Single-Family Mortgage Loans. The Bank’s predominant lending activity is
the origination by PBM of loans secured by first mortgages on owner-occupied,
single-family (one to four units) residences in the communities where the Bank
has established full service branches and loan production offices.
The Bank’s residential mortgage loans are generally underwritten and
documented in accordance with guidelines established by institutional loan buyers,
Freddie Mac, Fannie Mae and the Federal Housing Administration (“FHA”)
(collectively, “the secondary market”). All conforming agency loans
are generally underwritten and documented in accordance with the guidelines
established by these secondary market purchasers, as well as the Department
of Housing and Urban Development (“HUD”), FHA and the Veterans’
Administration (“VA”). Loans are normally classified as either conforming
(meeting agency criteria) or non-conforming (meeting an institutional investor’s
criteria). Non-conforming loans are typically those that exceed agency loan
limits but closely mirror agency underwriting criteria. The non-conforming loans
are underwritten to expanded guidelines allowing a borrower with good credit
a broader range of product choices. Given the recent market environment, PBM
has expanded the production of FHA, VA, Freddie Mac and Fannie Mae loans.
Multi-Family and Commercial Real Estate Mortgage Loans. Consistent with its
strategy to diversify the composition of loans held for investment, the Bank
has made the origination and purchase of multi-family and commercial real estate
loans a priority.
Multi-family mortgage loans originated by the Bank are predominately adjustable
rate loans, including 3/1, 5/1 and 7/1 hybrids, with a term to maturity of 10
to 30 years and a 25 to 30 year amortization schedule. Commercial real estate
loans originated by the Bank are also predominately adjustable rate loans, including
3/1 and 5/1 hybrids, with a term to maturity of 10 years and a 25 year amortization
schedule. Rates on multi-family and commercial real estate ARM loans generally
adjust monthly, quarterly, semi-annually or annually at a specific margin over
the respective interest rate index, subject to annual interest rate caps and
life-of-loan interest rate caps.
Commercial Business Loans. The Bank has a Business Banking Department that primarily
serves businesses located within the Inland Empire. Commercial business loans
allow the Bank to diversify its lending and increase the average loan yield.
Commercial business loans are generally made to customers who are well known
to the Bank and are generally secured by accounts receivable, inventory, business
equipment and/or other assets. The Bank’s commercial business loans may
be structured as term loans or as lines of credit. Lines of credit are made
at variable rates of interest equal to a negotiated margin above the prime rate
and term loans are at a fixed or variable rate. The Bank may also require personal
guarantees from financially capable parties associated with the business based
on a review of personal financial statements. Commercial business term loans
are generally made to finance the purchase of assets and have maturities of
five years or less. Commercial lines of credit are typically made for the purpose
of providing working capital and are usually approved with a term of one year
or less.
Consumer Loans. The Bank offers open-ended lines of credit on either a secured
or unsecured basis. The Bank offers secured savings lines of credit which have
an interest rate that is four percentage points above the COFI, which adjusts
monthly.