operations in a new location, we monitor and aggressively pursue a core deposit strategy that enhances profitability and we believe provides quality market penetration in the most expedient
Managing credit risk to maintain a low level of nonperforming assets, and interest rate risk to
optimize our net interest margin. Managing risk is an essential part of successfully managing a financial institution. Credit risk and interest rate risk are two prominent risk exposures that we face. Credit risk is the risk of not
collecting the interest and/or the principal balance of a loan or investment when it is due. Our strategy for credit risk management focuses on having well-defined credit policies and uniform underwriting criteria and providing prompt attention to
potential problem loans. We believe that strong asset quality is a key to long-term financial success. We have sought to grow and diversify the loan portfolio, while maintaining strong asset quality and moderate credit risk, using conservative
underwriting standards, as well as diligent monitoring of the portfolio and loans in non-accrual status and on-going collection efforts. Although we will continue to
originate commercial real estate, multi-family, commercial and industrial, and construction loans, we intend to continue our philosophy of managing large loan exposures through our experienced, risk-based approach to lending. In addition, we intend
to remain focused on lending within our immediate market area, with a specific focus on commercial customers disaffected by their relationships with larger banks as a result of turmoil in the industry.
Interest rate risk is the potential reduction of net interest income as a result of changes in interest rates. Our
earnings and the market value of our assets and liabilities are subject to fluctuations caused by changes in the level of interest rates. We manage the interest rate sensitivity of our interest-bearing liabilities and interest-earning assets in an
effort to minimize the adverse effects of changes in the interest rate environment. To reduce the potential volatility of our earnings, we have sought to improve the match between asset and liability maturities and rates, while maintaining an
acceptable interest rate spread. Our strategy for managing interest rate risk emphasizes: originating loans with adjustable interest rates; selling the residential real estate fixed-rate loans with terms 10 years or greater that we originate;
promoting core deposit products; and adjusting the interest rates and maturities of funding sources, as necessary.
Increasing core deposits through aggressive marketing and the offering of new deposit products. Deposits are our primary source of funds for investing and lending. Core deposits, which
include all deposit account types except certificates of deposit, comprised 66.6% of our total deposits at December 31, 2017. We value our core deposits because they represent a lower cost of funding and are generally less sensitive to
withdrawal when interest rates fluctuate as compared to certificate of deposit accounts. We market core deposits through the internet, in-branch and local mail, print and television advertising, as well as
programs that link various accounts and services together, minimizing service fees. We will continue to customize existing deposit products and introduce new products to meet the needs of our customers.
Balance Sheet Analysis
Assets. Our total assets increased $863.5 million, or 19.5%, to $5.299 billion at December 31, 2017 from $4.436 billion at December 31, 2016. Net loans
increased $724.1 million, or 18.6%, to $4.623 billion at December 31, 2017 from $3.899 billion at December 31, 2016. Cash and due from banks increased $166.3 million, or 70.3%, to $402.7 million at
December 31, 2017 from $236.4 million at December 31, 2016. Certificates of deposit decreased $11.0 million, or 13.7%, to $69.3 million at December 31, 2017 from $80.3 million at December 31, 2016, primarily
due to maturities of $35.1 million, partially offset by purchases of $22.7 million. Securities available for sale decreased $29.3 million, or 43.3%, to $38.4 million at December 31, 2017 from $67.7 million at
December 31, 2016.
Loan Portfolio Analysis. At December 31, 2017, net loans were
$4.623 billion, or 87.2% of total assets. During the year ended December 31, 2017, net loans increased $724.1 million, or 18.6%, including $73.6 million of loans acquired in the Meetinghouse acquisition. Loan originations totaled
$1.763 billion during the year ended December 31, 2017. The increase in net loans consisted primarily of $287.2 million in commercial real estate loans, $216.7 million in multi-family loans, $138.6 million in construction
loans, $10.2 million in commercial and industrial loans and $71.2 million in one- to four-family loans.
Our loan portfolio consists of one- to four-family residential real estate, multi-family, home equity lines of credit, commercial real estate, construction,
commercial and industrial and consumer segments. There are no