Bay Services Company, Inc. The Bank has one wholly owned subsidiary, Bay Services
Company, Inc., a Virginia corporation organized in 1994 (“Bay Services”).
Bay Services owns an interest in a land title insurance agency, Bankers Title
of Shenandoah, and an investment and insurance services company, Infinex Investments,
Inc. Bankers Title of Shenandoah sells title insurance to mortgage loan customers,
including customers of the Bank of Lancaster and the other financial institutions
that have an ownership interest in the agency. Infinex Investments, Inc. provides
the Bank’s non-deposit products department, Investment Advantage, with
insurance and investment products for marketing within the Bank’s market
areas.
Bay Trust Company. The Trust Company provides management services for personal
and corporate trusts, including estate planning, estate settlement, and trust
administration. Products include estate planning and settlement, revocable and
irrevocable living trusts, testamentary trusts, custodial accounts, investment
management accounts, and managed, as well as self-directed rollover Individual
Retirement Accounts.
Through the Bank of Lancaster and Bay Trust Company, Bay Banks of Virginia provides
a wide variety of financial services to its customers in its market areas. The
primary products and services are summarized as follows.
Mortgage Loans on Real Estate. The Bank’s mortgage loans on real estate
comprise the largest segment of its loan portfolio. The majority of the Bank’s
real estate loans are mortgages on owner-occupied one-to-four family residential
properties, including both fixed-rate and adjustable-rate structures. Residential
mortgages are underwritten and documented within the guidelines of the regulations
of the Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Home equity lines of credit are also offered. Construction
loans with a twelve-month term are another component of the Bank’s portfolio.
Underwritten at 80% loan to value, and to qualified builders and individuals,
these loans are disbursed as construction progresses and verified by Bank inspection.
The Bank also offers commercial loans that are secured by real estate. These
mortgages are also typically written at a maximum of 80% loan to value.
The Company also offers secondary market residential loan origination. Through
the Bank, customers may apply for home mortgages that are underwritten in accordance
with the guidelines of either the Federal Home Loan Mortgage Corporation or
the Federal National Mortgage Association (“FNMA” or “Fannie
Mae”). These loans are then sold into the secondary market on a loan-by-loan
basis, usually directly to FNMA. The Bank earns origination and servicing fees
from this service.
Commercial and Industrial Loans. Commercial lending activities include small
business loans, asset based loans, and other secured and unsecured loans and
lines of credit. Commercial and industrial loans may entail greater risk than
residential mortgage loans, and are therefore underwritten with strict risk
management standards. Among the criteria for determining the borrower’s
ability to repay is a cash flow analysis of the business and business collateral.
Consumer Loans. As part of its full range of services, the Bank’s consumer
lending services include automobile and boat financing, home improvement loans,
credit cards and unsecured personal loans. These consumer loans historically
entail greater risk than loans secured by real estate, but also generate a higher
return.
Consumer Deposit Services. Consumer deposit products include checking accounts,
savings accounts, money market accounts, certificates of deposit, online banking,
mobile banking and electronic statements. The Bank’s Golden Advantage
program offers special products and services to customers age 55 and over, and
the Extreme Banking program offers a suite of electronic products.
Commercial Banking Services. The Bank offers a variety of services to commercial
customers. These services include analysis checking, cash management deposit
accounts, wire services, direct deposit payroll service, online banking, telephone
banking, remote deposit, and a full line of commercial lending options. The
Bank also offers Small Business Administration loan products under the 504 Program,
which provides long-term funding for commercial real estate and long-lived equipment.
This allows commercial customers to obtain favorable rate loans for the development
of business opportunities, while providing the Bank with a partial guarantee
of the outstanding loan balance.