What are Poage Bankshares's Business Segments?
Consumer Lending and Home Equity Loans and Lines of Credit.
Consumer loans may entail greater credit risk than residential mortgage loans,
particularly in the case of consumer loans that are unsecured or that are secured
by rapidly depreciable assets, such as automobiles. In addition, consumer loan
collections are dependent on the borrower’s continuing financial stability,
and thus are more likely to be affected by adverse personal circumstances. Furthermore,
the application of various federal and state laws, including bankruptcy and
insolvency laws, may limit the amount that can be recovered on such loans. In
determining whether to make a consumer loan, we consider the value of collateral,
and the borrower’s residence, employment history, annual income and debt
service ratio which, including all mortgage payments and the credit line payment,
generally may not exceed 40% of gross monthly income without prior approval
of Town Square’s credit committee or senior officer with appropriate lending
authority.
Commercial Real Estate and Multi-Family Loans.
Maturities for our commercial real estate and multi-family loans generally do
not exceed 15 years, although exceptions may be made for terms of up to 20 years.
Rates are generally adjustable based upon the weekly average yield on U.S. treasury
securities adjusted to a constant maturity of one year or another floating index.
The maximum loan-to-value ratio is 80% on our owner-occupied commercial real
estate loans. The maximum loan-to-value ratio on one- to four-family residential
rental properties, and office or retail non-owner-occupied commercial real estate
or rental properties with greater than five units is 75%. We generally require
a first mortgage on all commercial real estate loans, as well as a debt service
coverage ratio of 1.25:1.
Commercial Business Loans.
We also originate commercial term loans to fund long-term borrowing needs such
as purchasing equipment, property improvements or other fixed asset needs. We
fix the maturity of a term loan to correspond to 75% of the useful life of any
equipment purchased or seven years, whichever is less. Term loans can be secured
with a variety of collateral, including business assets such as accounts receivable
and inventory or intermediate and long-term assets such as equipment, commercial
vehicles or real estate.
Construction and Land Loans. These construction loans have higher risk based
interest rates and terms. During the construction phase, the borrower generally
pays interest only. The maximum loan-to-value ratio of our owner-occupied construction
loans is generally 80% of construction costs or completed-appraised-value, whichever
is less. Residential construction loans are generally underwritten pursuant
to the same guidelines used for originating permanent residential mortgage loans.
We also make construction loans for the construction of homes “on speculation.”
These loans are for “pre-sold” and “spec” homes, and
no more than two such loans may be outstanding to one borrower at any time.
These loans generally have initial maximum terms of nine months, although the
term may be extended to up to 18 months. The loans generally carry variable
rates of interest. The maximum loan-to-value ratio of these construction loans
is generally 80% of construction costs or completed-appraised-value, whichever
is less. We also make loans for the construction of commercial and multi-family
buildings.
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