Events

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, private bankers, small business lenders, loan review specialists, special assets officers, lending managers, and credit officers indirectly involved in the construction lending process.

Presenter
Richard Hamm, Advantage Consulting & Training

Registration Option
Live presentation $330

Recording available through August 3, 2022

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, consumer lenders, mortgage bankers, private bankers, small business lenders, commercial lenders, credit analysts, loan review specialists, special assets officers, lending managers, and credit officers.

Presenter
Richard Hamm, Advantage Consulting & Training

Registration Options
Live presentation $330

Recording available through August 17, 2022

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, private bankers, small business lenders, loan review specialists, special assets officers, lending managers, and credit officers indirectly involved in the construction lending process.

Presenter
Richard Hamm, Advantage Consulting & Training

Registration Options
Live presentation $330

Recording available through August 10, 2022

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:  Small business lenders, private bankers, commercial lenders, credit analysts, loan review specialists, lending managers, and credit officers involved in C&I loans

Presenter
Richard Hamm, Advantage Consulting & Training

Registration Option
Live presentation $330

Recording available through July 5, 2022

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:  Small business lenders, private bankers, commercial lenders, credit analysts, loan review specialists, lending managers, and credit officers involved in C&I loans.

Presenter
Richard Hamm, Advantage Consulting & Training

Registration Option
Live presentation $330

Recording available through June 29, 2022

This seminar will provide the banker with several advanced tax return concepts and related analyses to help them more effectively work with their business customers.

The session will begin with a brief review of analyzing a business owner’s personal 1040 tax return and the return of an LLC, S corporation, and C corporation including Schedules M-1 and M-2, Schedule K-1, pass-through transactions, and other deductions.

The remainder of the seminar will cover the following advanced tax topics related to business clients:

  • Corporate tax Issues including business structure, Section 179 depreciation, and bonus depreciation
  • Investments including capital gain/loss issues and passive activities
  • Real estate issues including personal residence, rentals, home offices, and 1031 tax-free exchanges
  • Employer provided benefits including Qualified Retirement Plans and Health Savings Accounts (HSAs)
  • Retirement planning strategies including Defined Benefit (DB) plans
  • Estate planning issues including gifting
  • Year-end tax strategies
  • Changes to the Tax Code that impact Business Owners including the Tax Cuts and Jobs Act (TCJA), the CARES Act, and proposed tax legislation

Target Audience: Commercial lenders, credit analysts, relationship managers, and credit administrators

Presenter
David Osburn, Osburn & Associates, LLC

Registration Option
Live presentation $330

Recording available through June 22, 2022

The sales activity may be high but the conversion rates are low. Many deals sit in pipeline limbo consuming our time with little idea of when they may convert. How effectively and efficiently are we engaging prospects throughout the sales process to ensure we clearly understand their needs, their genuine intention to buy and any objections they may have? What closing techniques are we implementing to ensure we maximize our chances of conversion? Are you discounting your price to convert more deals? Improve deal conversion and stop wasting time on indecisive or unprofitable prospects by developing a more effective approach to meeting, qualifying, and persuading customers.

At the conclusion of this session participants will discover how to create, present, and convert more compelling proposals that demonstrate great value and result in more profitable new business.

Target Audience: Sales leaders working with commercial, small business, and retail customers

Presenter
Joe Micallef, Grow Up Sales Consulting

Registration Option
Live presentation $330

Recording available through June 21, 2022

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 June 16, 2022

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, mortgage bankers and private bankers; loan review specialists, special assets officers, lending managers, and credit officers

Presenter
Richard Hamm, Advantage Consulting & Training

Registration Option
Live presentation $330

Recording available through June 8, 2022

An important part of the commercial real estate (CRE) lending process is to establish the value of the collateral, and in many cases, the value does not need to come from a new appraisal. This program reviews  these options that have been in place since the initial set of interagency appraisal guidelines in 1994. These options typically involve work internally by bankers. At the other end of the spectrum, some projects are very risky or the dollar amount warrants a review of the valuation by third-party appraiser. How does that work and what can bankers learn from the review appraiser’s approach?

Specific subjects that will be covered during the seminar:

  • General situations where an appraisal is not required (exemptions)
  • Options for determining value when the loan is exempt from requiring a new appraisal
  • Situations where portfolio or market conditions might warrant a new appraisal, even in an exempt situation
  • Regulatory requirements for internal evaluations and a sample form
  • Key components in validating an existing appraisal and a sample form
  • Two situations that make a validation a difficult option
  • Types or levels of reviews: administrative/compliance, technical, and third party
  • Practical suggestions for setting loan-size limits to trigger the levels of review
  • Sample comments from a review by a third-party appraiser, and how these observations often differ from typical banker review points — what can bankers learn from the third-party approach?
  • Practical issues with finding appraisers to do reviews and/or appraisal management companies (AMCs)
  • What is Uniform Standards of Professional Appraisal Practice (USPAP) Standards Rule 3?
  • Review outcomes, and ideas on when and how to request revisions or corrections to the report

Presenter
Richard Hamm, Advantage Consulting & Training

Target Audience: CRE lenders, commercial lenders, mortgage bankers, private bankers, small business lenders, credit analysts, loan review specialists, special assets officers, lending managers and credit officers

Registration Option
Live presentation $330

Recording available through June 8, 2022