Residential real estate loans are a mixture of fixed rate and adjustable rate
residential mortgage loans, including first mortgages, second mortgages or home
equity lines of credit. As a policy, the Company holds adjustable rate loans
and sells a portion of its fixed rate loan originations into the secondary market.
Changes in interest rates or market conditions may impact a borrower’s
ability to meet contractual principal and interest payments. Residential real
estate loans are secured by real property.
Commercial real estate loans include loans secured by office buildings, warehouses,
retail stores and other property located in or near our markets. These loans
are originated based on the borrower’s ability to service the debt and
secondarily based on the fair value of the underlying collateral.
Land/land development/construction loans include residential and commercial
real estate loans and include a mixture of owner occupied and non-owner occupied.
The majority of the loans in this category are land related, either undeveloped
land, land held for development, residential building lots and commercial building
lots. Generally the terms are three to five years, with a potential for renewal
at maturity.
Commercial loans consist of small-to medium-sized businesses including professional
associations, medical services, retail trade, transportation, wholesale trade,
manufacturing and tourism. Commercial loans are derived from our market areas
and underwritten based on the borrower’s ability to service debt from
the business’s underlying cash flows. As a general practice, we obtain
collateral such as inventory, accounts receivable, equipment or other assets
although such loans may be uncollateralized but guaranteed.
Consumer and other loans include automobiles, boats, mobile homes without land,
or uncollateralized but personally guaranteed loans. These loans are originated
based primarily on credit scores, debt-to-income ratios and loan-to-value ratios.
