HVBC 2016 Annual Report

41 Investment Securities Investment securities increased by $15.5 million, or 39.6%, to $54.6 million at June 30, 2017 from $39.1 million at June 30, 2016. The increase was primarily due to purchases of $24.8 million in new securities, partially offset by sales and principal repayments of $9.0 million and an increase in unrealized losses on securities available-for-sale of $176,000. At June 30, 2017, our held-to-maturity portion of the securities portfolio, at amortized cost, was $11.8 million, and our available-for-sale portion of the securities portfolio, at fair value, was $42.8 million compared to held-to-maturity portion of $5.8 million and $33.3 million available-for-sale portion of the securities portfolio at June 30, 2016. Net Loans Net loans increased $18.3 million, or 19.6%, to $111.8 million at June 30, 2017 from $93.5 million at June 30, 2016. One- to four-family residential real estate loans increased $16.6 million, or 23.1%, to $88.6 million at June 30, 2017 from $72.0 million at June 30, 2016 as a result of our continued strategic emphasis on growing our adjustable-rate jumbo one- to four-family residential real estate loan portfolio. Commercial real estate loans increased by $600,000 from $11.6 million at June 30, 2016 to $12.2 million at June 30, 2017. Construction loans decreased $1.2 million from $3.2 million at June 30, 2016 to $2.0 million at June 30, 2017. Home equity and HELOC loans decreased $900,000 to $5.5 million at June 30, 2017 from $6.4 million at June 30, 2016 primarily as a result of borrower refinancing. Loans Held For Sale Loans held for sale decreased $11.9 million, or 48.2%, to $12.8 million at June 30, 2017 from $24.7 million at June 30, 2016 as the pipeline of one- to four-family residential real estate loans decreased during the year ended June 30, 2017 due to increases in interest rates resulting in lower demand. Deposits Deposits increased $28.7 million, or 20.3%, to $170.5 million at June 30, 2017 from $141.8 million at June 30, 2016. Our core deposits (consisting of NOW, money market, pass book and statement and checking accounts) increased by $38.3 million, or 36.7%, to $142.6 million at June 30, 2017 from $104.3 million at June 30, 2016, primarily as a result of the introduction of a new demand product attracting clients of local professional firms such as CPA firms, totaling $23.3 million at June 30, 2017. Offsetting the increase in core deposits was a decrease of $9.6 million, or 25.6% in certificates of deposit to $27.9 million at June 30, 2017 from $37.5 million at June 30, 2016 which was primarily due to the Bank’s allowing higher costing certificates of deposit held by credit unions and banks (through deposit listing services) to mature without renewing. Advances from the Federal Home Loan Bank Advances from the Federal Home Loan Bank decreased by $11.0 million from $20.0 million at June 30, 2016 to $9.0 million at June 30, 2017. The reduction was primarily due to scheduled maturities, which were not replaced due to managements deployment of funds resulting in the $28.7 million or 20.3% increase in deposits between June 30, 2016 and June 30, 2017. Securities Sold Under Agreements to Repurchase Securities sold under agreements to repurchase decreased $1.0 million, or 25.6%, to $2.9 million at June 30, 2017 from $3.9 million at June 30, 2016 as a result of a reduction in the underlying deposit balances, which are primarily held by title companies. Total Shareholders’ Equity Total shareholders’ equity increased $18.4 million to $31.4 million at June 30, 2017 compared to $13.0 million at June 30, 2016 primarily as a result of the issuance of the Company’s common stock from the completion of the mutual-to-stock conversion which increased equity by $20.4 million in January 2017, and net income for the year ended June 30, 2017 of $569,000. These increases in consolidated shareholders’ equity were partially offset by purchased ESOP shares of