One- to Four-Family Residential Loans. One of the Bank’s primary lending
activities is the origination of mortgage loans to enable borrowers to purchase
or refinance existing homes or to construct new residential dwellings in its
market area. The Bank offers fixed-rate and adjustable-rate mortgage loans with
terms up to 30 years. Borrower demand for adjustable-rate loans versus fixed-rate
loans is a function of the level of current and anticipated future interest
rates, the difference between the interest rates and loan fees offered for fixed-rate
mortgage loans and the initial period interest rates and loan fees for adjustable-rate
loans. The relative amount of fixed-rate mortgage loans and adjustable-rate
mortgage loans that can be originated at any time is largely determined by the
demand for each in a competitive environment and the effect each has on the
Bank’s interest rate risk. The loan fees charged, interest rates and other
provisions of mortgage loans are determined on the basis of the Bank’s
pricing criteria and competitive market conditions.
Multi-Family and Commercial Real Estate Loans. The origination of multi-family
and commercial real estate ("CRE") loans is the other primary lending
activity of the Bank. Such loans are made throughout its market area and in
strategic areas in the surrounding region for the purpose of acquiring, developing,
improving or refinancing multi-family and commercial real estate where the property
is the primary collateral securing the loan, and the income generated from the
property is the primary repayment source. The Bank offers fixed-rate and adjustable-rate
multi-family and commercial real estate loans. Adjustable-rate multi-family
and commercial real estate loans originate for amortization periods up to 25
years. Interest rates and payments on these loans typically adjust every five
years after a five-year initial fixed-rate period. The Bank’s multi-family
and commercial real estate loans are generally secured by owner-occupied properties,
including churches and retail facilities. These loans are secured by first mortgages
that generally do not exceed 75% of the property’s appraised value.
Construction and Land Loans. The Bank originates loans to individuals, and
to a lesser extent, builders, to finance the construction of residential dwellings.
The Bank also originates construction loans for commercial development projects,
including condominiums, apartment buildings, single-family subdivisions as well
as owner-occupied properties used for businesses. Residential construction loans
generally provide for the payment of interest only during the construction phase,
which is usually twelve months. At the end of the construction phase, the loan
generally converts to a permanent mortgage loan. Commercial construction loans
generally provide for the payment of interest only during the construction phase,
which may range from three to twenty-four months.
Commercial Business Loans. The Bank originates commercial business loans to
a variety of professionals, sole proprietorships and small businesses primarily
in its market area. When originating commercial business loans, the Bank considers
the financial statements of the borrower, the borrower’s payment history
of both corporate and personal debt, the debt service capabilities of the borrower,
the projected cash flows of the business, viability of the industry in which
the customer operates and the value of the collateral.
Consumer Loans. The Bank offers a variety of consumer loans, primarily home
equity lines of credit, and, to a lesser extent, loans secured by marketable
securities, passbook or certificate accounts, motorcycles, automobiles and recreational
vehicles, as well as unsecured loans. Generally, the Bank offers automobile
loans with a maximum loan-to-value ratio of 100% of the purchase price for new
vehicles. Unsecured loans generally have a maximum borrowing limit of $10,000
and a maximum term of five years.