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Member Profile

Provident Savings Bank Uses Advances to Manage Risk, Keep Pace with Regional Growth

For over 50 years, Provident Savings Bank has been providing mortgage credit to the communities that make up the Inland Empire of Southern California, one of the fastest growing regions in the nation—and one increasingly challenged by the state’s persistent affordability issues. Provident addresses these issues by offering a wide range of innovative mortgage product solutions and emphasizing multifamily lending.

“In recent years, home prices in the area have become less affordable, so the multifamily properties we finance are especially important to moderate-income families,” says Donavon Ternes, Executive Vice President and Chief Financial Officer. “To the extent that we can continue to fund those projects, along with single-family, commercial real estate, construction, and business loans, we know that we are helping to preserve desperately needed rental housing in our communities.”

Originating loans both for sale and for portfolio, Provident uses Bank advances to help it manage the interest rate risk inherent in its mortgage lending activities. “From an interest rate risk management perspective, the Bank is invaluable to us because it is one of the few sources of long-term funding for a financial institution of our size,” notes Mr. Ternes. “It’s also one of the cheapest.”

Along with the reliable and virtually instant access to low-cost funding that membership in the Bank affords, Provident values the financial flexibility it gains by using unique product features like Partial Prepayment Symmetry. “PPS is another tool at my disposal to structure my balance sheet,” says Mr. Ternes. “It gives me greater flexibility, and with it I have the option of turning a PPS Advance into a gain.” The ability to pledge loans serviced by other lenders as collateral for Bank advances is another advantage for Provident. “Not everybody allows that, so it is a real differentiator for the Bank,” according to Mr. Ternes.

Mr. Ternes also notes that Provident staff find e-Transact, the Bank’s secure internet transaction service, a quick and efficient way to borrow. All of the information needed is right at their fingertips, eliminating the need to make a telephone call or wait for a response.
 
“At the end of the day, we are delivering the financing that ultimately provides the housing that’s so desperately needed by Californians, especially in our rapidly expanding region,” says Mr. Ternes. As the Inland Empire continues to grow, Provident’s community banking business will grow with it.  “The Federal Home Loan Bank of San Francisco will continue to be an integral part of our funding strategy.”
 
© 2000-2008 Federal Home Loan Bank of San Francisco
Federal Home Loan Bank of San Francisco

Member Profile

Provident Savings Bank Uses Advances to Manage Risk, Keep Pace with Regional Growth

For over 50 years, Provident Savings Bank has been providing mortgage credit to the communities that make up the Inland Empire of Southern California, one of the fastest growing regions in the nation—and one increasingly challenged by the state’s persistent affordability issues. Provident addresses these issues by offering a wide range of innovative mortgage product solutions and emphasizing multifamily lending.

“In recent years, home prices in the area have become less affordable, so the multifamily properties we finance are especially important to moderate-income families,” says Donavon Ternes, Executive Vice President and Chief Financial Officer. “To the extent that we can continue to fund those projects, along with single-family, commercial real estate, construction, and business loans, we know that we are helping to preserve desperately needed rental housing in our communities.”

Originating loans both for sale and for portfolio, Provident uses Bank advances to help it manage the interest rate risk inherent in its mortgage lending activities. “From an interest rate risk management perspective, the Bank is invaluable to us because it is one of the few sources of long-term funding for a financial institution of our size,” notes Mr. Ternes. “It’s also one of the cheapest.”

Along with the reliable and virtually instant access to low-cost funding that membership in the Bank affords, Provident values the financial flexibility it gains by using unique product features like Partial Prepayment Symmetry. “PPS is another tool at my disposal to structure my balance sheet,” says Mr. Ternes. “It gives me greater flexibility, and with it I have the option of turning a PPS Advance into a gain.” The ability to pledge loans serviced by other lenders as collateral for Bank advances is another advantage for Provident. “Not everybody allows that, so it is a real differentiator for the Bank,” according to Mr. Ternes.

Mr. Ternes also notes that Provident staff find e-Transact, the Bank’s secure internet transaction service, a quick and efficient way to borrow. All of the information needed is right at their fingertips, eliminating the need to make a telephone call or wait for a response.
 
“At the end of the day, we are delivering the financing that ultimately provides the housing that’s so desperately needed by Californians, especially in our rapidly expanding region,” says Mr. Ternes. As the Inland Empire continues to grow, Provident’s community banking business will grow with it.  “The Federal Home Loan Bank of San Francisco will continue to be an integral part of our funding strategy.”
 


© 2000-2008 Federal Home Loan Bank of San Francisco