What are 's Business Segments?
One-to-Four Family Residential Real Estate Loans. A significant part of the
Company’s lending activity consists of the origination of one-to-four
family, owner-occupied, residential mortgage loans on properties located in
the Company’s market area. The Company also originates loans to commercial
customers secured by one-to-four family non-owner occupied properties. The Company
generally does not originate one-to-four family residential loans secured by
properties outside of its market area.
The Company’s fixed-rate loans generally are originated and underwritten
according to standards that permit resale in the secondary mortgage market (so-called
“conforming mortgages”) and, in accordance with the “Qualified
Mortgage” (“QM”) rules that became effective January 10, 2014
as issued by the Consumer Financial Protection Bureau (“CFPB”) will
be considered to be Qualified Mortgages. Certain loans may be originated with
certain exceptions that make the loans non-conforming and not qualified mortgages.
These loans are limited in number and are reported to the Bank’s Board
of Directors on a quarterly basis as exceptions to the Bank’s Loan Policy.
Multi-Family Residential Real Estate Loans. Multi-family real estate loans
currently are offered with adjustable interest rates or short-term balloon maturities,
although in the past the Company originated fixed-rate long-term multi-family
real estate loans. The terms of each multi-family loan are negotiated on a case-by-case
basis, although such loans typically have adjustable interest rates tied to
a market index, and amortize over 15 to 25 years. The Company currently does
not have any multi-family real estate construction loans.
Loans secured by multi-family real estate generally involve a greater degree
of credit risk than one-to-four family residential mortgage loans and carry
larger loan balances. This increased credit risk is a result of several factors,
including the concentration of principal in a limited number of loans and borrowers,
the effects of general economic conditions on income-producing properties, and
the increased difficulty of evaluating and monitoring these types of loans.
Furthermore, the repayment of loans secured by multi-family real estate is typically
dependent upon the successful operation of the related real estate property.
If the cash flow from the project is reduced, the borrower’s ability to
repay the loan may be impaired.
Nonresidential Real Estate and Land Loans. Loans secured by nonresidential
real estate generally involve a greater degree of risk than one-to- four family
residential mortgage loans and carry larger loan balances. This increased credit
risk is a result of several factors, including the concentration of principal
in a limited number of loans and borrowers, the effects of general economic
conditions on income-producing properties, and the increased difficulty of evaluating
and monitoring these types of loans. Furthermore, the repayment of loans secured
by non-residential real estate is typically dependent upon the successful operation
of the related real estate project. If the cash flow from the project is reduced,
the borrower’s ability to repay the loan may be impaired.
Residential Construction Loans. To a lesser extent, the Company originates
loans to finance the construction of one-to-four family residential property.
The Company makes construction loans to private individuals and to builders.
Loan proceeds are disbursed in increments as construction progresses and as
inspections warrant. Construction loans are typically structured as permanent
one-to-four family loans originated by the Company with a 12-month construction
phase. Accordingly, upon completion of the construction phase, there is no change
in interest rate or term to maturity of the original construction loan, nor
is a new permanent loan originated.
Commercial Business Loans. The Company has four experienced commercial lenders
and plans to pursue commercial lending growth as part of the Company’s
strategic plan to diversify the loan portfolio.
Commercial loans carry a higher degree of risk than one-to-four family residential
loans. Such lending typically involves large loan balances concentrated in a
single borrower or groups of related borrowers for rental or business properties.
In addition, the payment experience on loans secured by income-producing properties
is typically dependent on the success of the operation of the related project
and thus is typically affected by adverse conditions in the real estate market
and in the economy.
Consumer Loans. Ohio savings associations are authorized to invest in secured
and unsecured consumer loans in an aggregate amount which, when combined with
investments in commercial paper and corporate debt securities, does not exceed
20% of an association’s assets. In addition, an Ohio savings association
is permitted to invest up to 5% of its assets in loans for educational purposes.
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