After This Webinar You’ll Be Able To:
Understand the special construction loan documentation that is required and why it is required
Properly create and perfect liens in real and personal property during the construction process
Address problems involving the general contractor and suppliers
Handle loan disbursement procedures and construction monitoring
Explain how to deal with change orders and cost overruns
Webinar Details
Real estate construction lending is perhaps the most complicated type of loan and certainly one of the riskiest that your institution can make. Construction lending requires knowledge of unique lending processes and an understanding of how to manage these processes. It is a trap for the unwary who think construction lending is simply making a real estate loan. This webinar will explain the construction lending function from start to finish. It will discuss both consumer and commercial construction loans and the landmines to avoid.
Who Should Attend?
This informative session is designed for any personnel involved in construction loans, including loan officers, loan operations personnel, compliance staff, attorneys, auditors, and managers.
Take-Away Toolkit
- Loan closing checklist (list of loan documents and other items needed for construction loans)
- Employee training log
- Interactive quiz
- PDF of slides and speaker’s contact info for follow-up questions
- Attendance certificate provided to self-report CE credits
NOTE: All materials are subject to copyright. Transmission, retransmission, or republishing of any webinar to other institutions or those not employed by your institution is prohibited. Print materials may be copied for eligible participants only.
Presenters
Elizabeth Fast is a partner with Spencer Fane LLP where she specializes in the representation of financial institutions. Fast is the head of the firm’s training division. She received her law degree from the University of Kansas and her undergraduate degree from Pittsburg State University. In addition, she has a Master of Business Administration degree and she is a Certified Public Accountant. Before joining Spencer Fane, she was General Counsel, Senior Vice President, and Corporate Secretary of a $9 billion bank with more than 130 branches, where she managed all legal, regulatory, and compliance functions.
Registration Options
- $279 – Live Webinar Access
- $279 – OnDemand Access + Digital Download
- $379 – Both Live & On-Demand Access + Digital Download
Do you know about the proposed update to the Interagency Policy Statement on Prudent Commercial Real Estate Loan Accommodations and Workouts? What is in the statement? How will the proposed changes affect CRE loan workouts? Should institutions be preparing now? If so, how? Get answers to these and many other questions during this timely session.
After This Webinar You’ll Be Able To:
- Understand the changes proposed by regulators and how to implement them
- Employ the key principles of prudent CRE loan accommodations and workouts
- Explain what constitutes a troubled debt restructuring for reporting purposes
- Take the proper steps to avoid criticism from your regulators even if your CRE loans are adversely classified
- Protect your institution from potential liability to commercial borrowers
Webinar Details
On August 2, 2022, the FDIC, OCC, and NCUA proposed changes and updates to the existing Interagency Policy Statement on Prudent Commercial Real Estate Loan Accommodations and Workouts.
The COVID pandemic led to financial distress across several CRE property types, especially the hospitality, office, retail, and entertainment industries. In addition, rising interest rates, inflationary pressures, and labor challenges could adversely affect the financial condition and repayment capacity of commercial borrowers in various other industries. This new proposed policy statement reaffirms certain key principles which require financial institutions to work prudently and constructively with creditworthy borrowers during times of financial stress, and it adds new provisions on short-term loan accommodations, changes in the accounting rules for reporting and estimating loan losses, and new helpful examples of CRE loan workouts. This webinar will explain all of the proposed changes and updates and how your institution can prepare for the future.
Who Should Attend?
This informative session is designed for personnel involved in the commercial real estate loan workout and collection process, such as loan officers, workout officers, loan operations personnel, collectors, attorneys, auditors, compliance officers, and managers.
Take-Away Toolkit
- Copy of the proposed Interagency Policy Statement on Prudent Commercial Real Estate Loan Accommodations and Workouts
- Employee training log
- Interactive quiz
- PDF of slides and speaker’s contact info for follow-up questions
- Attendance certificate provided to self-report CE credits
NOTE: All materials are subject to copyright. Transmission, retransmission, or republishing of any webinar to other institutions or those not employed by your institution is prohibited. Print materials may be copied for eligible participants only.
Presenter
Elizabeth Fast, JD, CPA – Spencer Fane LLP
Elizabeth Fast is a partner with Spencer Fane Britt & Browne LLP where she specializes in the representation of financial institutions. Fast is the head of the firm’s training division. She received her law degree from the University of Kansas and her undergraduate degree from Pittsburg State University. In addition, she has a Master of Business Administration degree and she is a Certified Public Accountant. Before joining Spencer Fane, she was General Counsel, Senior Vice President, and Corporate Secretary of a $9 billion bank with more than 130 branches, where she managed all legal, regulatory, and compliance functions.
Registration Options
- $245 – Live Webinar Access
- $245 – OnDemand Access + Digital Download
- $350 – Both Live & On-Demand Access + Digital Download
GSB – Construction Lending: Issues in Underwriting Commercial Construction Loans
Construction loans for commercial real estate (CRE) remain a major part of commercial bank lending. This program provides an overview of the key issues involved in analyzing and underwriting commercial construction loans and assessing the risk involved.
In a sense, the underwriting is a mix of (a) CRE project viability, (b) sponsor analysis, and (c) construction feasibility. Further, the underwriting is difficult due to several unknowns. First, usually there is no historical operating information. Second, the developer/sponsor may have a number of other projects under construction or in the pipeline. Third, many property types do not get significant pre-leasing prior to or during construction. Finally, the developer may not have selected or engaged a contractor, or other key steps in the construction process may not have been finalized prior to bank underwriting.
Topics to be covered:
- Understanding the type of project (full construction vs. repair/remodel/repurpose)
- The three major areas of risk to the developer when constructing an investment property
- Determining project feasibility and cash flow sustainability
- Engaging a third-party market feasibility report
- Working from developer projections or market data
- Issues with pre-leasing (or lack of preleasing) and your bank’s appetite for speculative (spec) risk
- Re-lease and rollover risk into the future
- Key steps in analyzing the developer/sponsor’s experience and financial condition and key information needed beyond tax returns
- Assessing the construction risk
- Special issues with owner-occupied loans
- Identifying the degree of risk and communicating appropriate levels of monitoring and controls to the administrative team, over and above the basic processes used to assure that the project is within budget, on time and proceeding per the plans and specifications
Target Audience: Commercial lenders, credit analysts and support staff that deal directly with commercial construction loans; mortgage bankers, lending managers and credit officers indirectly involved in the construction lending process, loan review specialists, private bankers, small business lenders, and special assets officers.
Presenter
Richard Hamm, Advantage Consulting & Training
Registration Option
- Live presentation $330
- Recording available through July 23, 2024
GSB – Commercial Lending: Expanding from Global Cash Flow into Global Analysis
This seminar covers common versions of global cash flow (GCF) analysis being used by bankers, with a focus on GCF as part of the underwriting process in most medium- to smaller-sized businesses and self-employed lending situations. Beyond the basic calculations involved in combining business and personal cash flow, a major issue is how balance sheet changes affect business cash flow, and should business cash flow be broader than earnings before interest, depreciation and amortization (EBITDA)? What about personal balance sheet changes? We complete the cash flow part of the global analysis by reviewing an optional and simplified approach for integrating the cash flow effects of business and personal balance sheet changes.
Another issue is how to assess the borrower’s other business holdings, including commercial real estate (CRE). In many instances, the magnitude of guarantees (contingent liabilities) related to other businesses are much larger than the global cash flow that has been calculated. What are some best practices for moving beyond cash flow to making this global, “portfolio” assessment?
Topics to be covered include:
- Regulatory concept of global analysis
- Analytical and conceptual issues:
- Incorporating business balance sheet changes
- Effect of loss carryforwards in a business tax return
- GCF and the larger, global analysis of business and CRE owners/guarantors and related contingent liabilities
- Some tax return basics/issues along the way
- When to recognize that the business itself or a real estate project should stand on its own, and a global cash flow “can’t make a bad loan good.”
Target Audience: Branch managers, commercial lenders, Consumer lenders, credit analysts, lending managers and credit officers, loan review specialists, mortgage bankers, private bankers, small business lenders, special assets officers
Presenter
Richard Hamm, Advantage Consulting & Training
Registration Options
Live presentation $330
Recording available through August 14, 2024
The 2008–2009 downturn in commercial real estate (CRE) exposed many weaknesses in bank construction lending practices. This was due, in part, to banks attempting to utilize versions of their residential forms and policies to administer commercial construction loans. Such an approach generally does not adequately control the situation due to many important differences between residential and commercial projects. This program covers the important steps involved in effectively administering commercial construction loans, including common errors to avoid.
Topics to be covered:
- Differences between residential and commercial construction loans
- Factors to consider in gauging the level of risk involved in the project/loan
- Key issues with construction contracts, budgets and the interest reserve
- items that determine how you handle a specific loan
- The level of construction risk
- The type of commercial construction situations (new construction, repair/renovation, etc.)
- The loan approval and related conditions or contingencies
- The commitment letter or term sheet written to the customer
- Your bank’s policies and procedures
- The construction loan agreement
- Adjustments as the project unfolds
- Tips for other documentation: Surveys, title insurance and bonding
- Funding controls: Inspections, lien waivers and disbursement methods
- Completion of the project and stabilization (if applicable)
Target Audience: Commercial lenders, credit analysts and support staff that deal directly with commercial construction loans; mortgage bankers, lending managers and credit officers indirectly involved in the construction lending process, loan review specialists, private bankers, small business lenders, and special assets officers.
Presenter
Richard Hamm, Advantage Consulting & Training
Registration Options
- Live presentation $330
- Recording available through July 30, 2024
GSB – Commercial Lending: Best Practices for Lines of Credit, Term Loans, and Other Credit Facilities
Commercial and industrial (C&I) lending has been an area of emphasis as banks seek to grow their loan portfolios during this economic recovery. Both C&I lending and agricultural lending involve many types of loans and credit facilities. Equally diverse are the various cash needs of these businesses, such as operating funds, plant expansion or equipment purchases. Commercial real estate (CRE) lending involves both term loans and construction (a type of bridge loan).
In general, all of these borrowing needs can be grouped into four categories with distinct characteristics. Can you identify the analytical focus of a seasonal loan or a bridge loan? Hint: It is not your traditional financial statement analysis and industry research.
This seminar provides bankers with examples of the basic principles of loan structuring for four basic loan types (seasonal, bridge, term, and line of credit), including:
- Identifying the loan structures that best match the source(s) of repayment, both primary and secondary
- Determining the typical cause of borrowing, use of proceeds and analytical focus for each loan type
- Identifying how strategically setting the loan maturity and other elements helps to make the loan self-policing, increasing lender efficiency, and customer service
- Comparing appropriate reporting and monitoring after the loan is made
- Reviewing common mistakes and lender errors in the four basic loan types
Target Audience: Commercial lenders, credit analysts, lending managers and credit officers involved in C&I loans, loan review specialists, private bankers, and small business lenders
Presenter
Richard Hamm, Advantage Consulting & Training
Registration Option
Live presentation $330
Recording available through June 19, 2024
GSB – Commercial Lending: Four Keys to Loan Structuring
Many factors affect the loan structures used in commercial lending, both for commercial and industrial (C&I), and commercial real estate (CRE), agricultural, and other situations. This program provides the four keys to developing the best loan structure, starting with the bank’s goals.
Of secondary, and almost equal consideration, is the customer’s goals. We’ll focus on strategic goals and business life cycle concepts, which often supersede the borrower’s desire to get the lowest interest rate. In structuring a financing arrangement, the banker must have a thorough knowledge of the available credit facilities and how to match them to the customer’s needs (third key) and the anticipated source of loan repayment (fourth key).
This seminar provides bankers with a working knowledge of the basic principles of loan structuring, including:
- Understanding your bank’s goal(s) in structuring the loan
- Identifying the goals of your customer and the resulting credit needs
- Discussing and implementing the products you can utilize
- Identifying the loan structures that best match the source(s) of repayment
Target Audience: Commercial lenders, credit analysts, lending managers and credit officers involved in C&I loans, loan review specialists, private bankers, and small business lenders
Presenter
Richard Hamm, Advantage Consulting & Training
Registration Option
- Live presentation $330
- Recording available through June 12, 2024
This program will explore multiple models of both business and personal (business owner) cash flow analyses.
The session will begin with the business traditional EBITDA cash flow and personal cash flow of the business owner (using the 1040 tax return, including tax schedules and K-1s, and the personal financial statement). Additionally, the Global Cash Flow or combined business & personal cash flow model will be displayed.
This will be followed by the Statement of Cash Flows (using the Direct and Indirect Methods), as prepared by the CPA, the UCA Cash Flow (using the Moody’s software spreadsheet), Cash Basis Cash Flow, Fixed-Charge Coverage (FCC), and Free Cash Flow (FCF).
Various cash flow projections and sensitivity analyses will also be explored.
The webinar will then conclude with commercial real estate (CRE) cash flow analysis and other related real estate investment cash flow models.
Topics to be covered include:
- Business (EBITDA) & personal cash flow analyses
- Global cash flow: combining the business and personal cash flows
- Statement of cash flows, UCA cash flow, cash basis cash flow, fixed-charge coverage, and free cash flow
- Cash flow projections and sensitivity analysis
- CRE cash flow analysis including investment models
Target Audience: Commercial lenders, commercial relationship managers, credit analysts, and loan administrators
Presenter
David Osburn, Osburn & Associates, LLC
Registration Option
Live presentation $330
Recording available through February 14, 2023
In many instances of commercial real estate (CRE) lending, the risks to a borrower/owner/guarantor from contingent liabilities outweigh the strength of the property your bank is proposing to finance. How can you effectively evaluate the risks of these guarantees? This program provides a framework not only for arraying the various properties, but a strategy for determining the risk of individual properties. Yes, developing property cash flows for tax returns and other data is the first step, but bankers need to go deeper into estimating collateral value and any potential shortfall within the property that becomes a direct liability to your borrower/owner/guarantor. Due to the high incidence of banks requiring owners to guarantee a percentage higher than the person’s ownership percentage, minority interests in CRE create a more complicated analysis, even best case/worst case/most likely scenarios. Finally, issues such as property type, location, length of leases in place and strength of tenants quickly take the analysis beyond tax return or operating statement data.
Specific subjects that will be covered during the seminar:
- Net operating income (NOI) components and concepts
- Understanding key variables within NOI: vacancy, management fees, replacement reserves, and capital expenditures
- Understanding cap rates and how they are used to link cash flow to property value
- Using tax returns and customer rent rolls, plus issues with commercial leases
- Unique characteristics of the major types of real estate
- Transaction-level stress-testing of debt service coverage (DSC) and loan-to-value (LTV)
- How to use a sample worksheet to explore the major issues, including stress-testing
- Issues faced in the global analysis of the various holdings of the borrower/guarantor
- Taking the global analysis beyond the face values of guarantees (contingent liabilities analysis)
- Using the cash flow analysis as part of ongoing loan monitoring, including estimated property values, not in lieu of appraisals, but as a key part of the overall CRE process
- Brief look at residential rentals and related cash flow and property value issues
Target Audience: Commercial lenders, credit analysts and small business lenders; consumer lenders, lending managers and credit officers, mortgage bankers and private bankers; loan review specialists, special assets officers
Presenter
Richard Hamm, Advantage Consulting & Training
Registration Option
Live presentation $330
Recording available through May 13, 2024