Company profile
Introduction
Banco La Hipotecaria, S.A. is a regulated banking institution domiciled in the Republic of Panama with operating subsidiaries in El Salvador and Colombia.
Banco La Hipotecaria is the only regional financial institution dedicated exclusively to the origination and servicing of residential mortgage loans, with a proven ability to securitize its mortgages when the need arises, in order to mitigate liability maturity mismatches or to meet the general funding needs of the institution.
We are committed to providing a full array of performance data on our mortgage-loan and personal-loan portfolios so that our international investors, creditors and rating agencies can thoroughly assess the performance of assets originated and serviced by La Hipotecaria.
A brief company history
What is today Banco La Hipotecaria and Subsidiaries began operations in the Republic of Panamá in May of 1997, as a non-regulated mortgage finance company. In 2004 the shareholders launched operations in El Salvador as a non-regulated mortgage finance company under the name “La Hipotecaria, S.A. de C.V.”. In 2010 the firm’s Panama operations became a regulated deposit-taking banking entity upon obtaining a banking license from the Banking Superintendence of Panama.
In 2011, shareholders launched operations in Colombia under the name “La Hipotecaria de Colombia, S.A.”, a non-regulated mortgage finance company and in April of 2014, launched a second firm in Colombia, named “La Hipotecaria Compañía de Financiamento”, a regulated deposit-taking financial entity supervised by the Financial Superintendence of Colombia. Shortly thereafter, this new regulated company absorbed the lending operations of La Hipotecaria’s non-regulated operations in Colombia. In the same month, both La Hipotecaria, S.A. de C.V. (El Salvador) and La Hipotecaria Compañía de Financiamento (Colombia) became subsidiaries of Banco La Hipotecaria in Panama, thus placing all three operating entities under the regulatory umbrella of the Banking Superintendence of Panama.
Today, the three operating companies of La Hipotecaria employ 260 full-time salaried employees in Panama, El Salvador and Colombia and administer a residential loan portfolio of over 25,000 mortgage whose principal balance exceeds US$625,000,000. La Hipotecaria enjoys the support of many international banks and multilateral lending instructions that provide the company with warehousing lines of credit (see credit lines) and that of numerous institutional investors who invest in various the financial instruments issued by La Hipotecaria in local and international markets.
Shareholders
The sole shareholder of Banco La Hipotecaria, S.A. and Subsidiaries is La Hipotecaria, (Holding) Inc., a holding company domiciled in the British Virgin Islands.
The majority shareholder of La Hipotecaria (Holding) Inc. is Grupo ASSA, S.A., which possesses 69% of the company’s common shares. Grupo ASSA is a publicly-traded company on the Panamanian Securities Exchange whose shareholder equity exceeds US$810,000,000 and is owner of one of the region’s most important insurance companies, ASSA Compañía de Seguros, a company rated “A” (Excellent) by the prestigious international insurance rating agency A.M. Best. (www.assanet.com).
The International Finance Corporation (IFC) is a minority shareholder in La Hipotecaria (Holding), Inc., possessing 13% of the company’s common shares. The IFC is one of the world’s primer multilateral institutions and member of the World Bank Group. (www.ifc.org).
The company’s remaining common shares are held by non-institutional investors involved directly or indirectly in the operations of La Hipotecaria.
Loan origination activities
Since initiating operations in Panama City, Panama in 1997, La Hipotecaria has become one of the country’s most important providers of mortgage loans for borrowers in the middle to lower-middle income market; borrowers whose average family income range from approximately US$400 to US$1,500 per month. Through its five offices in Panamá, La Hipotecaria originates between US$6 million to US$8 million in mortgages per month with an average loan size of approximately US$38,500. In El Salvador, La Hipotecaria has also become one of the country’s most important providers of mortgage loans for borrowers in the same market niche and, with its offices in San Salvador and Santa Ana, originates between US$2 million to US$3 million in mortgages per month with an average loan size of approximately US$42,500. In Colombia, where the company is only beginning to expand its operations and mortgage lending activities are limited today to the city of Bogota, it is the company’s goal to eventually become an important player in the same lending niche in which it operates in Panama and El Salvador. Today, origination actives in Colombia generate approximately US$2 million in mortgages per month.
La Hipotecaria lends to borrowers who purchase homes in a large diversity of projects and no one real-estate developer or real-estate project is allowed to account for more than 5% of the company’s loan portfolio. Furthermore, in order to maintain its objectivity in loan origination activities, La Hipotecaria does not lend to real estate projects in which shareholders or directors have a direct or indirect interest, nor does it provide construction financing. Loan qualifications, are stringent but fair. Clients must show continuity of employment, a clean credit history, and an income to mortgage payment ratio of approximately 30%. Prudent mortgage lending has been at the cornerstone of La Hipotecaria’s business strategy and is reflected in its very low levels of historical delinquency. (see Portfolio Information).
Local mortgage loan securitization activities
La Hipotecaria has been pioneer in the creation of investment-grade mortgage-backed securities which it offers to local and international institutional investors, while retaining servicing rights on all originated mortgage loans.
In May of 1999, La Hipotecaria issued the first structured mortgage securitization ever completed in the Central American Region. Since that date and with the experience gained each year, La Hipotecaria has continued to issue mortgage-backed securities at the rate of approximately one issue per year and as of today has successfully completed twelve MBS transactions. All issuances have been approved by the Panamanian Securities and Exchange Commission (La Superintendencia del Mercado de Valores), and are sold through the Panamanian Stock Exchange (La Bolsa de Valores de Panamá).
Cross-border mortgage loan securitization activities
In 2007 La Hipotecaria became the first institution in Latin America to issue a cross-border residential mortgage-backed security structured under the rule 144A, Regulation S of the Securities and Exchange Commission of the United States of America. The senior notes of this issuance were the first Panamanian securities issued in international markets to breach the country’s sovereign ceiling and obtain an international investment grade rating from Fitch Ratings, Standard & Poors and Moodys Investor Services. Since that date La Hipotecaria has issued three additional cross-border RMBS in the years 2010, 2013 and 2014. With the inclusion of a financial guarantee policy issued by the Overseas Private Investment Corporation (OPIC) on these last three cross-border issuances, the senior notes achieved a AAA rating by Fitch Ratings on a global scale. All La Hipotecaria RMBS have been acquired by regional and international institutional investors and to date, all are performing as originally projected. (See Securitizations).
Technological platform
In order to support its mortgage-loan origination, servicing and securitization activities, La Hipotecaria has developed a fully-integrated proprietary software platform unique in the Latin-American region. The system manages all aspects of mortgage-loan origination, approval, servicing, accounting and securitization. Data fields are designed in accordance international standards for mortgage loan securitization activities and thus provide the historical data to support the company`s ongoing securitization program and comply with rating-agency requirements. The software platform is legally registered as intellectual property of Online Systems, S.A., a wholly owned subsidiary of La Hipotecaria (Holding) Inc.
Summary
It is the Vision of the company’s Executives, Directors and Shareholders to continue expanding its mortgage lending operations, especially in Colombia where the company hopes to achieve its goal of becoming a significant participant it its lending niche. La Hipotecaria will continue to strive to fulfill its corporate Mission of expanding home ownership and improving the lives of tens of thousands of Latin Americans through its mortgage products.