Residential Mortgage Loans. The Bank originates residential mortgage loans
secured by first mortgages on one- to four-family residences, generally located
in the State of New Jersey and the eastern part of Pennsylvania. The Bank originates
residential mortgages primarily through commissioned mortgage representatives
and through the Internet. The Bank originates both fixed-rate and adjustable-rate
mortgages.
Commercial Real Estate Loans. The Bank originates loans secured by mortgages
on various commercial income producing properties, including multi-family apartment
buildings, office buildings and retail and industrial properties.
Multi-family Loans. The Bank underwrites loans secured by apartment buildings
that have five or more units. The Bank considers multi-family lending a component
of the commercial real estate lending portfolio.
Construction Loans. The Bank originates commercial construction loans. Commercial
construction lending includes both new construction of residential and commercial
real estate projects and the reconstruction of existing structures.
The Bank’s commercial construction financing includes projects constructed
for investment purposes (rental property), projects for sale (single family/condominiums)
and to a lesser extent owner-occupied business properties. To mitigate the speculative
nature of construction loans, the Bank generally requires significant pre-leasing
on rental properties; requires that a percentage of the for-sale single-family
residences or condominiums be under contract to support construction loan advances;
and requires other covenants on residential for rent projects depending on whether
the project is vertical or horizontal construction.
The Bank underwrites construction loans for a term of three years or less. The
majority of the Bank’s construction loans are floating-rate loans with
a maximum 75% loan-to-value ratio for the completed project. The Bank employs
professional engineering firms to assist in the review of construction cost
estimates and make site inspections to determine if the work has been completed
prior to the advance of funds for the project.
Construction lending generally involves a greater degree of risk than commercial
real estate or multi-family lending. Repayment of a construction loan is, to
a great degree, dependent upon the successful and timely completion of the construction
of the subject project and the successful marketing of the sale or lease of
the project. Construction delays, slower than anticipated absorption or the
financial impairment of the builder may negatively affect the borrower’s
ability to repay the loan.
Commercial Loans. The Bank underwrites commercial loans to corporations, partnerships
and other businesses. The majority of the Bank’s commercial loan customers
are local businesses with revenues of less than $50.0 million. The Bank primarily
offers commercial loans for equipment purchases, lines of credit for working
capital purposes, letters of credit, asset-based lines of credit and real estate
loans where the borrower is the primary occupant of the property. Most commercial
loans are originated on a floating-rate basis and the majority of fixed-rate
commercial term loans are fully amortized over a five-year period. Owner-occupied
commercial real estate loans are generally underwritten to terms consistent
with those utilized for commercial real estate; however, the maximum loan-to-value
ratio for owner-occupied commercial real estate loans is 80%.