Residential Mortgage Loans – Single-family: We offer single family residential
mortgage loans primarily as an accommodation to our existing clients. In most
cases, these take the form of non-conforming jumbo and super jumbo loans and
FFB does not currently sell or securitize any of its single family residential
mortgage loan originations. FFB does not originate loans defined as high cost
by state or federal banking regulators. The majority of FFB’s single family
residential loan originations are collateralized by first mortgages on real
properties located in Southern California. These loans are generally adjustable
rate loans with fixed terms ranging from 3 to 10 years and terms of the loan
not exceeding 30 years. These loans generally have interest rate floors and
payment caps. The loans are underwritten based on a variety of underwriting
criteria, including an evaluation of the character and creditworthiness of the
borrower and guarantors, loan-to-value and debt to income ratios, borrower liquidity,
income verification and credit history. In addition, we perform stress testing
for changes in interest rates and other factors and review general economic
trends such as market values.
Commercial Real Estate Loans -Owner Occupied: Owner occupied commercial real
estate loans are generally made to businesses that have demonstrated a history
of profitable operations. To qualify for such loans, prospective borrowers generally
must have operating cash flow sufficient to meet their obligations as they become
due, and good payment histories. Our commercial real estate loans are secured
by first trust deeds on nonresidential real property. These loans generally
are adjustable rate loans with interest rates tied to a variety of independent
indexes; although in some cases these loans have fixed interest rates for periods
ranging from 3 to 10 years and adjust thereafter based on an applicable index.
These loans generally have terms of 10 years, interest rate floors, payment
caps, and prepayment penalties. The loans are underwritten based on a variety
of underwriting criteria, including an evaluation of the character and creditworthiness
of the borrower and guarantors, loan-to-value and debt service coverage ratios,
borrower liquidity and credit history. In addition, we perform stress testing
for changes in interest rates, cap rates and other factors and review general
economic trends such as lease rates, values and absorption rates. We typically
require personal guarantees from the owners of the entities to which we make
such loans.
Commercial Loans: We offer commercial term loans and commercial lines of credit
to our clients. Commercial loans generally are made to businesses that have
demonstrated a history of profitable operations. To qualify for such loans,
prospective borrowers generally must have operating cash flow sufficient to
meet their obligations as they become due, and good payment histories. Commercial
term loans are either fixed rate loans or adjustable rate loans with interest
rates tied to a variety of independent indexes and are made for terms ranging
from 1 to 5 years. Commercial lines of credit are adjustable rate loans with
interest rates usually tied to the Wall Street Journal prime rate or LIBOR rates,
are made for terms ranging from 1 to 2 years, and contain various covenants,
including a requirement that the borrower reduce its credit line borrowings
to zero for specified time periods during the term of the line of credit. The
loans are underwritten based on a variety of underwriting criteria, including
an evaluation of the character and creditworthiness of the borrower and guarantors,
debt service coverage ratios, historical and projected client income,
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borrower liquidity and credit history. In addition, we perform stress testing
for changes in interest rates and other factors and review general economic
trends in the client’s industry. We typically require personal guarantees
from the owners of the entities to which we make such loans.
Equipment financing: Beginning in 2016, we are offering equipment financing
to provide financing solutions to third party originators, including equipment
brokers, lessors and other referral sources. We expect that a majority of the
equipment financing business will be small in nature, typically averaging below
$250,000, will have terms ranging from 3 to 7 years, will carry fixed rates
and will be secured by the underlying equipment and the operations of the borrower.
Small Business Lending and USDA Lending: The Bank is approved as a SBA lender
and as a USDA lender. The Bank intends to expand its use of both the SBA and
USDA lending programs as it identifies opportunities to serve existing clients
and potential clients. As government guaranteed programs, the Bank will need
to comply with underwriting guidelines and terms and conditions set forth under
the related programs.
Consumer Loans: We offer a variety of consumer loans and credit products, including
personal installment loans and lines of credit, and home equity lines of credit
designed to meet the needs of our clients. Consumer loans are either fixed rate
loans or adjustable rate loans with interest rates tied to a variety of independent
indexes and are made for terms ranging from 1 to 10 years. The loans are underwritten
based on a variety of underwriting criteria, including an evaluation of the
character creditworthiness and credit history of the borrower and guarantors,
debt to income ratios, borrower liquidity, income verification, and the value
of any collateral securing the loan. Consumer loan collections are dependent
on the borrower’s ongoing cash flows and financial stability and, as a
result, generally pose higher credit risks than the other loans that we make.