HVBC 2016 Annual Report

3 Huntingdon Valley Bank Huntingdon Valley Bank is a stock savings bank organized under the laws of the Commonwealth of Pennsylvania and is subject to comprehensive regulation and examination by the Federal Deposit Insurance Corporation (the "FDIC") and the Pennsylvania Department of Banking and Insurance (the "Pennsylvania Department of Banking"). We have offices in Montgomery, Bucks and Philadelphia Counties, Pennsylvania. We are a community-oriented bank offering a variety of financial products and services to meet the needs of our customers. We believe that our community orientation and personalized service distinguishes us from larger banks that operate in our market area. Huntingdon Valley Bank was founded in 1871 as a building and loan association. In 1951, the association converted to a federal thrift charter, changed its name to “Huntingdon Valley Federal Savings & Loan Association” and became federally insured. In January 2000, we changed our corporate name to “Huntingdon Valley Bank.” On July 1, 2003, Huntingdon Valley Bank converted from a federally chartered mutual savings bank to a Pennsylvania chartered mutual savings bank. Our principal business consists of attracting retail deposits from the general public in our market area and investing those deposits, together with funds generated from operations and borrowings, primarily in one- to four- family residential mortgage loans, commercial real estate loans (including multi-family loans), home equity loans and home equity lines of credit (“HELOCs”) and, to a lesser extent, construction loans. We retain our loans in portfolio depending on market conditions, but we primarily sell our fixed-rate one- to four-family residential mortgage loans in the secondary market. We also invest in various investment securities. Our revenue is derived principally from interest on loans and investments and loan sales. Our primary sources of funds are deposits, Federal Home Loan Bank advances and principal and interest payments on loans and securities. Our website address is www.myhvb.com . Information on this website should not be considered a part of this annual report. Market Area We are headquartered in Huntingdon Valley, Pennsylvania, which is located in the northeast suburban area of metropolitan Philadelphia. We primarily serve communities located in Montgomery, Bucks and Philadelphia Counties in Pennsylvania from our executive office, four full service bank offices, one limited service office, a loan origination office and a loan production office. Our markets are demographically attractive, close to the business and financial district of Center City Philadelphia, and within commuting distance of Northern New Jersey and New York City. Based on the United States Census for 2016, Philadelphia, Montgomery and Bucks Counties have total populations of 1,568,000, 822,000 and 626,000, respectively, and the three counties comprise the 1st, 3rd and 4th largest counties in Pennsylvania, respectively. From 2017 to 2022, the populations of Philadelphia, Montgomery and Bucks Counties are expected to grow by 2.0%, 1.9% and 0.7%, respectively. Additionally, between June 2010 and June 2016, our market area has shown significant improvement in unemployment levels, decreasing from 10.8% to 6.9% for Philadelphia County, decreasing from 7.1% to 4.2% for Montgomery County and decreasing from 7.6% to 4.6% for Bucks County. The foreclosure rate in July 2017 for the Commonwealth of Pennsylvania was 0.05%, compared to foreclosure rates of 0.06%, 0.06%, and 0.10% for Philadelphia, Montgomery and Bucks Counties, respectively. In terms of median household income and median disposable income, Montgomery and Bucks Counties rank 2nd and 3rd in Pennsylvania in each category, based on the United States Census. Based on the United States Census, the median household income between 2011 and 2015 was $38,253, $80,675 and $77,568 for Philadelphia, Montgomery and Bucks Counties, respectively. The median value of owner occupied homes in Bucks County is nearly double the statewide median value, and home values in Bucks and Montgomery Counties rank 2nd and 3rd respectively of all the counties in Pennsylvania, based on the United States Census. In 2015, the Philadelphia metropolitan area was the seventh largest total gross metropolitan product in the United States. The economy of our market area is heavily based on education, life sciences and social services. The city of Philadelphia is home to many Fortune 500 companies, including cable television and internet provider Comcast; insurance company Lincoln Financial Group; energy company UGI; food services company Aramark; paper and packaging company Crown Holdings Incorporated; and hospital management company Universal Health Services. The city is also home to many universities and colleges.