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sufficient loan demand to pay the yields demanded by hot money
depositors.
5. Lending Activities
a. Loan Products
As of the reporting date, Peoples' loan portfolio was
heavily concentrated in real estate. Over 90 percent of Peoples'
loan portfolio was in real estate loans, of which 76.59 percent
were loans on 1 to 4 family residential real estate. Most real
estate loans made by Peoples were for existing properties, rather
than new construction. Peoples' concentration of loans in 1 to 4
family residential real estate placed it in the 98th percentile
in comparison to its peer institutions.
Peoples offered few choices in the way of loan products to
real estate borrowers. It did not offer adjustable rate
mortgages8 (ARM's) or home equity loans9 and did not participate
in any FHA or VA mortgage programs. Fixed-rate mortgages were
offered only with a 15- or 20-year term; a 30-year term, often
favored by first-time home buyers because of the lower monthly
payments, was not available. Also discouraging to first-time
home buyers, Peoples' loan-to-value (LTV) and loan limit
8 Peoples did not have sufficient information technology to
comply with regulations concerning the disclosures required
to be made to consumers with respect to adjustable rate
mortgage borrowers.
9 Peoples now offers home equity loans.
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