Residential Mortgage Loans. We offer conforming conventional mortgage loans,
which are loans of $417,000 or less with additional requirements, such as, down
payment amount and credit history, as well as jumbo mortgage loans, which are
loans that exceed that amount. Although we have not sold residential mortgage
loans in recent years, we generally originate residential mortgage loans in
conformance with secondary market guidelines. We are currently offering adjustable-rate
loans. We determine the loan fees, interest rates and other provisions of mortgage
loans based on our own pricing criteria and competitive market conditions.
While residential real estate loans are normally originated with up to 30-year
terms, such loans typically remain outstanding for substantially shorter periods
because borrowers often prepay their loans in full either upon sale of the property
pledged as security or upon refinancing the original loan. Therefore, average
loan maturity is a function of, among other factors, the level of purchase and
sale activity in the real estate market, prevailing interest rates and the interest
rates payable on outstanding loans on a regular basis. We do not offer residential
mortgage loans with negative amortization, and we generally do not make interest
only residential mortgage loans, although we have, on limited occasions, made
interest only loans where there were exceptional income or credit characteristics
associated with the loan.
We make owner occupied residential real estate loans with loan-to-value ratios
of up to 95%. Loans with loan-to-value ratios in excess of 80% require private
mortgage insurance. In addition, non-owner occupied one to four family residential
real estate loan-to-value ratios may not exceed 75%. We require all properties
securing mortgage loans to be appraised by a board-approved independent appraiser.
We also require title insurance on all first mortgage loans. Borrowers must
obtain hazard insurance, and flood insurance is required for all loans located
in special flood hazard areas. We do not offer, and have not offered, sub-prime
or no-documentation mortgage loans.
Included in residential mortgage loans are second mortgage loans. Second mortgage
loans are made at fixed rates for terms of up to 15 years and in amounts of
up to $200,000. We do not offer second mortgage loans with loan-to-value ratios
exceeding 80%, including any first mortgage loan balance.
Non-residential Real Estate Loans. We currently do not offer loans secured by
non-residential real estate, but we have done so in the past and, as of December
31, 2015, we had $8.3 million of non-residential real estate loans in our portfolio.
The non-residential real estate securing these loans generally consists of churches,
small office buildings and marinas.
We originate loans for the construction of one- to four-family homes. We originate
loans to individuals to finance the construction of residential dwellings. Our
construction loans generally provide for the payment of only interest during
the construction phase, which is usually up to 12 months. At the end of the
construction phase, the loan generally converts to a permanent mortgage loan.
Loans generally can be made with a maximum loan to value ratio of 80% on residential
construction, based on the lesser of the appraised value as if complete or the
sum of all costs to the borrower including the cost of the land and construction
costs. Before making a commitment to fund a construction loan, we require an
appraisal of the property by an independent appraiser, and we may require a
feasibility study to ensure that the lot is buildable. We also will generally
require an inspection of the property before disbursement of funds during the
term of the construction loan.
We also originate loans to individuals for the purpose of purchasing land for
future construction of one- to four-family residences. We offer land loans at
a fixed-rate for a term of 20 years but are callable after five years. We limit
the loan-to-value ratio to a maximum of 65%.
Home Equity Lines of Credit. We offer home equity lines of credit in amounts
of up to $200,000, although on occasion, in the past, we have approved home
equity lines of credit in excess of this amount. All of our home equity lines
of credit currently offered are adjustable-rate loans with rates tied to the
prime rate as reported in The Wall Street Journal and terms of up to 20 years.
We do not originate home equity loans with loan-to-value ratios exceeding 80%,
including any first mortgage loan balance. Our home equity lines of credit are
not necessarily secured by residential real estate on which we also maintain
the first mortgage.
Consumer Loans. The only consumer loans we offer are loans to depositors, secured
by savings.