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Recap of ABA Lending Course

Posted by:  Joseph Morstad
2017-05-15 12:59:15

BALBOA has been steadily working behind the scenes to improve how we run our commercial real estate department. 
The main factor to continuing the successful CRE loans we have done lately is built on a sound understanding of what good deals look like.
That focus that BALBOA has used for decades was why I wanted to improve my lending abilities and what brought me to the ABA Commercial Lending School for 7 days in Dallas, Texas. After a week of studying, learning, and practicing CRE lending skills I came away with dozens of great ideas. If you want to know more let's schedule a time to grab a coffee and discuss my week. If you want the main takeaways they are here below.

Highlights from the course:

  • Economic outlook summed up as "Getting better! But the Fed is uncertain where to go from here!"
  • Looking for 250,000 jobs per month - it's about creating jobs, not unemployment. 
  • The Fed has $4.6 Trillion in Total Assets - that's enough to purchase the top 10 companies on the S&P 500, names like Apple, Wells Fargo, Amazon, and Exxon.
  • Fundamentals are still fundamental to lending - good financials, cash flow underwriting, well-written credit memos are all important to good lending practices
  • Texas has good BBQ, slightly more weather fluctuations than San Diego and the ABA puts on a well-run course


Specific to commercial real estate lending:

BALBOA wants to help brokers understand our process and key items and elements we need as a lender to successfully close our CRE loans.
The ABA course highlighted 9 keys to achieve this goal:
  1. Understanding the key risk areas and enterprise risk management (ERM)
  2. Properly developing net operating income (NOI) and cash flow available for debt service 
  3. Understanding the non-financial risks
  4. Differentiating properties/projects, analysis, and underwriting
  5. Utilizing the concept of sponsorship (relevant experience of owner/borrower/guarantor)
  6. Developing a global analysis
  7. Following appraisal and environmental rules/regulations
  8. Effectively administering and monitoring loans post-closing
  9. Maintaining portfolio diversification

A big takeaway from my week in Dallas was that banks across the country have been and are working on sound fundamentals and best practices. They are filled with good people that want to:

  • do their jobs well
  • provide their borrowers with sound lending services, and
  • help make their cities and towns better
I felt lucky to be part of BALBOA and the Commercial Real Estate department as we work towards providing you - our brokers and borrowers - those same benefits. 
Please reach out to me directly to discuss my experience with ABA, learn more about BALBOA commercial real estate, and/or the name of a solid BBQ spot near SMU in Dallas.
Joseph Morstad



Categories:   educational