HVBC 2016 Annual Report

HV Bancorp, Inc. and Subsidiary Notes to the Consolidated Financial Statements Years Ended June 30, 2017 and 2016 78 and the shares will be outstanding for earnings-per-share purposes. The trustee will allocate the shares released among participants on the basis of each participant’s proportional share of compensation relative to the total aggregate compensation paid to all participants. A participant will become vested in his or her account balance at a rate of 20% per year over a six-year period, beginning in the second year of credited service. Participants who were employed by Huntingdon Valley Bank immediately prior to the conversion will receive credit for vesting purposes for years of service prior to the adoption of the ESOP. Participants also will become fully vested automatically upon normal retirement, death or disability, a change in control, or termination of the ESOP. Generally, participants will receive distributions from the ESOP upon separation from service. The ESOP reallocates any unvested shares forfeited upon termination of employment among the remaining participants. During the year ended June 30, 2017, the ESOP purchased 8% of the total shares issued which equated to 174,570 shares of the Company’s common stock in the open market ranging from $12.50 per share to $14.21 per share for a weighted average price per share of $13.92, and a total purchase price of $2,430,000. The Company also maintains a retirement plan for all eligible employees, which allows participants to make contributions by salary reduction pursuant to Section 401(k) of the Internal Revenue Code. Participants can contribute up to 15% of their compensation, as defined, to the plan. The Company's contribution to the Plan is discretionary and will be determined on a yearly basis. The Company contributed $80,000 and $36,000 to the Plan during the year ended June 30, 2017 and 2016. 12. Income Taxes The table below summarizes the income tax expense (benefit) for the years ended June 30, 2017 and 2016: (Dollars in thousands) 2017 2016 Current: Federal $ 305 $ 4 State 48 108 353 112 Deferred: Federal (158) 413 State — — (158) 413 Total income tax expense $ 195 $ 525 The expense (benefit) for income taxes for the years ended June 30, 2017 and 2016 differed from the federal income tax statutory rate due to the following: 2017 2016 (Dollars in thousands) Amount Rate Amount Rate Tax at statutory rate $ 259 34.0% $ 525 34.0% State tax net of federal benefit 31 4.2% 72 4.7% Banked-owned life insurance (37) -4.9% (38) -2.5% Tax-exempt interest (64) -8.8% (53) -3.6% Other, net 6 1.1% 19 1.3% $ 195 25.6% $ 525 33.9%