Real Estate Loans
Construction and Development Loans. We offer loans both to individuals who are
constructing personal residences and to real estate developers and building
contractors for the acquisition of land for development and the construction
of homes and commercial properties. These loans are generally in-market to known
and established borrowers. Construction loans generally have a short term, such
as one to two years.
Commercial and Industrial Loans
We have a strong commercial loan base. We focus on, and tailor our commercial
loan programs to, small- to mid-sized businesses in our market areas. Our loan
portfolio includes loans to wholesalers, manufacturers, contractors, business
services companies and retailers. We provide a wide range of business loans,
including lines of credit for working capital and operational purposes and term
loans for the acquisition of equipment. Although most loans are made on a secured
basis, loans may be made on an unsecured basis where warranted by the overall
financial condition of the borrower. Terms of commercial business loans generally
range from one to five years.
Agricultural Loans
Due to the rural market areas in and around which we operate, agricultural loans
are an important part of our business. Agricultural loans include loans made
to finance agricultural production and other loans to farmers and farming operations.
Agricultural loans comprised approximately 5.7% of our total loan portfolio
at December 31, 2015.
Agricultural loans, most of which are secured by crops, livestock and machinery,
are generally provided to finance capital improvements and farm operations as
well as acquisitions of livestock and machinery. The ability of the borrower
to repay may be affected by many factors outside of the borrower’s control,
including adverse weather conditions, loss of livestock due to disease or other
factors, declines in market prices for agricultural products and the impact
of government regulations. The ultimate repayment of agricultural loans is dependent
upon the profitable operation or management of the agricultural entity.
Consumer Lending
Our consumer lending department provides all types of consumer loans, including
personal loans (secured or unsecured) and automobile loans. Consumer loans typically
have shorter terms, lower balances, higher yields and higher risks of default
than one- to four-family residential real estate mortgage loans. Consumer loan
collections are dependent on the borrower’s continuing financial stability
and are therefore more likely to be affected by adverse personal circumstances.
Loan Pool Participations
The Company acquired its loan pool participations in the merger with Former
MidWestOne and continued in this business following that merger. However, in
2010, the Company made the decision to exit this line of business and did not
purchase new loan pool participations as existing pools paid down. The Company
sold its remaining loan pool participations in June 2015, and has now completely
exited this line of business.