HVBC 2016 Annual Report

9 From time to time, we may purchase loan participations secured by properties within and outside of our primary lending market area in which we are not the lead lender. In these circumstances, we follow our customary loan underwriting and approval policies. At June 30, 2017, we had six participation loans for $3.8 million in which we were not the lead lender, of which one multi-family investment property with a carrying value of $100,000, is not performing in accordance with its original terms. We also have participated out portions of loans from time to time that exceeded our loans-to-one borrower legal lending limit and for risk diversification. We currently have an arrangement with a mortgage origination company affiliated with a national home builder to purchase residential one- to four-family real estate loans, all of which are jumbo adjustable-rate loans. As of June 30, 2017, we have purchased $10.6 million of loans pursuant to this relationship. The homes are located in Pennsylvania, New Jersey and Delaware. Additionally, we have an arrangement with a full-service mortgage lender to purchase primarily jumbo adjustable-rate one- to four-family residential real estate loans. As of June 30, 2017, we have purchased $8.0 million of such loans pursuant to this relationship. These loans are originated pursuant to our underwriting guidelines and subject to our underwriting process prior to when we purchase the loan. We intend to maintain these current relationships and in the future we will look for additional opportunities to expand our purchase of one- to four-family real estate loans. The following table shows our loan originations, sales and repayment activities for the years indicated, including loans held for sale. For the Year Ended June 30, 2017 2016 2015 (In thousands) Total loans at beginning of year (1) $ 118,471 $ 100,040 $ 98,189 Loan originations: Residential: One- to four-family (1) 202,503 182,962 171,114 Home equity & HELOCs 430 2,989 298 Commercial real estate 1,796 1,198 2,399 Commercial business 3,386 — — Construction — 2,970 460 Consumer loans 5 4 4 Total loans originated 208,120 190,123 174,275 Sales and loan principal repayments: Principal repayments 22,494 13,914 12,973 Loan sales 179,268 157,778 159,451 Net loan activity 6,358 18,431 1,851 Total loans at end of year (1) $ 124,829 $ 118,471 $ 100,040 (1) Table includes loans held for sale Loans to One Borrower. Pursuant to applicable law, the aggregate amount of loans that we are permitted to make to any one borrower or a group of related borrowers is generally limited to 15% of Huntingdon Valley Bank’s unimpaired capital and surplus (25% if the amount in excess of 15% is secured by “readily marketable collateral”). This 15% of unimpaired capital and surplus was approximately $3.6 million as of June 30, 2017. At June 30, 2017, our largest credit relationship totaled $1.8 million, consisting of a construction loan secured by residential real estate. At June 30, 2017, this loan relationship was performing in accordance with its current terms. Loan Approval Procedures and Authority . Our lending activities follow written, non-discriminatory underwriting standards and loan origination procedures established by the board of directors. In the approval process for residential loans, we assess the borrower's ability to repay the loan and the value of the property securing the loan. To assess the borrower's ability to repay, we review the borrower's income and expenses and employment and credit history. In the case of commercial real estate loans, we also review projected income, expenses and the