Business and Consumer Lending
WashingtonFirst’s lending activities include commercial real estate loans,
residential real estate loans, commercial and industrial loans, construction
and development loans and consumer loans. Loans originated by the Bank are primarily
classified as loans held for investment. Loans originated by the Mortgage Company
are primarily classified as loans held for sale.
Lending activities are subject to lending limits imposed by federal and state
law. While different limits apply in certain circumstances based on the type
of loan, the Bank’s lending limit to any one borrower on loans that are
not fully secured by readily marketable or other permissible collateral generally
is equal to 15 percent of the Bank’s unimpaired capital and surplus.
Acquisition, Development & Construction Loans. These loans generally fall
into one of four types: first, loans to construct owner-occupied commercial
buildings; second, loans to individuals that are ultimately used to acquire
property and construct an owner-occupied residence; third, loans to builders
for the purpose of acquiring property and constructing homes for sale to consumers;
and fourth, loans to developers for the purpose of acquiring land to be developed
into finished lots for the ultimate construction of residential or commercial
buildings. Loans of these types are generally secured by the subject property
within limits established by WashingtonFirst’s board of directors based
upon an assessment of market conditions and updated from time to time. The loans
typically carry recourse to principal borrowers. In addition to the repayment
risk associated with loans to individuals and businesses, loans in this category
carry construction completion risk. To address this additional risk, loans of
this type are subject to additional administrative procedures designed to verify
and ensure progress of the project in accordance with allocated funding, project
specifications and time frames.
Commercial Real Estate Loans. These loans generally fall into one of three categories:
loans supporting owner-occupied commercial property; loans supporting properties
used by non-profit organizations such as trade associations, churches or charter
schools where repayment is dependent upon the cash flow of the non-profit organizations;
and loans supporting a commercial property leased to third parties for investment.
Commercial real estate loans are secured by the subject property and underwritten
to policy standards. Policy standards, approved by WashingtonFirst’s board
of directors from time to time, set forth, among other considerations, loan
to value limits, cash flow coverage ratios, and standards governing the general
creditworthiness of the obligors. Loans secured by commercial real estate originated
by the Bank are primarily classified as loans held for investment.
Residential Real Estate Loans. Through the Mortgage Company, WashingtonFirst
offers a variety of competitive mortgage loan products to homeowners and investors
of 1-4 family properties. Mortgage loans originated are generally sold in the
secondary market through purchase agreements with institutional investors with
servicing released. Loans in these categories are underwritten to standards
within a traditional consumer framework that is periodically reviewed and updated
by management and the board of directors, and includes such considerations as
repayment source and capacity, collateral value, credit history, savings pattern,
and stability. The Mortgage Company’s activities rely on insurance provided
by HUD and the VA. In addition, we underwrite mortgage loans in accordance with
guidelines for programs under Fannie Mae and Freddie Mac that make these loans
marketable in the secondary market.
Commercial and Industrial Loans. These loans are to businesses or individuals
within the greater Washington, D.C. metropolitan area for business purposes.
Typically the loan proceeds are used to support working capital and the acquisition
of fixed assets of an operating business or to refinance a loan payable to another
financial institution that was originally made for a similar purpose. Each loan
is underwritten based upon WashingtonFirst’s assessment of the obligor’s
ability to generate operating cash flow in the future necessary to repay the
loan. To address the risks associated with the uncertainties of future cash
flow, these loans are generally secured by assets owned by the business or its
principal shareholders and the principal shareholders are typically required
to guarantee the loan.
Consumer Loans. Consumer loans are loans to individuals for a stated purpose
such as to finance a car or boat, to refinance debt, or to fund general working
capital needs. These loans are generally extended in a single disbursement and
repaid over a specified period of time. Most loans are well secured with assets
other than real estate, such as marketable securities or automobiles. In general,
management discourages unsecured lending. Loans in this category are underwritten
to standards within a traditional consumer framework that is periodically reviewed
and updated by WashingtonFirst’s management and board of directors, and
includes such considerations as repayment source and capacity, collateral value,
credit history, savings pattern, and stability.
Deposit Services
Deposits are the primary source of funding for the Bank. The Bank offers an
array of traditional banking products and services which are priced competitively.
Deposit services include business and personal checking, NOW accounts, tiered
savings and money market and time deposit accounts with varying maturity structures
and customer options. A complete individual retirement account program is also
available. The Bank also participates in the CDARS program which function to
assure full FDIC insurance for participating Bank customers.
Wealth Management
Through its wholly owned subsidiary, Wealth Advisors, the Company offers fee
based investment advisory services to high net worth individuals, business owners
and executives, and families to preserve and grow their wealth. In addition,
the Company provides financial and retirement planning services. Custodial services
are offered through third party contractual arrangements with Pershing Securities
and Charles Schwab Securities.