Residential Lending
The Bank originates residential mortgage (1-4 family) loans secured by property
located in the Bank’s market areas. Approximately 29.0% of the Bank’s
total loans were comprised of such loans. The Bank generally originates residential
mortgage (1-4 family) loans in amounts of up to 80.0% of the lesser of the appraised
value or the selling price of the mortgaged property without requiring private
mortgage insurance. A mortgage loan originated by the Bank, whether fixed rate
or adjustable rate, can have a term of up to 30 years. The Bank holds substantially
all of its adjustable rate and its 8, 10 and 12-year fixed rate loans in portfolio.
Adjustable rate loans limit the periodic interest rate adjustment and the minimum
and maximum rates that may be charged over the term of the loan. The Bank’s
fixed rate 15-year and 20-year loans are held in portfolio or sold in the secondary
market depending on market conditions. Generally, all 30-year fixed rate loans
are sold in the secondary market. The volume of loan sales is dependent on the
volume, type and term of loan originations.
Home Equity Loans
The Bank also originates home equity loans. These loans are secured by the
borrowers’ primary residence, but are typically subject to a prior lien,
which may or may not be held by the Bank. Borrowers may use the proceeds from
the Bank’s home equity loans for many purposes, including home improvement,
debt consolidation or other purchasing needs. The Bank offers fixed rate, fixed
payment home equity loans as well as variable and fixed rate home equity lines
of credit. Fixed rate home equity loans typically have terms of no longer than
15 years.
Commercial Real Estate and Land Loans
The Bank originates commercial real estate mortgage and land loans, including
both developed and undeveloped land loans, and loans on multi-family dwellings.
The Bank’s commercial real estate mortgage loans are primarily permanent
loans secured by improved property such as office buildings, retail stores,
commercial warehouses and apartment buildings. The terms and conditions of each
loan are tailored to the needs of the borrower and based on the financial strength
of the project and any guarantors. Generally, commercial real estate loans originated
by the Bank will not exceed 75.0% of the appraised value or the selling price
of the property, whichever is less. The average loan size is approximately $470,000
and is typically made with fixed rates of interest and 5- to 15-year maturities.
Real Estate Construction Lending
The Bank also lends funds for the construction of one-to-four family homes.
Real estate construction loans are made both to individual homeowners for the
construction of their primary residence and, to a lesser extent, to local builders
for the construction of pre-sold houses or houses that are being built for sale
in the future.
Consumer Loans
As part of its strategy to invest in higher yielding shorter term loans, the
Bank emphasized growth of its consumer lending portfolio in recent years. This
portfolio includes personal loans secured by collateral other than real estate,
unsecured personal loans and lines of credit and loans secured by deposits held
by the Bank. These loans consist primarily of auto loans, RV loans, boat loans,
personal loans and credit lines and deposit account loans. Consumer loans are
originated in the Bank’s market areas and generally have maturities of
up to 7 years. For loans secured by savings accounts, the Bank will lend up
to 90.0% of the account balance on single payment loans and up to 100.0% for
monthly payment loans.