collateral or conditions in the real estate market, actual offers or sales contracts received or age of the appraisal.

(3)
Appraisals are adjusted downwards by management for qualitative factors such as the estimated costs to liquidate the collateral.
Carrying Amounts and Estimated Fair Value of Financial Instruments
The carrying amounts and estimated fair value of financial instruments are as follows:

(In thousands)
 
September 30, 2019
  
Fair Value Measurements Using
 
  
Carrying
Amount
  
Fair Value
  
(Level 1)
  
(Level 2)
  
(Level 3)
 
Cash and cash equivalents
 
$
110,852
  
$
110,852
  
$
110,852
  
$
-
  
$
-
 
Long term certificate of deposit
  
3,626
   
3,626
   
3,626
   
-
   
-
 
Securities available-for-sale
  
159,263
   
159,263
   
4,543
   
154,720
   
-
 
Securities held-to-maturity
  
304,582
   
315,322
   
-
   
315,322
   
-
 
Equity securities
  
251
   
251
   
251
   
-
     
Federal Home Loan Bank stock
  
1,399
   
1,399
   
-
   
1,399
   
-
 
Net loans receivable
  
805,539
   
805,814
   
-
   
-
   
805,814
 
Accrued interest receivable
  
5,970
   
5,970
   
-
   
5,970
   
-
 
Deposits
  
1,263,210
   
1,263,336
   
-
   
1,263,336
   
-
 
Borrowings from Federal Home Loan Bank
  
13,600
   13,572   
-
   13,572   
-
 
Accrued interest payable
  
124
   
124
   
-
   
124
   
-
 

(In thousands)
 
June 30, 2019
  
Fair Value Measurements Using
 
  
Carrying
Amount
  
Fair Value
  
(Level 1)
  
(Level 2)
  
(Level 3)
 
Cash and cash equivalents
 
$
29,538
  
$
29,538
  
$
29,538
  
$
-
  
$
-
 
Long term certificate of deposit
  
2,875
   
2,875
   
2,875
   
-
   
-
 
Securities available-for-sale
  
122,728
   
122,728
   
1,550
   
121,178
   
-
 
Securities held-to-maturity
  
304,208
   
313,613
   
-
   
313,613
   
-
 
Equity Securities
  
253
   
253
   
253
   
-
   
-
 
Federal Home Loan Bank stock
  
1,759
   
1,759
   
-
   
1,759
   
-
 
Net loans receivable
  
785,738
   
781,614
   
-
   
-
   
781,614
 
Accrued interest receivable
  
5,853
   
5,853
   
-
   
5,853
   
-
 
Deposits
  
1,120,569
   
1,120,632
   
-
   
1,120,632
   
-
 
Borrowings from Federal Home Loan Bank
  
21,600
   
21,534
   
-
   
21,534
   
-
 
Accrued interest payable
  
110
   
110
   
-
   
110
   
-
 
v3.19.3
Accumulated Other Comprehensive Loss (Tables)
3 Months Ended
Sep. 30, 2019
Accumulated Other Comprehensive Loss [Abstract]  
Components of Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss at September 30, 2019 and 2018 are presented in the following table:

(In thousands)
 
Unrealized
gain (losses)
on securities
available-for-
sale
  
Pension
benefits
  
Total
 
Balance - June 30, 2018
 
$
10
  
$
(1,633
)
 
$
(1,623
)
Other comprehensive loss before reclassification
  
(76
)
  
-
   
(76
)
Other comprehensive loss for the three months ended September 30, 2018
  
(76
)
  
-
   
(76
)
Reclassification for change in accounting(1)
  
(114
)
  
-
   
(114
)
Balance - September 30, 2018
 
$
(180
)
 
$
(1,633
)
 
$
(1,813
)
             
Balance - June 30, 2019
 
$
832
  
$
(1,838
)
 
$
(1,006
)
Other comprehensive loss before reclassification
  
(271
)
  
-
   
(271
)
Other comprehensive loss for the three months ended September 30, 2019
  
(271
)
  
-
   
(271
)
Balance - September 30, 2019
 
$
561
  
$
(1,838
)
 
$
(1,277
)


(1)
Adoption of ASU 2016-01 – cumulative effect of change in measurement of equity securities.
v3.19.3
Dividends (Details) - $ / shares
3 Months Ended 12 Months Ended
Jul. 17, 2019
Sep. 30, 2019
Sep. 30, 2018
Jun. 30, 2019
Dividends [Abstract]        
Common stock, dividends, per share, declared (in dollars per share)   $ 0.11 $ 0.10  
2019 Q4 Dividend [Member]        
Dividends [Abstract]        
Dividends payable, date declared   Jul. 17, 2019    
Common stock, dividends, per share, declared (in dollars per share) $ 0.11      
Percentage of increase in cash dividend rate 10.00%      
Dividends payable, date of record   Aug. 15, 2019    
Dividends payable, date paid   Aug. 30, 2019    
2020 Annual Dividend [Member]        
Dividends [Abstract]        
Common stock, dividends, per share, declared (in dollars per share) $ 0.44      
2019 Annual Dividend [Member]        
Dividends [Abstract]        
Common stock, dividends, per share, declared (in dollars per share)       $ 0.40
v3.19.3
Fair Value Measurements and Fair Value of Financial Instruments, Assets and Liabilities Measured on Nonrecurring Basis (Details)
$ in Thousands
3 Months Ended
Sep. 30, 2019
USD ($)
Approach
Jun. 30, 2019
USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Impaired loans, recorded investment $ 3,042 $ 3,894
Impaired loans, related allowance 178 262
Nonrecurring [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Impaired loans, recorded investment 1,547 2,335
Impaired loans, related allowance 178 262
Impaired loans, fair value 1,369 2,073
Foreclosed real estate, recorded investment 303 53
Foreclosed real estate, related allowance 0 0
Foreclosed real estate, fair value $ 303 53
Nonrecurring [Member] | Maximum [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Number of approaches used for appraisals | Approach 3  
Nonrecurring [Member] | Level 1 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Impaired loans, fair value $ 0 0
Foreclosed real estate, fair value 0 0
Nonrecurring [Member] | Level 2 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Impaired loans, fair value 0 0
Foreclosed real estate, fair value 0 0
Nonrecurring [Member] | Level 3 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Impaired loans, fair value 1,369 2,073
Foreclosed real estate, fair value $ 303 $ 53
v3.19.3
Accumulated Other Comprehensive Loss (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Jun. 30, 2018
Balances and changes in components of accumulated other comprehensive loss [Roll Forward]      
Balance $ 112,369 $ 96,191  
Total other comprehensive loss, net of taxes (271) (76)  
Balance 116,529 99,641  
ASU 2016-01 [Member]      
Balances and changes in components of accumulated other comprehensive loss [Roll Forward]      
Reclassification for change in accounting [1]     $ 0
Accumulated Other Comprehensive Loss [Member]      
Balances and changes in components of accumulated other comprehensive loss [Roll Forward]      
Balance (1,006) (1,623)  
Other comprehensive loss before reclassification (271) (76)  
Total other comprehensive loss, net of taxes (271) (76)  
Balance (1,277) (1,813)  
Accumulated Other Comprehensive Loss [Member] | ASU 2016-01 [Member]      
Balances and changes in components of accumulated other comprehensive loss [Roll Forward]      
Reclassification for change in accounting [1],[2]     (114)
Unrealized Gain (Losses) on Securities Available-for-sale [Member]      
Balances and changes in components of accumulated other comprehensive loss [Roll Forward]      
Balance 832 10  
Other comprehensive loss before reclassification (271) (76)  
Total other comprehensive loss, net of taxes (271) (76)  
Balance 561 (180)  
Unrealized Gain (Losses) on Securities Available-for-sale [Member] | ASU 2016-01 [Member]      
Balances and changes in components of accumulated other comprehensive loss [Roll Forward]      
Reclassification for change in accounting [2]     (114)
Pension Benefits [Member]      
Balances and changes in components of accumulated other comprehensive loss [Roll Forward]      
Balance (1,838) (1,633)  
Other comprehensive loss before reclassification 0 0  
Total other comprehensive loss, net of taxes 0 0  
Balance $ (1,838) $ (1,633)  
Pension Benefits [Member] | ASU 2016-01 [Member]      
Balances and changes in components of accumulated other comprehensive loss [Roll Forward]      
Reclassification for change in accounting [2]     $ 0
[1] See Note 9 Impact of Recent Accounting Pronouncements - cumulative effect of change in measurement of equity securities.
[2] Adoption of ASU 2016-01 - cumulative effect of change in measurement of equity securities.
v3.19.3
Loans and Allowance for Loan Losses, Activity and Allocation of Allowance for Loan Losses (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Jun. 30, 2019
Activity of allowance for loan losses by loan category [Roll Forward]      
Balance, beginning of period $ 13,200 $ 12,024  
Charge-offs 361 120  
Recoveries 54 50  
Provision 551 354  
Balance, end of period 13,444 12,308  
Allocation of allowance for loan losses by loan category [Abstract]      
Allowance for loan losses, ending balance, impairment analysis individually evaluated 178   $ 262
Allowance for loan losses, ending balance, impairment analysis collectively evaluated 13,266   12,938
Loans receivable, ending balance, impairment analysis individually evaluated 3,042   3,894
Loans receivable, ending balance, impairment analysis collectively evaluated $ 815,134   794,211
Smaller Commercial Loans [Member] | Unsecured [Member]      
Allowance for Loan Losses [Abstract]      
Threshold period to charge off loans against allowance for loan losses 90 days    
Residential Real Estate [Member] | Residential Real Estate [Member]      
Activity of allowance for loan losses by loan category [Roll Forward]      
Balance, beginning of period $ 2,026 2,116  
Charge-offs 53 21  
Recoveries 0 13  
Provision (461) 0  
Balance, end of period 1,512 2,108  
Allocation of allowance for loan losses by loan category [Abstract]      
Allowance for loan losses, ending balance, impairment analysis individually evaluated 91   188
Allowance for loan losses, ending balance, impairment analysis collectively evaluated 1,421   1,838
Loans receivable, ending balance, impairment analysis individually evaluated 1,504   2,147
Loans receivable, ending balance, impairment analysis collectively evaluated 265,741   265,655
Residential Real Estate [Member] | Construction and Land [Member]      
Activity of allowance for loan losses by loan category [Roll Forward]      
Balance, beginning of period 87 114  
Charge-offs 0 0  
Recoveries 0 0  
Provision 12 2  
Balance, end of period 99 116  
Allocation of allowance for loan losses by loan category [Abstract]      
Allowance for loan losses, ending balance, impairment analysis individually evaluated 0   0
Allowance for loan losses, ending balance, impairment analysis collectively evaluated 99   87
Loans receivable, ending balance, impairment analysis individually evaluated 0   0
Loans receivable, ending balance, impairment analysis collectively evaluated 8,377   7,462
Residential Real Estate [Member] | Multi-family [Member]      
Activity of allowance for loan losses by loan category [Roll Forward]      
Balance, beginning of period 180 162  
Charge-offs 0 0  
Recoveries 0 0  
Provision 25 9  
Balance, end of period 205 171  
Allocation of allowance for loan losses by loan category [Abstract]      
Allowance for loan losses, ending balance, impairment analysis individually evaluated 0   0
Allowance for loan losses, ending balance, impairment analysis collectively evaluated 205   180
Loans receivable, ending balance, impairment analysis individually evaluated 0   0
Loans receivable, ending balance, impairment analysis collectively evaluated 25,021   24,592
Commercial Real Estate [Member] | Real Estate [Member]      
Activity of allowance for loan losses by loan category [Roll Forward]      
Balance, beginning of period 7,110 5,979  
Charge-offs 0 0  
Recoveries 0 0  
Provision 49 44  
Balance, end of period 7,159 6,023  
Allocation of allowance for loan losses by loan category [Abstract]      
Allowance for loan losses, ending balance, impairment analysis individually evaluated 0   0
Allowance for loan losses, ending balance, impairment analysis collectively evaluated 7,159   7,110
Loans receivable, ending balance, impairment analysis individually evaluated 697   717
Loans receivable, ending balance, impairment analysis collectively evaluated 331,488   328,951
Commercial Real Estate [Member] | Construction [Member]      
Activity of allowance for loan losses by loan category [Roll Forward]      
Balance, beginning of period 872 950  
Charge-offs 0 0  
Recoveries 0 0  
Provision 419 7  
Balance, end of period 1,291 957  
Allocation of allowance for loan losses by loan category [Abstract]      
Allowance for loan losses, ending balance, impairment analysis individually evaluated 2   2
Allowance for loan losses, ending balance, impairment analysis collectively evaluated 1,289   870
Loans receivable, ending balance, impairment analysis individually evaluated 102   102
Loans receivable, ending balance, impairment analysis collectively evaluated $ 48,649   36,259
Consumer Loan [Member] | Unsecured [Member]      
Allowance for Loan Losses [Abstract]      
Threshold period to charge off loans against allowance for loan losses 90 days    
Consumer Loan [Member] | Home Equity [Member]      
Activity of allowance for loan losses by loan category [Roll Forward]      
Balance, beginning of period $ 314 317  
Charge-offs 0 0  
Recoveries 0 0  
Provision (7) 0  
Balance, end of period 307 317  
Allocation of allowance for loan losses by loan category [Abstract]      
Allowance for loan losses, ending balance, impairment analysis individually evaluated 73   59
Allowance for loan losses, ending balance, impairment analysis collectively evaluated 234   255
Loans receivable, ending balance, impairment analysis individually evaluated 474   657
Loans receivable, ending balance, impairment analysis collectively evaluated 22,814   22,528
Consumer Loan [Member] | Consumer Installment [Member]      
Activity of allowance for loan losses by loan category [Roll Forward]      
Balance, beginning of period 250 224  
Charge-offs 109 99  
Recoveries 24 37  
Provision 154 67  
Balance, end of period 319 229  
Allocation of allowance for loan losses by loan category [Abstract]      
Allowance for loan losses, ending balance, impairment analysis individually evaluated 0   0
Allowance for loan losses, ending balance, impairment analysis collectively evaluated 319   250
Loans receivable, ending balance, impairment analysis individually evaluated 0   0
Loans receivable, ending balance, impairment analysis collectively evaluated $ 5,677   5,481
Consumer Loan [Member] | Consumer Installment [Member] | Unsecured [Member]      
Allowance for Loan Losses [Abstract]      
Threshold period to charge off overdrawn deposit accounts against allowance for loan losses 60 days    
Commercial Loans [Member]      
Activity of allowance for loan losses by loan category [Roll Forward]      
Balance, beginning of period $ 2,361 2,128  
Charge-offs 199 0  
Recoveries 30 0  
Provision 360 5  
Balance, end of period 2,552 2,133  
Allocation of allowance for loan losses by loan category [Abstract]      
Allowance for loan losses, ending balance, impairment analysis individually evaluated 12   13
Allowance for loan losses, ending balance, impairment analysis collectively evaluated 2,540   2,348
Loans receivable, ending balance, impairment analysis individually evaluated 265   271
Loans receivable, ending balance, impairment analysis collectively evaluated 107,367   103,283
Unallocated [Member]      
Activity of allowance for loan losses by loan category [Roll Forward]      
Balance, beginning of period   34  
Charge-offs   0  
Recoveries   0  
Provision   220  
Balance, end of period   $ 254  
Allocation of allowance for loan losses by loan category [Abstract]      
Allowance for loan losses, ending balance, impairment analysis individually evaluated 0   0
Allowance for loan losses, ending balance, impairment analysis collectively evaluated 0   0
Loans receivable, ending balance, impairment analysis individually evaluated 0   0
Loans receivable, ending balance, impairment analysis collectively evaluated $ 0   $ 0
v3.19.3
Securities, Securities by Contractual Maturity (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Jun. 30, 2019
Available-for-sale Debt Securities, Amortized Cost [Abstract]    
Within one year $ 125,147  
After one year through five years 510  
After five years through ten years 2,002  
After ten years 2,000  
Total available for sale debt securities 129,659  
Mortgage-backed securities 28,845  
Amortized cost 158,504  
Available-for-sale Debt Securities, Fair Value [Abstract]    
Within one year 125,521  
After one through five years 526  
After five through ten years 2,046  
After ten years 1,971  
Total available-for-sale debt securities 130,064  
Mortgage-backed securities 29,199  
Estimated fair value 159,263 $ 122,728
Held-to-maturity Debt Securities, Amortized Cost [Abstract]    
Within one year 25,105  
After one year through five years 74,861  
After five years through ten years 43,093  
After ten years 18,574  
Total held-to-maturity debt securities 161,633  
Mortgage-backed securities 142,949  
Amortized cost 304,582 304,208
Held-to-maturity Debt Securities, Fair Value [Abstract]    
Within one year 25,395  
After one year through five years 76,755  
After five years through ten years 45,660  
After ten years 20,144  
Total held-to-maturity debt securities 167,954  
Mortgage-backed securities 147,368  
Estimated fair value 315,322 313,613
Total Debt Securities [Abstract]    
Amortized cost 463,086 425,810
Estimated fair value 474,585 436,341
Securities pledged as collateral for deposits in excess of FDIC insurance limits, fair value 460,900 425,700
Securities pledged as collateral for potential borrowings at the Federal Reserve Bank discount window $ 4,500 $ 1,500
v3.19.3
Loans and Allowance for Loan Losses, Delinquent and Nonaccrual Loans by Past Due Status (Details)
$ in Thousands
Sep. 30, 2019
USD ($)
Loan
Jun. 30, 2019
USD ($)
Loan
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due $ 5,846 $ 7,340
Current 812,330 790,765
Total loans 818,176 798,105
Loans on non-accrual 3,522 3,638
Loans in the process of foreclosure 1,100 1,600
Nonaccrual loans with recent history of delinquency greater than 90 days 1,800 1,800
Nonaccrual loans making payments pursuant to forbearance agreements 150  
Accruing loans delinquent more than 90 days 0 0
30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 3,353 2,903
60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 779 2,607
90 Days or More Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due $ 1,714 $ 1,830
Residential Real Estate [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Number of loans in the process of foreclosure | Loan 9 12
Loans in the process of foreclosure $ 938 $ 1,500
Residential Real Estate [Member] | Residential Real Estate [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 3,104 4,399
Current 264,141 263,403
Total loans 267,245 267,802
Loans on non-accrual 2,026 2,474
Residential Real Estate [Member] | Residential Real Estate [Member] | 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 1,906 2,144
Residential Real Estate [Member] | Residential Real Estate [Member] | 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 212 870
Residential Real Estate [Member] | Residential Real Estate [Member] | 90 Days or More Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 986 1,385
Residential Real Estate [Member] | Construction and Land [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 0 0
Current 8,377 7,462
Total loans 8,377 7,462
Loans on non-accrual 0 0
Residential Real Estate [Member] | Construction and Land [Member] | 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 0 0
Residential Real Estate [Member] | Construction and Land [Member] | 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 0 0
Residential Real Estate [Member] | Construction and Land [Member] | 90 Days or More Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 0 0
Residential Real Estate [Member] | Multi-family [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 134 138
Current 24,887 24,454
Total loans 25,021 24,592
Loans on non-accrual 134 0
Residential Real Estate [Member] | Multi-family [Member] | 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 0 1
Residential Real Estate [Member] | Multi-family [Member] | 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 0 137
Residential Real Estate [Member] | Multi-family [Member] | 90 Days or More Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 134 0
Commercial Real Estate [Member] | Real Estate [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 1,671 1,490
Current 330,514 328,178
Total loans 332,185 329,668
Loans on non-accrual 847 598
Commercial Real Estate [Member] | Real Estate [Member] | 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 1,083 280
Commercial Real Estate [Member] | Real Estate [Member] | 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 474 1,108
Commercial Real Estate [Member] | Real Estate [Member] | 90 Days or More Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 114 102
Commercial Real Estate [Member] | Construction [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 0 0
Current 48,751 36,361
Total loans 48,751 36,361
Loans on non-accrual 0 0
Commercial Real Estate [Member] | Construction [Member] | 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 0 0
Commercial Real Estate [Member] | Construction [Member] | 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 0 0
Commercial Real Estate [Member] | Construction [Member] | 90 Days or More Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 0 0
Consumer Loan [Member] | Home Equity [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 442 461
Current 22,846 22,724
Total loans 23,288 23,185
Loans on non-accrual 268 452
Consumer Loan [Member] | Home Equity [Member] | 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 124 16
Consumer Loan [Member] | Home Equity [Member] | 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 75 136
Consumer Loan [Member] | Home Equity [Member] | 90 Days or More Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 243 309
Consumer Loan [Member] | Consumer Installment [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 84 52
Current 5,593 5,429
Total loans 5,677 5,481
Loans on non-accrual 0 6
Consumer Loan [Member] | Consumer Installment [Member] | 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 66 32
Consumer Loan [Member] | Consumer Installment [Member] | 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 18 14
Consumer Loan [Member] | Consumer Installment [Member] | 90 Days or More Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 0 6
Commercial Loans [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 411 800
Current 107,221 102,754
Total loans 107,632 103,554
Loans on non-accrual 247 108
Commercial Loans [Member] | 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 174 430
Commercial Loans [Member] | 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due 0 342
Commercial Loans [Member] | 90 Days or More Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total past due $ 237 $ 28
v3.19.3
Subsequent events (Details) - $ / shares
3 Months Ended
Oct. 15, 2019
Jul. 17, 2019
Sep. 30, 2019
Sep. 30, 2018
Dividends [Abstract]        
Common stock, dividends declared (in dollars per share)     $ 0.11 $ 0.10
2020 Annual Dividend [Member]        
Dividends [Abstract]        
Common stock, dividends declared (in dollars per share)   $ 0.44    
Subsequent Event [Member] | 2020 Q1 Dividend [Member]        
Dividends [Abstract]        
Dividends payable, date declared Oct. 15, 2019      
Common stock, dividends declared (in dollars per share) $ 0.11      
Dividends payable, date of record Nov. 15, 2019      
Dividends payable, date paid Nov. 29, 2019      
Subsequent Event [Member] | 2020 Annual Dividend [Member]        
Dividends [Abstract]        
Common stock, dividends declared (in dollars per share) $ 0.44      
v3.19.3
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Consolidated Statements of Comprehensive Income (Unaudited) [Abstract]    
Net Income $ 4,863 $ 4,380
Other comprehensive loss:    
Unrealized holding loss on available-for-sale securities, net of income tax benefit of ($96) and ($27), respectively (271) (76)
Total other comprehensive loss, net of taxes (271) (76)
Comprehensive income $ 4,592 $ 4,304
v3.19.3
Document and Entity Information - shares
3 Months Ended
Sep. 30, 2019
Nov. 08, 2019
Document and Entity Information [Abstract]    
Entity Registrant Name GREENE COUNTY BANCORP INC  
Entity Central Index Key 0001070524  
Current Fiscal Year End Date --06-30  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Shell Company false  
Entity Filer Category Accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Ex Transition Period false  
Entity Common Stock, Shares Outstanding   8,537,114
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 30, 2019  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q1  
Entity Address, State or Province NY  
v3.19.3
Basis of Presentation
3 Months Ended
Sep. 30, 2019
Basis of Presentation [Abstract]  
Basis of Presentation
(1)
Basis of Presentation

Within the accompanying unaudited consolidated statement of financial condition, and related notes to the consolidated financial statements, June 30, 2019 data 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 three months ended September 30, 2019 and 2018 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, 2019, 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.   The Company had no reclassifications from amounts in the prior year’s consolidated financial statements to conform to the current year’s presentation.  All material inter-company accounts and transactions have been eliminated in the consolidation. The results of operations and other data for the three months ended September 30, 2019 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2020.   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 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 collectability 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. There have been no significant changes in the application of this critical accounting policy during the three months ended September 30, 2019.

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 equity security for a period of time sufficient for a recovery in value; recent events specific to the issuer or industry; and for debt securities, the 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 write-downs to fair value 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.
v3.19.3
Use of Estimates (Policies)
3 Months Ended
Sep. 30, 2019
Use of Estimates [Abstract]  
Use of Estimates
The preparation of consolidated 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 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 through earnings.
v3.19.3
Revenue from Contracts with Customers
3 Months Ended
Sep. 30, 2019
Revenue from Contracts with Customers [Abstract]  
Revenue from Contracts with Customers
(13)
Revenue from Contracts with Customers

The majority of the Company's revenue-generating transactions are not subject to ASC Topic 606, including revenue generated from financial instruments, such as loans and investment securities which are presented in our consolidated income statements as components of net interest income. All of the Company's revenue from contracts with customers in the scope of ASC 606 is recognized within non-interest income, with the exception of net gains and losses from sales of foreclosed real estate, which is recognized within non-interest expense. The following table presents revenues subject to ASC 606 for the three months ended September 30, 2019 and 2018, respectively.

  
For the three months ended
September 30,
 
(In thousands)
 
2019
  
2018
 
Service charges on deposit accounts
      
Insufficient funds fees
 
$
1,019
  
$
930
 
Deposit related fees
  
38
   
37
 
ATM/point of sale fees
  
68
   
70
 
Total service charges
  
1,125
   
1,037
 
Interchange fee income
        
Debit card interchange fees
  
743
   
640
 
E-commerce fee income
        
E-commerce fees
  
35
   
37
 
Investment services income
        
Investment services
  
145
   
115
 
Sales of assets
        
Net gain (loss) on sale of foreclosed real estate
  
76
   
(9
)

Service Charges on Deposit Accounts: The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which included services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are recognized at the time the maintenance occurs. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer's account balance.

Debit Card Interchange Fee Income: The Company earns interchange fees from debit cardholder transactions conducted through the Visa DPS payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to cardholder.

E-commerce income:  The Company earns fees for merchant transaction processing services provided to its business customers by a third party service provider.  The fees represent a percentage of the monthly transaction activity net of related costs, and are received from the service provider on a monthly basis.

Investment Services Income: The Company earns fees from investment brokerage services provided to its customers by a third-party service provider. The Company receives commissions from the third-party service provider on a monthly basis based upon customer activity for the month. The Company (i) acts as an agent in arranging the relationship between the customer and the third-party service provider and (ii) does not control the services rendered to the customers. Investment brokerage fees are presented net of related costs.

Net Gains/Losses on Sales of Foreclosed Real Estate: The Company records a gain or loss from the sale of foreclosed real estate when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of foreclosed real estate to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the foreclosed real estate asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.
v3.19.3
Loans and Allowance for Loan Losses (Tables)
3 Months Ended
Sep. 30, 2019
Loans and Allowance for Loan Losses [Abstract]  
Major Loan Segments and Classes
Loan segments and classes at September 30, 2019 and June 30, 2019 are summarized as follows:
(In thousands)
 
September 30, 2019
  
June 30, 2019
 
Residential real estate:
      
Residential real estate
 
$
267,245
  
$
267,802
 
Residential construction and land
  
8,377
   
7,462
 
Multi-family
  
25,021
   
24,592
 
Commercial real estate:
        
Commercial real estate
  
332,185
   
329,668
 
Commercial construction
  
48,751
   
36,361
 
Consumer loan:
        
Home equity
  
23,288
   
23,185
 
Consumer installment
  
5,677
   
5,481
 
Commercial loans
  
107,632
   
103,554
 
Total gross loans
  
818,176
   
798,105
 
Allowance for loan losses
  
(13,444
)
  
(13,200
)
Unearned origination fees and costs, net
  
807
   
833
 
Loans receivable, net
 
$
805,539
  
$
785,738
 
Loan Balances by Internal Credit Quality Indicator
Loan balances by internal credit quality indicator at September 30, 2019 are shown below.

(In thousands)
 
Performing
  
Watch
  
Special Mention
  
Substandard
  
Total
 
Residential real estate
 
$
264,257
  
$
496
  
$
209
  
$
2,283
  
$
267,245
 
Residential construction and land
  
8,377
   
-
   
-
   
-
   
8,377
 
Multi-family
  
23,127
   
-
   
1,759
   
135
   
25,021
 
Commercial real estate
  
321,306
   
161
   
7,569
   
3,149
   
332,185
 
Commercial construction
  
43,957
   
-
   
4,692
   
102
   
48,751
 
Home equity
  
22,624
   
75
   
-
   
589
   
23,288
 
Consumer installment
  
5,659
   
18
   
-
   
-
   
5,677
 
Commercial loans
  
105,389
   
-
   
1,936
   
307
   
107,632
 
Total gross loans
 
$
794,697
  
$
750
  
$
16,165
  
$
6,564
  
$
818,176
 

Loan balances by internal credit quality indicator at June 30, 2019 are shown below.

(In thousands)
 
Performing
  
Watch
  
Special
Mention
  
Substandard
  
Total
 
Residential real estate
 
$
264,138
  
$
874
  
$
86
  
$
2,704
  
$
267,802
 
Residential construction and land
  
7,462
   
-
   
-
   
-
   
7,462
 
Multi-family
  
22,544
   
137
   
1,835
   
76
   
24,592
 
Commercial real estate
  
318,703
   
616
   
7,435
   
2,914
   
329,668
 
Commercial construction
  
36,259
   
-
   
-
   
102
   
36,361
 
Home equity
  
22,392
   
20
   
-
   
773
   
23,185
 
Consumer installment
  
5,461
   
14
   
-
   
6
   
5,481
 
Commercial loans
  
102,103
   
261
   
1,082
   
108
   
103,554
 
Total gross loans
 
$
779,062
  
$
1,922
  
$
10,438
  
$
6,683
  
$
798,105
 
Delinquent and/or Nonaccrual Loans by Past Due Status
The following table sets forth information regarding delinquent and/or nonaccrual loans at September 30, 2019:

(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
 
$
1,906
  
$
212
  
$
986
  
$
3,104
  
$
264,141
  
$
267,245
  
$
2,026
 
Residential construction and land
  
-
   
-
   
-
   
-
   
8,377
   
8,377
   
-
 
Multi-family
  
-
   
-
   
134
   
134
   
24,887
   
25,021
   
134
 
Commercial real estate
  
1,083
   
474
   
114
   
1,671
   
330,514
   
332,185
   
847
 
Commercial construction
  
-
   
-
   
-
   
-
   
48,751
   
48,751
   
-
 
Home equity
  
124
   
75
   
243
   
442
   
22,846
   
23,288
   
268
 
Consumer installment
  
66
   
18
   
-
   
84
   
5,593
   
5,677
   
-
 
Commercial loans
  
174
   
-
   
237
   
411
   
107,221
   
107,632
   
247
 
Total gross loans
 
$
3,353
  
$
779
  
$
1,714
  
$
5,846
  
$
812,330
  
$
818,176
  
$
3,522
 

The following table sets forth information regarding delinquent and/or nonaccrual loans at June 30, 2019:

(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
 
$
2,144
  
$
870
  
$
1,385
  
$
4,399
  
$
263,403
  
$
267,802
  
$
2,474
 
Residential construction and land
  
-
   
-
   
-
   
-
   
7,462
   
7,462
   
-
 
Multi-family
  
1
   
137
   
-
   
138
   
24,454
   
24,592
   
-
 
Commercial real estate
  
280
   
1,108
   
102
   
1,490
   
328,178
   
329,668
   
598
 
Commercial construction
  
-
   
-
   
-
   
-
   
36,361
   
36,361
   
-
 
Home equity
  
16
   
136
   
309
   
461
   
22,724
   
23,185
   
452
 
Consumer installment
  
32
   
14
   
6
   
52
   
5,429
   
5,481
   
6
 
Commercial loans
  
430
   
342
   
28
   
800
   
102,754
   
103,554
   
108
 
Total gross loans
 
$
2,903
  
$
2,607
  
$
1,830
  
$
7,340
  
$
790,765
  
$
798,105
  
$
3,638
 
Nonaccrual Loans, Interest Income Data
The table below details additional information related to nonaccrual loans for the three months ended September 30:

(In thousands)
 
2019
  
2018
 
Interest income that would have been recorded if loans had been performing in accordance with original terms
 
$
101
  
$
71
 
Interest income that was recorded on nonaccrual loans
  
50
   
32
 
Impaired Loans by Loan Portfolio Class
The tables below detail additional information on impaired loans at the date or periods indicated:

  
At September 30, 2019
  
For the three months ended
September 30, 2019
 
(In thousands)
 
Recorded
Investment
  
Unpaid
Principal
  
Related
Allowance
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
With no related allowance recorded:
          
Residential real estate
 
$
674
  
$
674
  
$
-
  
$
692
  
$
30
 
Commercial real estate
  
697
   
697
   
-
   
704
   
7
 
Home equity
  
153
   
153
   
-
   
266
   
-
 
Commercial loans
  
135
   
135
   
-
   
137
   
-
 
Total impaired loans with no allowance
  
1,659
   
1,659
   
-
   
1,799
   
37
 
                     
With an allowance recorded:
                    
Residential real estate
  
830
   
830
   
91
   
1,087
   
24
 
Commercial construction
  
102
   
102
   
2
   
102
   
-
 
Home equity
  
321
   
321
   
73
   
330
   
5
 
Commercial loans
  
130
   
130
   
12
   
130
   
1
 
Total impaired loans with allowance
  
1,383
   
1,383
   
178
   
1,649
   
30
 
                     
Total impaired:
                    
Residential real estate
  
1,504
   
1,504
   
91
   
1,779
   
54
 
Commercial real estate
  
697
   
697
   
-
   
704
   
7
 
Commercial construction
  
102
   
102
   
2
   
102
   
-
 
Home equity
  
474
   
474
   
73
   
596
   
5
 
Commercial loans
  
265
   
265
   
12
   
267
   
1
 
Total impaired loans
 
$
3,042
  
$
3,042
  
$
178
  
$
3,448
  
$
67
 

  
At June 30, 2019
  
For the three months ended
September 30, 2018
 
(In thousands)
 
Recorded
Investment
  
Unpaid
Principal
  
Related
Allowance
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
With no related allowance recorded:
          
Residential real estate
 
$
727
  
$
727
  
$
-
  
$
7
  
$
3
 
Commercial real estate
  
717
   
717
   
-
   
796
   
8
 
Home equity
  
309
   
309
   
-
   
224
   
-
 
Commercial loans
  
141
   
141
   
-
   
157
   
-
 
Impaired loans with no allowance
  
1,894
   
1,894
   
-
   
1,184
   
11
 
                     
With an allowance recorded:
                    
Residential real estate
  
1,420
   
1,420
   
188
   
1,855
   
23
 
Commercial real estate
  
-
   
-
   
-
   
365
   
-
 
Commercial construction
  
102
   
102
   
2
   
176
   
-
 
Home equity
  
348
   
348
   
59
   
322
   
4
 
Commercial Loans
  
130
   
130
   
13
   
-
   
-
 
Impaired loans with allowance
  
2,000
   
2,000
   
262
   
2,718
   
27
 
                     
Total impaired:
                    
Residential real estate
  
2,147
   
2,147
   
188
   
1,862
   
26
 
Commercial real estate
  
717
   
717
   
-
   
1,161
   
8
 
Commercial construction
  
102
   
102
   
2
   
176
   
-
 
Home equity
  
657
   
657
   
59
   
546
   
4
 
Commercial loans
  
271
   
271
   
13
   
157
   
-
 
Total impaired loans
 
$
3,894
  
$
3,894
  
$
262
  
$
3,902
  
$
38
 
Activity and Allocation of Allowance for Loan Losses
The following tables set forth the activity and allocation of the allowance for loan losses by loan category during and at the periods indicated.  The allowance is allocated to each loan category based on historical loss experience and economic conditions.

  
Activity for the three months ended September 30, 2019
 
(In thousands)
 
Balance at
June 30, 2019
  
Charge-offs
  
Recoveries
  
Provision
  
Balance at
September 30,
2019
 
Residential real estate
 
$
2,026
  
$
53
  
$
-
  
$
(461
)
 
$
1,512
 
Residential construction and land
  
87
   
-
   
-
   
12
   
99
 
Multi-family
  
180
   
-
   
-
   
25
   
205
 
Commercial real estate
  
7,110
   
-
   
-
   
49
   
7,159
 
Commercial construction
  
872
   
-
   
-
   
419
   
1,291
 
Home equity
  
314
   
-
   
-
   
(7
)
  
307
 
Consumer installment
  
250
   
109
   
24
   
154
   
319
 
Commercial loans
  
2,361
   
199
   
30
   
360
   
2,552
 
Total
 
$
13,200
  
$
361
  
$
54
  
$
551
  
$
13,444
 

  
Allowance for Loan Losses
  
Loans Receivable
 
  
Ending Balance At September 30, 2019
Impairment Analysis
  
Ending Balance At September 30, 2019
Impairment Analysis
 
(In thousands)
 
Individually
Evaluated
  
Collectively
Evaluated
  
Individually
Evaluated
  
Collectively
Evaluated
 
Residential real estate
 
$
91
  
$
1,421
  
$
1,504
  
$
265,741
 
Residential construction and land
  
-
   
99
   
-
   
8,377
 
Multi-family
  
-
   
205
   
-
   
25,021
 
Commercial real estate
  
-
   
7,159
   
697
   
331,488
 
Commercial construction
  
2
   
1,289
   
102
   
48,649
 
Home equity
  
73
   
234
   
474
   
22,814
 
Consumer installment
  
-
   
319
   
-
   
5,677
 
Commercial loans
  
12
   
2,540
   
265
   
107,367
 
Unallocated
  
-
   
-
   
-
   
-
 
Total
 
$
178
  
$
13,266
  
$
3,042
  
$
815,134
 

  
Activity for the three months ended September 30, 2018
 
(In thousands)
 
Balance at
June 30, 2018
  
Charge-offs
  
Recoveries
  
Provision
  
Balance at
September 30,
2018
 
Residential real estate
 
$
2,116
  
$
21
  
$
13
  
$
-
  
$
2,108
 
Residential construction and land
  
114
   
-
   
-
   
2
   
116
 
Multi-family
  
162
   
-
   
-
   
9
   
171
 
Commercial real estate
  
5,979
   
-
   
-
   
44
   
6,023
 
Commercial construction
  
950
   
-
   
-
   
7
   
957
 
Home equity
  
317
   
-
   
-
   
-
   
317
 
Consumer installment
  
224
   
99
   
37
   
67
   
229
 
Commercial loans
  
2,128
   
-
   
-
   
5
   
2,133
 
Unallocated
  
34
   
-
   
-
   
220
   
254
 
Total
 
$
12,024
  
$
120
  
$
50
  
$
354
  
$
12,308
 

  
Allowance for Loan Losses
  
Loans Receivable
 
  
Ending Balance June 30, 2019
Impairment Analysis
  
Ending Balance June 30, 2019
Impairment Analysis
 
(In thousands)
 
Individually
Evaluated
  
Collectively
Evaluated
  
Individually
Evaluated
  
Collectively
Evaluated
 
Residential real estate
 
$
188
  
$
1,838
  
$
2,147
  
$
265,655
 
Residential construction and land
  
-
   
87
   
-
   
7,462
 
Multi-family
  
-
   
180
   
-
   
24,592
 
Commercial real estate
  
-
   
7,110
   
717
   
328,951
 
Commercial construction
  
2
   
870
   
102
   
36,259
 
Home equity
  
59
   
255
   
657
   
22,528
 
Consumer installment
  
-
   
250
   
-
   
5,481
 
Commercial loans
  
13
   
2,348
   
271
   
103,283
 
Unallocated
  
-
   
-
   
-
   
-
 
Total
 
$
262
  
$
12,938
  
$
3,894
  
$
794,211
 
Foreclosed Real Estate
The following table sets forth information regarding FRE at September 30, 2019 and June 30, 2019:

(in thousands)
 
September 30, 2019
  
June 30, 2019
 
Residential real estate
 
$
303
  
$
53
 
Total foreclosed real estate
 
$
303
  
$
53
 
v3.19.3
Employee Benefit Plans (Tables)
3 Months Ended
Sep. 30, 2019
Employee Benefit Plans [Abstract]  
Components of Net Periodic Pension Costs
The components of net periodic pension cost related to the defined benefit pension plan for the three months ended September 30, 2019 and 2018 were as follows:

  
Three months ended
September 30,
 
(In thousands)
 
2019
  
2018
 
Interest cost
 
$
49
  
$
54
 
Expected return on plan assets
  
(63
)
  
(59
)
Amortization of net loss
  
40
   
35
 
Net periodic pension cost
 
$
26
  
$
30
 
v3.19.3
Operating leases (Tables)
3 Months Ended
Sep. 30, 2019
Operating leases [Abstract]  
Quantitative Data Related to Operating Leases
The following includes quantitative data related to the Company’s operating leases as of September 30, 2019:

(In thousands, except weighted-average information).
   
Right-of-use assets
 
$
1,770
 
Lease liabilities
 
$
1,773
 
     
Operating lease cost
 
$
72
 
Variable lease cost
 
$
10
 
Operating outgoing cash flows from operating leases
 
$
78
 
Right-of-use assets obtained in exchange for new operating lease liabilities
 
$
1,840
 
Weighted-average remaining lease term (Years)
  
7.8
 
Weighted-average discount rate
  
2.50
%
Undiscounted Cash Flows of Operating Lease Liabilities
The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding CAM charges as of September 30, 2019:

(in thousands)
   
Within the twelve months ended September 30,
   
2020
 
$
288
 
2021
  
283
 
2022
  
245
 
2023
  
205
 
2024
  
218
 
Thereafter
  
722
 
Total undiscounted cash flow
  
1,961
 
Less net present value adjustment
  
(188
)
Lease Liability
 
$
1,773
 
v3.19.3
Stock-Based Compensation
3 Months Ended
Sep. 30, 2019
Stock-Based Compensation [Abstract]  
Stock-Based Compensation
(11)
Stock-Based Compensation

Phantom Stock Option Plan and Long-term Incentive Plan

The Greene County Bancorp, Inc. 2011 Phantom Stock Option and Long-term Incentive Plan (the “Plan”) was adopted effective July 1, 2011, to promote the long-term financial success of the Company and its subsidiaries by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company’s shareholders. The Plan is intended to provide benefits to employees and directors of the Company or any subsidiary as designated by the Compensation Committee of the Board of Directors of the Company (“Committee”).   A phantom stock option represents the right to receive a cash payment on the date the award vests. The Plan is more fully described in Note 11 of the consolidated financial statements and notes thereto for the year ended June 30, 2019.

A summary of the Company’s phantom stock option activity and related information for the Plan for the three months ended September 30, 2019 and 2018 is as follows:

  
2019
  
2018
 
Number of options outstanding at beginning of year
  
1,711,600
   
1,634,160
 
Options granted
  
614,700
   
592,700
 
Options forfeited
  
(7,000
)
  
-
 
Options paid in cash
  
-
   
(484,760
)
Number of options outstanding at period end
  
2,319,300
   
1,742,100
 

(In thousands)
 
2019
  
2018
 
Cash paid out on options vested
 
$
-
  
$
1,704
 
Compensation expense recognized
  
645
   
516
 

The total liability for the Plan was $4.8 million and $4.1 million at September 30, 2019 and June 30, 2019, respectively, and is included in accrued expenses and other liabilities.
v3.19.3
Earnings Per Share
3 Months Ended
Sep. 30, 2019
Earnings Per Share [Abstract]  
Earnings Per Share
(7)
Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period.  Diluted earnings per share is computed in a manner similar to that of basic earnings per share except that the weighted-average number of common shares outstanding is increased to include the number of incremental common shares that would have been outstanding under the treasury stock method if all potentially dilutive common shares (such as stock options) issued became vested during the period.  There were no dilutive or anti-dilutive securities or contracts outstanding during the three months ended September 30, 2019 and 2018.

  
For the three months ended September 30,
 
  
2019
  
2018
 
       
Net Income
 
$
4,863,000
  
$
4,380,000
 
Weighted Average Shares – Basic
  
8,537,814
   
8,537,814
 
Weighted Average Shares - Diluted
  
8,537,814
   
8,537,814
 
         
Earnings per share - Basic
 
$
0.57
  
$
0.51
 
Earnings per share - Diluted
 
$
0.57
  
$
0.51
 
v3.19.3
Use of Estimates
3 Months Ended
Sep. 30, 2019
Use of Estimates [Abstract]  
Use of Estimates
(3)
Use of Estimates

The preparation of consolidated 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 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 through earnings.
v3.19.3
Employee Benefit Plans (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Jun. 30, 2019
Defined Benefit Plan [Member]      
Components of Net Periodic Pension Costs [Abstract]      
Interest cost $ 49 $ 54  
Expected return on plan assets (63) (59)  
Amortization of net loss 40 35  
Net periodic pension cost 26 30  
Supplemental Executive Retirement Plan [Member]      
Components of Net Periodic Pension Costs [Abstract]      
Net periodic pension cost 205 $ 158  
Postemployment benefits liability $ 5,500   $ 5,000
v3.19.3
Fair Value Measurements and Fair Value of Financial Instruments, Carrying Amount and Estimated Fair Value (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Jun. 30, 2019
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Securities available-for-sale $ 159,263 $ 122,728
Equity securities 251 253
Borrowings from Federal Home Loan Bank 13,600 13,600
Carrying Amount [Member]    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Cash and cash equivalents 110,852 29,538
Long term certificate of deposit 3,626 2,875
Securities available-for-sale 159,263 122,728
Securities held-to-maturity 304,582 304,208
Equity securities 251 253
Federal Home Loan Bank stock 1,399 1,759
Net loans receivable 805,539 785,738
Accrued interest receivable 5,970 5,853
Deposits 1,263,210 1,120,569
Borrowings from Federal Home Loan Bank 13,600 21,600
Accrued interest payable 124 110
Fair Value [Member]    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Cash and cash equivalents 110,852 29,538
Long term certificate of deposit 3,626 2,875
Securities available-for-sale 159,263 122,728
Securities held-to-maturity 315,322 313,613
Equity securities 251 253
Federal Home Loan Bank stock 1,399 1,759
Net loans receivable 805,814 781,614
Accrued interest receivable 5,970 5,853
Deposits 1,263,336 1,120,632
Borrowings from Federal Home Loan Bank 13,572 21,534
Accrued interest payable 124 110
Fair Value [Member] | Level 1 [Member]    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Cash and cash equivalents 110,852 29,538
Long term certificate of deposit 3,626 2,875
Securities available-for-sale 4,543 1,550
Securities held-to-maturity 0 0
Equity securities 251 253
Federal Home Loan Bank stock 0 0
Net loans receivable 0 0
Accrued interest receivable 0 0
Deposits 0 0
Borrowings from Federal Home Loan Bank 0 0
Accrued interest payable 0 0
Fair Value [Member] | Level 2 [Member]    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Cash and cash equivalents 0 0
Long term certificate of deposit 0 0
Securities available-for-sale 154,720 121,178
Securities held-to-maturity 315,322 313,613
Equity securities 0 0
Federal Home Loan Bank stock 1,399 1,759
Net loans receivable 0 0
Accrued interest receivable 5,970 5,853
Deposits 1,263,336 1,120,632
Borrowings from Federal Home Loan Bank 13,572 21,534
Accrued interest payable 124 110
Fair Value [Member] | Level 3 [Member]    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Cash and cash equivalents 0 0
Long term certificate of deposit 0 0
Securities available-for-sale 0 0
Securities held-to-maturity 0 0
Equity securities 0 0
Federal Home Loan Bank stock 0 0
Net loans receivable 805,814 781,614
Accrued interest receivable 0 0
Deposits 0 0
Borrowings from Federal Home Loan Bank 0 0
Accrued interest payable $ 0 $ 0
v3.19.3
Operating leases, Quantitative Data (Details)
$ in Thousands
3 Months Ended
Sep. 30, 2019
USD ($)
Quantitative Data Related to Operating Leases [Abstract]  
Right-of-use assets $ 1,770
Lease liabilities 1,773
Operating lease cost 72
Variable lease cost 10
Operating outgoing cash flows from operating leases 78
Right-of-use assets obtained in exchange for new operating lease liabilities $ 1,840
Weighted-average remaining lease term (Years) 7 years 9 months 18 days
Weighted-average discount rate 2.50%
v3.19.3
Loans and Allowance for Loan Losses, Major Loan Segments and Classes (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Jun. 30, 2019
Sep. 30, 2018
Jun. 30, 2018
Major Loan Segments and Classes [Abstract]        
Total gross loans $ 818,176 $ 798,105    
Allowance for loan losses (13,444) (13,200) $ (12,308) $ (12,024)
Unearned origination fees and costs, net 807 833    
Net loans receivable 805,539 785,738    
Residential Real Estate [Member] | Residential Real Estate [Member]        
Major Loan Segments and Classes [Abstract]        
Total gross loans 267,245 267,802    
Allowance for loan losses (1,512) (2,026) (2,108) (2,116)
Residential Real Estate [Member] | Construction and Land [Member]        
Major Loan Segments and Classes [Abstract]        
Total gross loans 8,377 7,462    
Allowance for loan losses (99) (87) (116) (114)
Residential Real Estate [Member] | Multi-family [Member]        
Major Loan Segments and Classes [Abstract]        
Total gross loans 25,021 24,592    
Allowance for loan losses (205) (180) (171) (162)
Commercial Real Estate [Member] | Real Estate [Member]        
Major Loan Segments and Classes [Abstract]        
Total gross loans 332,185 329,668    
Allowance for loan losses (7,159) (7,110) (6,023) (5,979)
Commercial Real Estate [Member] | Construction [Member]        
Major Loan Segments and Classes [Abstract]        
Total gross loans 48,751 36,361    
Allowance for loan losses (1,291) (872) (957) (950)
Consumer Loan [Member] | Home Equity [Member]        
Major Loan Segments and Classes [Abstract]        
Total gross loans 23,288 23,185    
Allowance for loan losses (307) (314) (317) (317)
Consumer Loan [Member] | Consumer Installment [Member]        
Major Loan Segments and Classes [Abstract]        
Total gross loans 5,677 5,481    
Allowance for loan losses (319) (250) (229) (224)
Commercial Loans [Member]        
Major Loan Segments and Classes [Abstract]        
Total gross loans 107,632 103,554    
Allowance for loan losses $ (2,552) $ (2,361) $ (2,133) $ (2,128)
v3.19.3
Loans and Allowance for Loan Losses, Impaired Loans By Loan Portfolio Class (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Jun. 30, 2019
With no related allowance recorded [Abstract]      
Recorded investment $ 1,659   $ 1,894
Unpaid principal 1,659   1,894
Average recorded investment 1,799 $ 1,184  
Interest income recognized 37 11  
With an allowance recorded [Abstract]      
Recorded investment 1,383   2,000
Unpaid principal 1,383   2,000
Related allowance 178   262
Average recorded investment 1,649 2,718  
Interest income recognized 30 27  
Total impaired [Abstract]      
Recorded investment 3,042   3,894
Unpaid principal 3,042   3,894
Related allowance 178   262
Average recorded investment 3,448 3,902  
Interest income recognized 67 38  
Residential Real Estate [Member] | Residential Real Estate [Member]      
With no related allowance recorded [Abstract]      
Recorded investment 674   727
Unpaid principal 674   727
Average recorded investment 692 7  
Interest income recognized 30 3  
With an allowance recorded [Abstract]      
Recorded investment 830   1,420
Unpaid principal 830   1,420
Related allowance 91   188
Average recorded investment 1,087 1,855  
Interest income recognized 24 23  
Total impaired [Abstract]      
Recorded investment 1,504   2,147
Unpaid principal 1,504   2,147
Related allowance 91   188
Average recorded investment 1,779 1,862  
Interest income recognized 54 26  
Commercial Real Estate [Member] | Real Estate [Member]      
With no related allowance recorded [Abstract]      
Recorded investment 697   717
Unpaid principal 697   717
Average recorded investment 704 796  
Interest income recognized 7 8  
With an allowance recorded [Abstract]      
Recorded investment     0
Unpaid principal     0
Related allowance 0   0
Average recorded investment   365  
Interest income recognized   0  
Total impaired [Abstract]      
Recorded investment 697   717
Unpaid principal 697   717
Related allowance 0   0
Average recorded investment 704 1,161  
Interest income recognized 7 8  
Commercial Real Estate [Member] | Construction [Member]      
With an allowance recorded [Abstract]      
Recorded investment 102   102
Unpaid principal 102   102
Related allowance 2   2
Average recorded investment 102 176  
Interest income recognized 0 0  
Total impaired [Abstract]      
Recorded investment 102   102
Unpaid principal 102   102
Related allowance 2   2
Average recorded investment 102 176  
Interest income recognized 0 0  
Consumer Loan [Member] | Home Equity [Member]      
With no related allowance recorded [Abstract]      
Recorded investment 153   309
Unpaid principal 153   309
Average recorded investment 266 224  
Interest income recognized 0 0  
With an allowance recorded [Abstract]      
Recorded investment 321   348
Unpaid principal 321   348
Related allowance 73   59
Average recorded investment 330 322  
Interest income recognized 5 4  
Total impaired [Abstract]      
Recorded investment 474   657
Unpaid principal 474   657
Related allowance 73   59
Average recorded investment 596 546  
Interest income recognized 5 4  
Commercial Loans [Member]      
With no related allowance recorded [Abstract]      
Recorded investment 135   141
Unpaid principal 135   141
Average recorded investment 137 157  
Interest income recognized 0 0  
With an allowance recorded [Abstract]      
Recorded investment 130   130
Unpaid principal 130   130
Related allowance 12   13
Average recorded investment 130 0  
Interest income recognized 1 0  
Total impaired [Abstract]      
Recorded investment 265   271
Unpaid principal 265   271
Related allowance 12   $ 13
Average recorded investment 267 157  
Interest income recognized $ 1 $ 0  
v3.19.3
Impact of Recent Accounting Pronouncements (Policies)
3 Months Ended
Sep. 30, 2019
Impact of Recent Accounting Pronouncements [Abstract]  
Impact of Recent Accounting Pronouncements
Accounting Pronouncements Recently Adopted

The following accounting standards have been adopted in the first quarter ended September 30, 2019:

On July 1, 2019, the Company adopted ASU 2016-02 Leases and all subsequent amendments (collectively, “ASU 2016-02”). The objective of this ASU is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements to meet that objective.  The main difference between previous GAAP and this ASU is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP.  Under this new guidance, a lessee should recognize in the statement of financial position a liability to make lease payments and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term.  The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP.  ASU 2016-02 required a modified retrospective transition approach, applying the new standard to all leases existing at the date of initial application. The Company elected to use the effective date, July 1, 2019, as our date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before July 1, 2019.  In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. Under ASU 2016-02, leases are classified as finance or operating, with the classification affecting the pattern and classification of expense recognition in the income statement. The Company’s leases, consisting of property leases for certain of our bank branches, are classified as operating leases. Operating lease ROU assets and liabilities were recognized in the amount of $1.7 million at commencement date, with no adjustment to retained earnings, based on the present value of lease payments over the lease term. As these leases do not provide an implicit rate, we use our incremental borrowing rate from the Federal Home Loan Bank of New York in determining the present value of lease payments. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for lease payments is recognized on a straight-line basis over the lease term. ASU 2016-02 did not have a material impact on the consolidated statements of income or the consolidated statements of cash flows.

On July 1, 2019, the Company adopted ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20) related to premium amortization on purchased callable debt securities. This Update shortens the amortization period for certain callable debt securities held at a premium.  Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity.  For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  Early adoption was permitted, including adoption in an interim period.  If an entity early adopted the amendments in an interim period, any adjustments were reflected as of the beginning of the fiscal year that includes that interim period.  An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption.  The adoption of this guidance did not have a material impact on our consolidated results of operations or financial position.
 
Accounting Pronouncements to be adopted in future periods

In June 2016, the FASB issued an Update (ASU 2016-13) to its guidance on “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 requires credit losses on most financial assets measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected credit loss (CECL) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications unless reasonable expectation of a troubled debt restructuring exists) from the date of initial recognition of that instrument. The ASU also replaces the current accounting model for purchased credit impaired loans and debt securities. The allowance for credit losses for purchased financial assets with a more-than insignificant amount of credit deterioration since origination (“PCD assets”), should be determined in a similar manner to other financial assets measured on an amortized cost basis. However, upon initial recognition, the allowance for credit losses is added to the purchase price (“gross up approach”) to determine the initial amortized cost basis. The subsequent accounting for PCD financial assets is the same expected loss model described above. Further, the ASU made certain targeted amendments to the existing impairment model for available-for-sale (AFS) debt securities. For an AFS debt security for which there is neither the intent nor a more-likely-than-not requirement to sell, an entity will record credit losses as an allowance rather than a write-down of the amortized cost basis.  An entity will apply the amendments in this Update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which aligns the implementation date for nonpublic entities’ annual financial statements with the implementation date for their interim financial statements and clarifies the scope of the guidance in the amendments in ASU 2016-13.  In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.  ASU 2019-04 clarifies or addresses stakeholders’ specific issues about certain aspects of the amendments in Update 2016-13 related to measuring the allowance for loan losses under the new guidance. The effective dates and transition requirements for the amendments related to this Update are the same as the effective dates and transition requirements in Update 2016-13. The Company is currently evaluating the potential impact on our consolidated results of operations or financial position. The initial adjustment will not be reported in earnings and therefore will not have any material impact on our consolidated results of operations, but it is expected that it will have an impact on our consolidated financial position at the date of adoption of this Update.  At this time, we have not calculated the estimated impact that this Update will have on our Allowance for Loan Losses, however, we anticipate it will have a significant impact on the methodology process we utilize to calculate the allowance.  A vendor has been selected and alternative methodologies are currently being considered.  Data requirements and integrity are being reviewed and enhancements incorporated into standard processes.  For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, excluding small reporting companies such as the Company, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  On October 16, 2019, FASB approved a proposed ASU, to be issued in mid-November 2019, to topic 326, Financial Instruments – Credit Losses which amends the implementation effective date for small reporting companies, such as the Company, and non-public business entities, for fiscal years beginning after December 15, 2022. All entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.   The Company is in the early stages of evaluation and implementation of the guidance.
 
In August 2018, the FASB issued an Update (ASU 2018-13) to its guidance on “Fair Value Measurement (Topic 820)”.  This update modifies the disclosure requirements on fair value measurements. The following disclosure requirements were removed from Topic 820:  (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (2) the policy for timing of transfers between levels; (3) the valuation processes for Level 3 fair value measurements; and (4) for nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting period.  The following disclosure requirements were modified in Topic 820: (1) in lieu of a rollforward for Level 3 fair value measurements, a nonpublic entity is required to disclose transfers into and out of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities; (2) for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and (3) the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The following disclosure requirements were added to Topic 820; however, the disclosures are not required for non-public entities: (1) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.  In addition, the amendments eliminate at a minimum from the phrase “an entity shall disclose at a minimum” to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements. The amendments in ASU No. 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date.  Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU No. 2018-13 and delay adoption of the additional disclosures until their effective date.  The adoption of this guidance is not expected to have a material impact on our consolidated results of operations or financial position.

In August 2018, the FASB has issued an Update (ASU No. 2018-14), “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans”, that applies to all employers that sponsor defined benefit pension or other postretirement plans.  The amendments modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The following disclosure requirements were removed from Subtopic 715-20: (1) the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year; (2) the amount and timing of plan assets expected to be returned to the employer; (3) the disclosures related to the June 2001 amendments to the Japanese Welfare Pension Insurance Law; related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan; (4) for nonpublic entities, the reconciliation of the opening balances to the closing balances of plan assets measured on a recurring basis in Level 3 of the fair value hierarchy. However, nonpublic entities will be required to disclose separately the amounts of transfers into and out of Level 3 of the fair value hierarchy and purchases of Level 3 plan assets; and (5) for public entities, the effects of a one-percentage-point change in assumed health care cost trend rates on the (a) aggregate of the service and interest cost components of net periodic benefit costs and (b) benefit obligation for postretirement health care benefits. The following disclosure requirements were added to Subtopic 715-20: (1) the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates; and (2) an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The amendments also clarify the disclosure requirements in paragraph 715-20-50-3, which state that the following information for defined benefit pension plans should be disclosed: (1) the projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets; and (2) the accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets.  ASU No. 2018-14 is effective for fiscal years ending after December 15, 2020, for public business entities and for fiscal years ending after December 15, 2021, for all other entities. Early adoption is permitted for all entities. The adoption of this guidance is not expected to have a material impact on our consolidated results of operations or financial position.

In April 2019, the FASB issued an Update (ASU 2019-04), Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.  The amendments to Topic 326 and other topics in this Update include items related to the amendments in Update 2016-13 discussed at the June 2018 and November 2018 Credit Losses TRG meetings. The amendments clarify or address stakeholders’ specific issues about certain aspects of the amendments in Update 2016-13 on a number of different topics, including the following:  Accrued Interest, Transfers between Classifications or Categories for Loans and Debt Securities, Recoveries, Consideration of Prepayments in Determining the Effective Interest Rate, Consideration of Estimated Costs to Sell When Foreclosure Is Probable, Vintage Disclosures— Line-of-Credit Arrangements Converted to Term Loans, and Contractual Extensions and Renewals.   The ASU also covered a number of issues that related to hedge accounting including: Partial-Term Fair Value Hedges of Interest Rate Risk, Amortization of Fair Value Hedge Basis Adjustments, Disclosure of Fair Value Hedge Basis Adjustments, Consideration of the Hedged Contractually Specified Interest Rate under the Hypothetical Derivative Method, Scoping for Not-for-Profit Entities, Hedge Accounting Provisions Applicable to Certain Private Companies and Not-for-Profit Entities, Application of a First-Payments-Received Cash Flow Hedging Technique to Overall Cash Flows on a Group of Variable Interest Payments, and Transition Guidance  For Codification Improvements specific to ASU 2016-01. The following topics were covered within ASU 2019-04: Scope Clarifications, Held-to-Maturity Debt Securities Fair Value Disclosures, Applicability of Topic 820 to the Measurement Alternative, and Remeasurement of Equity Securities at Historical Exchange Rates. ASU 2019-04 has various implementation dates dependent on a number of factors as it pertains to the above items. The Company is in the early stages of evaluation of the guidance.
v3.19.3
Subsequent events
3 Months Ended
Sep. 30, 2019
Subsequent events [Abstract]  
Subsequent events
(15)
Subsequent events

On October 15, 2019, the Board of Directors declared a cash dividend for the quarter ended September 30, 2019 of $0.11 per share on Greene County Bancorp, Inc.’s common stock.  The dividend reflects an annual cash dividend rate of $0.44 per share, which was the same rate as the dividend declared during the previous quarter.  The dividend will be payable to stockholders of record as of November 15, 2019, and will be paid on November 29, 2019.  The MHC does not intend to waive its receipt of this dividend.
v3.19.3
Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($)
$ in Thousands
Common Stock [Member]
Additional Paid-In Capital [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Loss [Member]
Treasury Stock [Member]
Total
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Impact of Adopting ASU | ASU 2016-01 [Member] [1]     $ 114 $ (114) [2]   $ 0
Balance at Jun. 30, 2018 $ 861 $ 11,017 86,213 (1,623) $ (277) 96,191
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Dividends declared     (854)     (854)
Net income     4,380     4,380
Other comprehensive loss, net of taxes       (76)   (76)
Balance at Sep. 30, 2018 861 11,017 89,853 (1,813) (277) 99,641
Balance at Jun. 30, 2019 861 11,017 101,774 (1,006) (277) 112,369
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Dividends declared     (432)     (432)
Net income     4,863     4,863
Other comprehensive loss, net of taxes       (271)   (271)
Balance at Sep. 30, 2019 $ 861 $ 11,017 $ 106,205 $ (1,277) $ (277) $ 116,529
[1] See Note 9 Impact of Recent Accounting Pronouncements - cumulative effect of change in measurement of equity securities.
[2] Adoption of ASU 2016-01 - cumulative effect of change in measurement of equity securities.
v3.19.3
Consolidated Statements of Financial Condition (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
Sep. 30, 2019
Jun. 30, 2019
ASSETS    
Securities held-to-maturity, fair value $ 315,322 $ 313,613
SHAREHOLDERS' EQUITY    
Preferred stock, shares authorized (in shares) 1,000,000 1,000,000
Preferred stock, shares issued (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.10 $ 0.10
Common stock, shares authorized (in shares) 12,000,000 12,000,000
Common stock, shares issued (in shares) 8,611,340 8,611,340
Common stock, shares outstanding (in shares) 8,537,814 8,537,814
Treasury stock, shares (in shares) 73,526 73,526
v3.19.3
Revenue from Contracts with Customers (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sales of assets [Abstract]    
Net gain (loss) on sale of foreclosed real estate $ 76 $ (9)
Service Charges on Deposit Accounts [Member]    
Revenues Subject to ASC 606 [Abstract]    
Revenue from contract with customers 1,125 1,037
Insufficient Funds Fees [Member]    
Revenues Subject to ASC 606 [Abstract]    
Revenue from contract with customers 1,019 930
Deposit Related Fees [Member]    
Revenues Subject to ASC 606 [Abstract]    
Revenue from contract with customers 38 37
ATM/Point of Sale Fees [Member]    
Revenues Subject to ASC 606 [Abstract]    
Revenue from contract with customers 68 70
Debit Card Interchange Fees [Member]    
Revenues Subject to ASC 606 [Abstract]    
Revenue from contract with customers 743 640
E-commerce Fee Income [Member]    
Revenues Subject to ASC 606 [Abstract]    
Revenue from contract with customers 35 37
Investment Services Income [Member]    
Revenues Subject to ASC 606 [Abstract]    
Revenue from contract with customers $ 145 $ 115
v3.19.3
Loans and Allowance for Loan Losses, Loan Balances by Internal Credit Quality Indicator (Details)
$ in Thousands
3 Months Ended
Sep. 30, 2019
USD ($)
Segment
Jun. 30, 2019
USD ($)
Financing Receivable, Recorded Investment [Line Items]    
Number of segments within loan portfolio | Segment 4  
Total gross loans $ 818,176 $ 798,105
Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 794,697 779,062
Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 750 1,922
Special Mention [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 16,165 10,438
Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 6,564 6,683
Doubtful [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 0 0
Loss [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans $ 0 0
Residential Real Estate [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Loan-to-value ratio 89.90%  
Residential Real Estate [Member] | Residential Mortgage with Private Mortgage Insurance [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Loan-to-value ratio 95.00%  
Residential Real Estate [Member] | Residential Real Estate [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans $ 267,245 267,802
Residential Real Estate [Member] | Residential Real Estate [Member] | Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 264,257 264,138
Residential Real Estate [Member] | Residential Real Estate [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 496 874
Residential Real Estate [Member] | Residential Real Estate [Member] | Special Mention [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 209 86
Residential Real Estate [Member] | Residential Real Estate [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 2,283 2,704
Residential Real Estate [Member] | Construction and Land [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 8,377 7,462
Residential Real Estate [Member] | Construction and Land [Member] | Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 8,377 7,462
Residential Real Estate [Member] | Construction and Land [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 0 0
Residential Real Estate [Member] | Construction and Land [Member] | Special Mention [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 0 0
Residential Real Estate [Member] | Construction and Land [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 0 0
Residential Real Estate [Member] | Multi-family [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 25,021 24,592
Residential Real Estate [Member] | Multi-family [Member] | Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 23,127 22,544
Residential Real Estate [Member] | Multi-family [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 0 137
Residential Real Estate [Member] | Multi-family [Member] | Special Mention [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 1,759 1,835
Residential Real Estate [Member] | Multi-family [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 135 76
Commercial Real Estate [Member] | Real Estate [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 332,185 329,668
Commercial Real Estate [Member] | Real Estate [Member] | Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 321,306 318,703
Commercial Real Estate [Member] | Real Estate [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 161 616
Commercial Real Estate [Member] | Real Estate [Member] | Special Mention [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 7,569 7,435
Commercial Real Estate [Member] | Real Estate [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 3,149 2,914
Commercial Real Estate [Member] | Construction [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 48,751 36,361
Commercial Real Estate [Member] | Construction [Member] | Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 43,957 36,259
Commercial Real Estate [Member] | Construction [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 0 0
Commercial Real Estate [Member] | Construction [Member] | Special Mention [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 4,692 0
Commercial Real Estate [Member] | Construction [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 102 102
Consumer Loan [Member] | Home Equity [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 23,288 23,185
Consumer Loan [Member] | Home Equity [Member] | Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 22,624 22,392
Consumer Loan [Member] | Home Equity [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 75 20
Consumer Loan [Member] | Home Equity [Member] | Special Mention [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 0 0
Consumer Loan [Member] | Home Equity [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 589 773
Consumer Loan [Member] | Consumer Installment [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 5,677 5,481
Consumer Loan [Member] | Consumer Installment [Member] | Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 5,659 5,461
Consumer Loan [Member] | Consumer Installment [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 18 14
Consumer Loan [Member] | Consumer Installment [Member] | Special Mention [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 0 0
Consumer Loan [Member] | Consumer Installment [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 0 6
Commercial Loans [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 107,632 103,554
Commercial Loans [Member] | Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 105,389 102,103
Commercial Loans [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 0 261
Commercial Loans [Member] | Special Mention [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans 1,936 1,082
Commercial Loans [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Total gross loans $ 307 $ 108
v3.19.3
Loans and Allowance for Loan Losses, Troubled Debt Restructurings (Details) - Contract
3 Months Ended 12 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Troubled Debt Restructurings [Abstract]        
Number of contracts 0 0 0 0
TDR loans which have subsequently defaulted during the period 0 0    
v3.19.3
Securities (Policies)
3 Months Ended
Sep. 30, 2019
Securities [Abstract]  
Federal Home Loan Bank Stock
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 three months ended September 30, 2019 or 2018.

v3.19.3
Operating leases
3 Months Ended
Sep. 30, 2019
Operating leases [Abstract]  
Operating leases
(14)
Operating leases

The Company leases certain branch properties under long-term, operating lease agreements.  The Company’s operating lease agreements contain lease components, which are generally accounted for separately.  The Company’s lease agreements do not contain any residual value guarantees.  There are no significant right and obligations of the Company for leases that have not commenced as of the reporting date. The following includes quantitative data related to the Company’s operating leases as of September 30, 2019:

(In thousands, except weighted-average information).
   
Right-of-use assets
 
$
1,770
 
Lease liabilities
 
$
1,773
 
     
Operating lease cost
 
$
72
 
Variable lease cost
 
$
10
 
Operating outgoing cash flows from operating leases
 
$
78
 
Right-of-use assets obtained in exchange for new operating lease liabilities
 
$
1,840
 
Weighted-average remaining lease term (Years)
  
7.8
 
Weighted-average discount rate
  
2.50
%

The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding CAM charges as of September 30, 2019:

(in thousands)
   
Within the twelve months ended September 30,
   
2020
 
$
288
 
2021
  
283
 
2022
  
245
 
2023
  
205
 
2024
  
218
 
Thereafter
  
722
 
Total undiscounted cash flow
  
1,961
 
Less net present value adjustment
  
(188
)
Lease Liability
 
$
1,773
 

Right-of-use assets are included in prepaid expenses and other assets, and lease liabilities are included in accrued expenses and other liabilities within the Company’s statement of condition.  The Company did not have any lease commitments that had not yet commenced at September 30, 2019.
v3.19.3
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Other comprehensive loss:    
Unrealized holding loss on available-for-sale securities, income taxes $ (96) $ (27)
v3.19.3
Consolidated Statements of Financial Condition (Unaudited) - USD ($)
$ in Thousands
Sep. 30, 2019
Jun. 30, 2019
ASSETS    
Total cash and cash equivalents $ 110,852 $ 29,538
Long term certificates of deposit 3,626 2,875
Securities available-for-sale, at fair value 159,263 122,728
Securities held-to-maturity, at amortized cost (fair value $315,322 at September 30, 2019; $313,613 at June 30, 2019) 304,582 304,208
Equity securities, at fair value 251 253
Federal Home Loan Bank stock, at cost 1,399 1,759
Loans 818,176 798,105
Allowance for loan losses (13,444) (13,200)
Unearned origination fees and costs, net 807 833
Net loans receivable 805,539 785,738
Premises and equipment, net 13,336 13,255
Accrued interest receivable 5,970 5,853
Foreclosed real estate 303 53
Prepaid expenses and other assets 4,599 3,202
Total assets 1,409,720 1,269,462
LIABILITIES AND SHAREHOLDERS' EQUITY    
Noninterest-bearing deposits 115,474 107,469
Interest-bearing deposits 1,147,736 1,013,100
Total deposits 1,263,210 1,120,569
Borrowings from Federal Home Loan Bank, short-term 0 8,000
Borrowings from Federal Home Loan Bank, long-term 13,600 13,600
Accrued expenses and other liabilities 16,381 14,924
Total liabilities 1,293,191 1,157,093
SHAREHOLDERS' EQUITY    
Preferred stock, Authorized - 1,000,000 shares; Issued - None 0 0
Common stock, par value $.10 per share; Authorized - 12,000,000 shares; Issued - 8,611,340; Outstanding - 8,537,814 861 861
Additional paid-in capital 11,017 11,017
Retained earnings 106,205 101,774
Accumulated other comprehensive loss (1,277) (1,006)
Treasury stock, at cost 73,526 shares (277) (277)
Total shareholders' equity 116,529 112,369
Total liabilities and shareholders' equity $ 1,409,720 $ 1,269,462
v3.19.3
Stock-Based Compensation (Tables)
3 Months Ended
Sep. 30, 2019
Stock-Based Compensation [Abstract]  
Summary of Phantom Stock Option Activity and Related Information
A summary of the Company’s phantom stock option activity and related information for the Plan for the three months ended September 30, 2019 and 2018 is as follows:

  
2019
  
2018
 
Number of options outstanding at beginning of year
  
1,711,600
   
1,634,160
 
Options granted
  
614,700
   
592,700
 
Options forfeited
  
(7,000
)
  
-
 
Options paid in cash
  
-
   
(484,760
)
Number of options outstanding at period end
  
2,319,300
   
1,742,100
 

(In thousands)
 
2019
  
2018
 
Cash paid out on options vested
 
$
-
  
$
1,704
 
Compensation expense recognized
  
645
   
516
 
v3.19.3
Nature of Operations (Details)
Sep. 30, 2019
Office
Subsidiary
Nature of Operations [Abstract]  
Number of full-service offices | Office 16
Number of subsidiaries | Subsidiary 2
v3.19.3
Fair Value Measurements and Fair Value of Financial Instruments
3 Months Ended
Sep. 30, 2019
Fair Value Measurements and Fair Value of Financial Instruments [Abstract]  
Fair Value Measurements and Fair Value of Financial Instruments
(6)
Fair Value Measurements and Fair Value of Financial Instruments

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique.  Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sale transaction on the dates indicated.  The estimated fair value amounts have been measured at September 30, 2019 and June 30, 2019 and have not been re-evaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates.  As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.

The FASB ASC Topic on “Fair Value Measurement” established a fair value hierarchy that prioritized the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
 
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
 
Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.
 
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).
 
An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

For assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used are as follows:

     
Fair Value Measurements Using
 
     
Quoted
Prices In
Active Markets
For Identical
Assets
  
Significant
Other
Observable
Inputs
  
Significant
Unobservable
Inputs
 
(In thousands)
 
September 30, 2019
  
(Level 1)
  
(Level 2)
  
(Level 3)
 
Assets:
            
U.S. Government sponsored enterprises
 
$
4,545
  
$
-
  
$
4,545
  
$
-
 
State and political subdivisions
  
120,976
   
-
   
120,976
   
-
 
Mortgage-backed securities-residential
  
8,621
   
-
   
8,621
   
-
 
Mortgage-backed securities-multi-family
  
20,578
   
-
   
20,578
   
-
 
Corporate debt securities
  
4,543
   
4,543
   
-
   
-
 
Securities available-for-sale
  
159,263
  
$
4,543
  
$
154,720
   
-
 
Equity securities
  
251
   
251
   
-
   
-
 
Total securities measured at fair value
 
$
159,514
  
$
4,794
  
$
154,720
  
$
-
 

     
Fair Value Measurements Using
 
     
Quoted Prices
In Active
Markets For
Identical Assets
  
Significant
Other Observable
Inputs
  
Significant
Unobservable
Inputs
 
(In thousands)
 
June 30, 2019
  
(Level 1)
  
(Level 2)
  
(Level 3)
 
Assets:
            
U.S. Government sponsored enterprises
 
$
5,553
  
$
-
  
$
5,553
  
$
-
 
State and political subdivisions
  
96,570
   
-
   
96,570
   
-
 
Mortgage-backed securities-residential
  
2,645
   
-
   
2,645
   
-
 
Mortgage-backed securities-multi-family
  
16,410
   
-
   
16,410
   
-
 
Corporate debt securities
  
1,550
   
1,550
   
-
   
-
 
Securities available-for-sale
  
122,728
   
1,550
   
121,178
   
-
 
Equity securities
  
253
   
253
   
-
   
-
 
Total securities measured at fair value
 
$
122,981
  
$
1,803
  
$
121,178
  
$
-
 

Certain investments that are actively traded and have quoted market prices have been classified as Level 1 valuations.  Other available-for-sale investment securities have been valued by reference to prices for similar securities or through model-based techniques in which all significant inputs are observable and, therefore, such valuations have been classified as Level 2.

In addition to disclosures of the fair value of assets on a recurring basis, FASB ASC Topic on “Fair Value Measurement” requires disclosures for assets and liabilities measured at fair value on a nonrecurring basis, such as impaired assets, in the period in which a re-measurement at fair value is performed.  Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral-dependent loans calculated as required by the “Receivables –Loan Impairment” subtopic of the FASB ASC when establishing the allowance for credit losses. Impaired loans are those loans in which the Company has measured impairment based on the fair value of the loan’s collateral or the discounted value of expected future cash flows. Fair value is generally determined based upon market value evaluations by third parties of the properties and/or estimates by management of working capital collateral or discounted cash flows based upon expected proceeds. These appraisals may include up to three approaches to value: the sales comparison approach, the income approach (for income-producing property), and the cost approach. Management modifies the appraised values, if needed, to take into account recent developments in the market or other factors, such as, changes in absorption rates or market conditions from the time of valuation and anticipated sales values considering management’s plans for disposition. Such modifications to the appraised values could result in lower valuations of such collateral. Estimated costs to sell are based on current amounts of disposal costs for similar assets. These measurements are classified as Level 3 within the valuation hierarchy. Impaired loans are subject to nonrecurring fair value adjustment upon initial recognition or subsequent impairment. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance.

Fair values for foreclosed real estate are initially recorded based on market value evaluations by third parties, less costs to sell (“initial cost basis”). Any write-downs required when the related loan receivable is exchanged for the underlying real estate collateral at the time of transfer to foreclosed real estate are charged to the allowance for loan losses. Values are derived from appraisals, similar to impaired loans, of underlying collateral or discounted cash flow analysis. Subsequent to foreclosure, valuations are updated periodically and assets are marked to current fair value, not to exceed the initial cost basis. In the determination of fair value subsequent to foreclosure, management also considers other factors or recent developments, such as, changes in absorption rates and market conditions from the time of valuation and anticipated sales values considering management’s plans for disposition. Either change could result in adjustment to lower the property value estimates indicated in the appraisals. These measurements are classified as Level 3 within the fair value hierarchy.

           
Fair Value Measurements Using
 
(In thousands)
 
Recorded
Investment
  
Related
Allowance
  
Fair Value
  
(Level 1)
  
(Level 2)
  
(Level 3)
 
September 30, 2019
                  
Impaired loans
 
$
1,547
  
$
178
  
$
1,369
  
$
-
  
$
-
  
$
1,369
 
Foreclosed real estate
  
303
   
-
   
303
   
-
   
-
   
303
 
                         
June 30, 2019
                        
Impaired loans
 
$
2,335
  
$
262
  
$
2,073
  
$
-
  
$
-
  
$
2,073
 
Foreclosed real estate
  
53
   
-
   
53
   
-
   
-
   
53
 

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Level 3 inputs were utilized to determine fair value:

(Dollars in thousands)
 
Fair Value
 
Valuation Technique
Unobservable Input
 
Range
  
Weighted
Average
 
September 30, 2019
           
Impaired Loans
 
$
703
 
Appraisal of collateral(1)
Appraisal adjustments(2)
  
27.03%-41.67
%
  
35.97
%
        
Liquidation expenses(3)
  
3.98%-5.49
%
  
4.43
%
   
666
 
Discounted cash flow
Discount rate
  
4.19%-8.66
%
  
6.07
%
Foreclosed real estate
  
303
 
Appraisal of collateral(1)
Appraisal adjustments(2)
  
0.00-0.00
%
  
0.00
%
        
Liquidation expenses(3)
  
6.80
%
  
6.80
%
June 30, 2019
              
Impaired loans
 
$
1,403
 
Appraisal of collateral(1)
Appraisal adjustments(2)
  
0.00%-33.73
%
  
24.48
%
        
Liquidation expenses(3)
 
 3.98%-6.00
%
 
 4.53
%
   
670
 
Discounted cash flow
Discount rate
 
 4.19%-8.66
%
 
 6.07
%
Foreclosed real estate
  
53
 
Appraisal of collateral(1)
Appraisal adjustments(2)
 
 0.00%-0.00
%
 
 0.00
%
        
Liquidation expenses(3)
 
      10.41
%
  
10.41
%


(1)
Fair value is generally determined through independent third-party appraisals of the underlying collateral, which generally includes various Level 3 inputs which are not observable.

(2)
Appraisals may be adjusted downwards by management for qualitative factors such as economic conditions.  Higher downward adjustments are caused by negative changes to the collateral or conditions in the real estate market, actual offers or sales contracts received or age of the appraisal.

(3)
Appraisals are adjusted downwards by management for qualitative factors such as the estimated costs to liquidate the collateral.

The carrying amounts reported in the statements of financial condition for cash and cash equivalents, accrued interest receivable and accrued interest payable approximate their fair values.  Fair values of securities are based on quoted market prices (Level 1), where available, or matrix pricing (Level 2), which is a mathematical technique, used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.  The carrying amount of Federal Home Loan Bank stock approximates fair value due to its restricted nature.  The fair values for loans are measured using the "exit price" notion which is a reasonable estimate of what another party might pay in an orderly transaction. Fair values for variable rate loans that reprice frequently, with no significant credit risk, are based on carrying value.  Fair value for fixed rate loans are estimated using discounted cash flows and interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.  Fair values disclosed for demand and savings deposits are equal to carrying amounts at the reporting date.  The carrying amounts for variable rate money market deposits approximate fair values at the reporting date.  Fair values for fixed rate certificates of deposit are estimated using discounted cash flows and interest rates currently being offered in the market on similar certificates.  Fair value for Federal Home Loan Bank long term borrowings are estimated using discounted cash flows and interest rates currently being offered on similar borrowings.  The carrying value of short-term Federal Home Loan Bank borrowings approximates its fair value.

The fair value of commitments to extend credit is estimated based on an analysis of the interest rates and fees currently charged to enter into similar transactions, considering the remaining terms of the commitments and the credit-worthiness of the potential borrowers.  At September 30, 2019 and June 30, 2019, the estimated fair values of these off-balance sheet financial instruments were immaterial, and are therefore excluded from the table below.

The carrying amounts and estimated fair value of financial instruments are as follows:

(In thousands)
 
September 30, 2019
  
Fair Value Measurements Using
 
  
Carrying
Amount
  
Fair Value
  
(Level 1)
  
(Level 2)
  
(Level 3)
 
Cash and cash equivalents
 
$
110,852
  
$
110,852
  
$
110,852
  
$
-
  
$
-
 
Long term certificate of deposit
  
3,626
   
3,626
   
3,626
   
-
   
-
 
Securities available-for-sale
  
159,263
   
159,263
   
4,543
   
154,720
   
-
 
Securities held-to-maturity
  
304,582
   
315,322
   
-
   
315,322
   
-
 
Equity securities
  
251
   
251
   
251
   
-
     
Federal Home Loan Bank stock
  
1,399
   
1,399
   
-
   
1,399
   
-
 
Net loans receivable
  
805,539
   
805,814
   
-
   
-
   
805,814
 
Accrued interest receivable
  
5,970
   
5,970
   
-
   
5,970
   
-
 
Deposits
  
1,263,210
   
1,263,336
   
-
   
1,263,336
   
-
 
Borrowings from Federal Home Loan Bank
  
13,600
   13,572   
-
   13,572   
-
 
Accrued interest payable
  
124
   
124
   
-
   
124
   
-
 

(In thousands)
 
June 30, 2019
  
Fair Value Measurements Using
 
  
Carrying
Amount
  
Fair Value
  
(Level 1)
  
(Level 2)
  
(Level 3)
 
Cash and cash equivalents
 
$
29,538
  
$
29,538
  
$
29,538
  
$
-
  
$
-
 
Long term certificate of deposit
  
2,875
   
2,875
   
2,875
   
-
   
-
 
Securities available-for-sale
  
122,728
   
122,728
   
1,550
   
121,178
   
-
 
Securities held-to-maturity
  
304,208
   
313,613
   
-
   
313,613
   
-
 
Equity Securities
  
253
   
253
   
253
   
-
   
-
 
Federal Home Loan Bank stock
  
1,759
   
1,759
   
-
   
1,759
   
-
 
Net loans receivable
  
785,738
   
781,614
   
-
   
-
   
781,614
 
Accrued interest receivable
  
5,853
   
5,853
   
-
   
5,853
   
-
 
Deposits
  
1,120,569
   
1,120,632
   
-
   
1,120,632
   
-
 
Borrowings from Federal Home Loan Bank
  
21,600
   
21,534
   
-
   
21,534
   
-
 
Accrued interest payable
  
110
   
110
   
-
   
110
   
-
 
v3.19.3
Nature of Operations
3 Months Ended
Sep. 30, 2019
Nature of Operations [Abstract]  
Nature of Operations
(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 16 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.
v3.19.3
Employee Benefit Plans
3 Months Ended
Sep. 30, 2019
Employee Benefit Plans [Abstract]  
Employee Benefit Plans
(10)
Employee Benefit Plans

Defined Benefit Plan

The components of net periodic pension cost related to the defined benefit pension plan for the three months ended September 30, 2019 and 2018 were as follows:

  
Three months ended
September 30,
 
(In thousands)
 
2019
  
2018
 
Interest cost
 
$
49
  
$
54
 
Expected return on plan assets
  
(63
)
  
(59
)
Amortization of net loss
  
40
   
35
 
Net periodic pension cost
 
$
26
  
$
30
 

The Company does not anticipate that it will make any additional contributions to the defined benefit pension plan during fiscal 2020.

SERP

The Board of Directors of The Bank of Greene County adopted The Bank of Greene County Supplemental Executive Retirement Plan (the “SERP Plan”), effective as of July 1, 2010. The SERP Plan benefits certain key senior executives of the Bank who have been selected by the Board to participate. The SERP Plan is intended to provide a benefit from the Bank upon retirement, death or disability or voluntary or involuntary termination of service (other than “for cause”).  The SERP Plan is more fully described in Note 10 of the consolidated financial statements and notes thereto for the year ended June 30, 2019.

The net periodic pension costs related to the SERP Plan for the three months ended September 30, 2019 and 2018 were $205,000 and $158,000, respectively, consisting primarily of service costs and interest costs. The total liability for the SERP Plan was $5.5 million and $5.0 million at September 30, 2019 and June 30, 2019, respectively, and is included in accrued expenses and other liabilities.  The total liability for the SERP Plan includes both accumulated net periodic pension costs and participant contributions.
v3.19.3
Impact of Recent Accounting Pronouncements (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Jun. 30, 2019
Recent Accounting Pronouncements [Abstract]    
Right-of-use assets $ 1,770  
Operating lease, liabilities $ 1,773  
ASU 2016-02 [Member]    
Recent Accounting Pronouncements [Abstract]    
Right-of-use assets   $ 1,700
Operating lease, liabilities   $ 1,700
v3.19.3
Fair Value Measurements and Fair Value of Financial Instruments, Fair Value Inputs, Assets, Quantitative Information (Details)
$ in Thousands
Sep. 30, 2019
USD ($)
Jun. 30, 2019
USD ($)
Nonrecurring [Member]    
Additional Quantitative Information about Assets Measured at Fair Value [Abstract]    
Impaired loans $ 1,369 $ 2,073
Foreclosed real estate 303 53
Level 3 [Member] | Appraisal of Collateral [Member]    
Additional Quantitative Information about Assets Measured at Fair Value [Abstract]    
Impaired loans [1] 703 1,403
Foreclosed real estate [1] 303 53
Level 3 [Member] | Discounted Cash Flow [Member]    
Additional Quantitative Information about Assets Measured at Fair Value [Abstract]    
Impaired loans [1] 666 670
Level 3 [Member] | Nonrecurring [Member]    
Additional Quantitative Information about Assets Measured at Fair Value [Abstract]    
Impaired loans 1,369 2,073
Foreclosed real estate $ 303 $ 53
Level 3 [Member] | Appraisal Adjustments [Member] | Appraisal of Collateral [Member] | Minimum [Member]    
Additional Quantitative Information about Assets Measured at Fair Value [Abstract]    
Impaired loans, measurement input [1],[2] 0.2703 0.0000
Foreclosed real estate, measurement input [1],[2] 0.0000 0.0000
Level 3 [Member] | Appraisal Adjustments [Member] | Appraisal of Collateral [Member] | Maximum [Member]    
Additional Quantitative Information about Assets Measured at Fair Value [Abstract]    
Impaired loans, measurement input [1],[2] 0.4167 0.3373
Foreclosed real estate, measurement input [1],[2] 0.0000 0.0000
Level 3 [Member] | Appraisal Adjustments [Member] | Appraisal of Collateral [Member] | Weighted Average [Member]    
Additional Quantitative Information about Assets Measured at Fair Value [Abstract]    
Impaired loans, measurement input [1],[2] 0.3597 0.2448
Foreclosed real estate, measurement input [1],[2] 0.0000 0.0000
Level 3 [Member] | Liquidation Expenses [Member] | Appraisal of Collateral [Member]    
Additional Quantitative Information about Assets Measured at Fair Value [Abstract]    
Foreclosed real estate, measurement input [1],[3] 0.0680 0.1041
Level 3 [Member] | Liquidation Expenses [Member] | Appraisal of Collateral [Member] | Minimum [Member]    
Additional Quantitative Information about Assets Measured at Fair Value [Abstract]    
Impaired loans, measurement input [1],[3] 0.0398 0.0398
Level 3 [Member] | Liquidation Expenses [Member] | Appraisal of Collateral [Member] | Maximum [Member]    
Additional Quantitative Information about Assets Measured at Fair Value [Abstract]    
Impaired loans, measurement input [1],[3] 0.0549 0.0600
Level 3 [Member] | Liquidation Expenses [Member] | Appraisal of Collateral [Member] | Weighted Average [Member]    
Additional Quantitative Information about Assets Measured at Fair Value [Abstract]    
Impaired loans, measurement input [1],[3] 0.0443 0.0453
Foreclosed real estate, measurement input [1],[3] 0.0680 0.1041
Level 3 [Member] | Discount Rate [Member] | Discounted Cash Flow [Member] | Minimum [Member]    
Additional Quantitative Information about Assets Measured at Fair Value [Abstract]    
Impaired loans, measurement input 0.0419 0.0419
Level 3 [Member] | Discount Rate [Member] | Discounted Cash Flow [Member] | Maximum [Member]    
Additional Quantitative Information about Assets Measured at Fair Value [Abstract]    
Impaired loans, measurement input 0.0866 0.0866
Level 3 [Member] | Discount Rate [Member] | Discounted Cash Flow [Member] | Weighted Average [Member]    
Additional Quantitative Information about Assets Measured at Fair Value [Abstract]    
Impaired loans, measurement input 0.0607 0.0607
[1] Fair value is generally determined through independent third-party appraisals of the underlying collateral, which generally includes various Level 3 inputs which are not observable.
[2] Appraisals may be adjusted downwards by management for qualitative factors such as economic conditions. Higher downward adjustments are caused by negative changes to the collateral or conditions in the real estate market, actual offers or sales contracts received or age of the appraisal.
[3] Appraisals are adjusted downwards by management for qualitative factors such as the estimated costs to liquidate the collateral.