HVBC 2016 Annual Report

HV Bancorp, Inc. and Subsidiary Notes to the Consolidated Financial Statements Years Ended June 30, 2017 and 2016 75 The following table details the Company’s overnight repurchase agreements: At or For the Years Ended June 30, 2017 2016 (Dollars in thousands) Balance at end of year $ 2,883 $ 3,929 Average balance during year $ 1,935 $ 1,998 Maximum outstanding at any month end $ 4,277 $ 3,929 Weighted average interest rate at end of year 0.19% 0.08% Weighted average interest rate during year 0.16% 0.15% 8. Regulatory Capital Information presented for June 30, 2017 and 2016, reflects the Basel III capital requirements that became effective January 1, 2015 for the Bank. Under these capital requirements and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk- weightings and other factors. Federal bank regulators require the Bank maintain minimum ratios of core capital to adjusted average assets of 4.0%, common equity Tier 1 capital to risk-weighted assets of 4.5%, Tier 1 capital to risk-weighted assets of 6.0% and total risk-based capital to risk-weighted assets of 8.0%. At June 30, 2017, the Bank met all the capital adequacy requirements to which they were subject. At June 30, 2017, the Bank was “well capitalized” under the regulatory framework for prompt corrective action. To be “well capitalized,” the Bank must maintain minimum leverage, common equity Tier 1 risk-based, Tier 1 risk-based and total risk-based capital ratios of at least 5.0%, 6.5%, 8.0% and 10.0%, respectively. Management believes that no conditions or events have occurred since June 30, 2017 that would materially adversely change the Bank’s capital classifications. From time to time, the Bank may need to raise additional capital to support the Bank’s further growth and to maintain its “well capitalized” status. The Bank’s actual capital amounts and ratios are presented in the table (dollars in thousands): Capital Adequacy Corrective Action Actual Purposes Provision (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio As of June 30, 2017 Total risk-based capital (to risk-weighted assets) $ 24,113 21.8% $ 8,870 > 8.0% $ 11,087 > 10.0% Tier 1 capital (to risk-weighted assets) 23,520 21.2 >6,652 >6.0 >8,870 >8.0 Tier 1 capital (to average assets) 23,520 11.2 >8,377 >4.0 >10,471 >5.0 Tier 1 common equity (to risk-weighted assets) 23,520 21.2 >4,989 >4.5 >7,207 >6.5 As of June 30, 2016 Total risk-based capital (to risk-weighted assets) $ 13,438 12.5% $ 8,607 > 8.0% $ 10,759 > 10.0% Tier 1 capital (to risk-weighted assets) 12,951 12.0 > 6,455 > 6.0 > 8,607 > 8.0 Tier 1 capital (to average assets) 12,951 7.6 > 6,787 > 4.0 > 8,483 >5.0 Tier 1 common equity (to risk-weighted assets) 12,951 12.0 > 4,842 > 4.5 >6,993 >6.5 As a licensed mortgagee, the Bank is subject to the rules and regulations of the Department of Housing and Urban Development ("HUD"), Federal Housing Authority (“FHA”) and state regulatory authorities with respect to originating, processing and selling loans. Those rules and regulations, among other things, require the maintenance of minimum net worth levels (which vary based on the portfolio of FHA loans originated by the Bank). Failure to