Loan Products
We offer a diversified mix of business loans encompassing the following loan products:
(i) commercial and industrial loans; (ii) commercial real estate loans; (iii)
construction loans; and (iv) SBA loans. We also offer home equity lines of credit
“HELOCS”, to accommodate the needs of business owners and individual
clients, as well as personal loans (both secured and unsecured) for that customer
segment. In the event creditworthy loan customers’ borrowing needs exceed
our legal lending limit, or house limit (an amount less than our legal limit which
by policy is the highest amount we lend to one borrower, subject to certain exceptions
which must be approved by the Chief Credit Officer and the Chief Executive Officer
or the President and in limited circumstances (absence of approving officers)
by the Chairman of the Board of Directors Loan Committee and the Chief Credit
Officer or by the Chairman of the Board of Directors Loan Committee and the Chief
Executive Officer or the President), we have the ability to sell participations
in those loans to other banks. We encourage relationship banking, obtaining a
substantial portion of each borrower’s banking business, including deposit
accounts. Other than as set forth below, the Bank does not currently engage in
consumer mortgage lending.
Commercial and Industrial Loans. These loans comprise a significant portion
of our loan portfolio and are made to businesses located in the Southern California
region and surrounding communities whose borrowing needs are generally $5.0
million or less. These loans are directly underwritten by us. These loans are
made to finance operations, to provide working capital, or for specific purposes
such as to finance the purchase of assets, equipment or inventory. Our commercial
and industrial loans may be secured (other than by real estate) or unsecured.
They may take the form of single payment, installment, equipment financing loans
(secured by the underlying equipment) or lines of credit. These are generally
based on the financial strength and integrity of the borrower and guarantor(s)
and generally (with some exceptions) are collateralized by short term assets
such as accounts receivable, inventory, equipment, real estate or a borrower’s
other business assets. Commercial term loans are typically made to finance the
acquisition of fixed assets, refinance short-term debt originally used to purchase
fixed assets, or, in rare cases, to finance the purchase of businesses.
Construction, Miniperm Loans, Land Development and Other Land Loans. We originate
and underwrite interim land and construction loans as well as miniperm loans,
collateralized by first or junior deeds of trust on specific commercial properties
which are principally in our primary market areas. Land loans are primarily
for entitlements and infrastructure. We originate construction, renovation and
conversion loans to businesses on commercial, residential and income producing
properties, which generally have terms of less than two years. Miniperm loans
finance the purchase and/or ownership of commercial properties, including owner-occupied
and income producing properties. Miniperm loans are generally made with an amortization
schedule ranging from 15 to 25 years with a lump sum balloon payment due in
five to ten years. We do not engage in any large tract construction lending.
Our construction loans are generally limited to experienced developers who are
known to our management. We impose a limit on the loan to value ratio on all
real estate lending. The project financed must be supported by current independent
third party appraisals (which are reviewed by our appraisal department), environmental
reviews where appropriate and other relevant information. We review each loan
request and renewal individually.
Commercial and Residential Real Estate Loans. We originate and underwrite commercial
property and multi-family loans principally within our service area. Typically,
these loans are held in our loan portfolio and collateralized by the underlying
property. The property financed must be supported by current independent third
party appraisals at the date of origination (which are reviewed by our appraisal
department) and other relevant information.
SBA Loans. SBA loans are made through programs designed by the federal government
to assist the small business community in obtaining financing from financial
institutions that are given government guarantees as an incentive to make the
loans. The Bank has been designated as an SBA Preferred Lender. Our SBA loans
fall into three categories, loans originated under the SBA’s 7a Program
(“7a Loans”), loans originated under the SBA’s 504 Program
(“504 Loans”) and SBA “Express” Loans. SBA 7a Loans
are commercial business loans generally made for the purpose of purchasing real
estate to be occupied by the business owner, providing working capital, and/or
purchasing equipment or inventory. SBA 504 Loans are collateralized by commercial
real estate and are generally made to business owners for the purpose of purchasing
or improving real estate for their use and for equipment used in their business.
SBA lending is subject to federal legislation that can affect the availability
and funding of the program. From time to time, this dependence on legislative
funding causes limitations and uncertainties with regard to the continued funding
of such programs, which could potentially have an adverse financial impact on
our business.
Home Equity Lines of Credit “HELOCS”. We offer home equity lines
of credit “HELOCS”, which are revolving lines of credit collateralized
by senior or junior deeds of trust on residential real properties, the applicants
for which are generally our individual clientele and the principals and executives
of our business customers. They generally bear a rate of interest that floats
with the Bank’s base rate or the prime rate and have maturities of five
to ten years.
Personal Loans. We offer personal loans. Generally, these are unsecured, but
they may be secured by collateral, including deposit accounts or marketable
securities. The Bank does not currently originate first trust deed home mortgage
loans or home improvement loans.
Deposit Products
As a full-service commercial bank, we focus deposit generation on relationship
accounts, encompassing non-interest bearing demand, interest bearing demand,
and money market. In order to facilitate generation of non-interest bearing
demand deposits, we require, depending on the circumstances and the type of
relationship, our borrowers to maintain deposit balances with us as a typical
condition of granting loans. We also offer certificates of deposit and savings
accounts. We service our attorney clients by offering Interest on Lawyers’
Trust Accounts, “IOLTA” in accordance with the requirements of the
California State Bar. We market deposits by offering the convenience of third
party “couriers” or, in appropriate cases armored vehicles, which
contract with our customers, as well as a “remote deposit capture”
product that allows deposits to be made via computer at the customer’s
business location. We also offer customers “e-statements” that allows
customers to receive statements electronically, which is more convenient and
secure than receiving paper statements, in addition to reducing paper and being
environmentally-friendly.
For customers requiring full FDIC insurance on certificates of deposit in excess
of $250,000, we offer the CDARS® program, which allows the Bank to place
the certificates of deposit with other participating banks to maximize the customers’
FDIC insurance. We receive a like amount of deposits from other participating
financial institutions. In addition, we offer on a limited basis the ICS™
program, an insured deposit “sweep” program for demand deposits
which is a product offered by Promontory Interfinancial Network, LLC, which
is also the provider of the CDARS® program. Similarly to the CD’s
discussed above, the Bank receives a like amount of deposits from other financial
institutions and all customer deposits are insured by the FDIC. These “reciprocal”
CDARS® and ICS deposits are classified as “brokered” deposits
in regulatory reports and are currently the only brokered deposits utilized
by the Bank; the Bank considers these deposits to be “core” in nature.
Investment Products
We compete with other larger and multi-state institutions for deposits. We have
traditionally offered customers requiring either higher yields or more security
investment sweeps into multiple types of money market funds provided by Dreyfus
Corporation, a wholly owned subsidiary of Bank of New York Mellon Corporation,
although this service has been temporarily discontinued. All of the funds invest
in short-term securities and seek high current income, the preservation of capital
and the maintenance of liquidity and each fund favors stability over growth.
As a condition to access these products, we require the customer to maintain
a certain level of demand deposits. Furthermore, we have also entered into “repurchase
agreements” with sophisticated business customers, many of whom act as
fiduciaries and require additional security above FDIC deposit insurance. These
are essentially borrowings by the Bank, secured by U.S. Government and Agency
securities from its investment portfolio. These are disclosed on the Bank’s
financial statements as “Securities Sold under Agreements to Repurchase.”
We also offer a “repo sweep” product whereby the deposits of qualifying
customers are “swept” into repurchase agreements on a daily basis.
Through a third party arrangement with a registered representative of National
Planning Corporation, member FINRA/SIPC we offer customers, upon request, the
ability to purchase mutual funds, securities, annuities and limited types of
insurance. The Bank considers this an ancillary product to its commercial banking
activities.
Electronic Banking
While personalized, service-oriented banking is the cornerstone of our business
plan, we use technology and the Internet as a secondary means for servicing
customers, to compete with larger banks and to provide a convenient platform
for customers to review and transact business. We offer sophisticated electronic
or “internet banking” opportunities that permit commercial customers
to conduct much of their banking business remotely from their home or business.
However, our customers will always have the opportunity to personally discuss
specific banking needs with knowledgeable bank officers and staff who are directly
accessible in the branches and offices as well as by telephone and email.
The Bank offers multiple electronic banking options to its customers. It does
not allow the origination of deposit accounts through online banking, nor does
it accept loan applications through its online services. All of the Bank’s
electronic banking services allow customers to review transactions and statements,
review images of paid items, transfer funds between accounts at the Bank, place
stop orders, pay bills and export to various business and personal software
applications. CUB Online Commercial Banking also allows customers to initiate
domestic wire transfers and ACH transactions, with the added security and functionality
of assigning discrete access and levels of security to different employees of
the client and division of functions to allow separation of duties, such as
input and release.
Additionally, we offer Positive Pay, an antifraud service that allows businesses
to review all issued checks daily and provides them with the ability to pay
or reject any item. ACH Positive Pay is also offered to allow customers to review
ACH transactions on a daily basis.
We also offer our internet banking customers an additional third party product
designed to assist in mitigating fraud risk to both the customer and the Bank
in internet banking and other internet activities conducted by the customer,
at no cost to the customer.
The Bank has its own “home page” address on the World Wide Web
as an additional means of expanding our market and providing banking services
through the Internet. Members of the public can also communicate with us through
the website. Our website address is: www.californiaunitedbank.com or www.cunb.com.
Other Services
In addition to providing a full complement of lending and deposit products and
related services, we provide our customers with many additional services, either
directly or through other providers, including, but not limited to, commercial
and stand-by letters of credit, domestic and international wire transfers, on
site Automated Teller Machines (“ATM’s”) and Visa® Debit
Cards and ATM cards. We also provide bank-by-mail services, courier services,
armored transport, lock box, cash vault, cash management services, telephone
banking, night depositories, credit cards and international services (some of
these through arrangements with third parties). Our customers may utilize ATM’s
other than California United Bank’s ATM’s; we reimburse our customers
for charges for utilization of other banks’ ATM’s up to a maximum
of $20 per month.