Ken Lim President and CEO Fund Control for the Future National Association of Chinese American Bankers December 4, 2009 N ...
Fund Control for the Future From the present To the future National Builders Control works!
Current Realities <ul><li>According to Foresight Analytics: </li></ul><ul><ul><li>Q2 16.3% of all construction loans held...
Current Realities <ul><li>Construction loan exposure for smaller banks has nearly doubled since 2004 </li></ul><ul><li>CRE...
Management of Information San Francisco, CA Phoenix, AZ Lewisville, TX Beaverton, OR Oakland, CA
Know Your Position NOW <ul><li>Jim Collins of Good to Great </li></ul><ul><ul><li>Get the Right People on the Bus and ...
Construction Loan Risks <ul><li>Cost-over-runs, plan changes, increased material cost, delays </li></ul><ul><li>Mechanics...
Loan Risk Mitigation <ul><li>Cost-over-runs, plan changes, increased material cost, delays </li></ul><ul><li>Mechanics’ L...
FDIC CLM standards <ul><li>Loan Portfolio Assessment </li></ul><ul><ul><li>Due Diligence Review </li></ul></ul><ul><ul>...
CLM Loan Portfolio Assessment <ul><li>Loan Portfolio Assessment </li></ul><ul><ul><li>Due Diligence Review </li></ul></...
CLM Asset Level Risk Assessment <ul><li>Asset - Level Risk Assessment </li></ul><ul><ul><li>Asset Impairment & Risk As...
Know Your Position NOW Appraise Project value Cost-to-Complete Value Determine Market value Complete, hold or sell? Comple...
Move Forward Don’t go along for the ride Take control and drive
<ul><li>1110 East Main Street </li></ul><ul><li>Alhambra, CA 91801 </li></ul><ul><li>Phone: 626.281.8883 </li></ul><ul><...
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National Builders Control, Inc. and NACAB - Fund Control for the Future

NBC and National Association of Chinese American Bankers NACAB Holiday Luncheon December 4, 2009 PresentationFund Control for the Future
Published on: Mar 3, 2016
Published in: Real Estate      Business      Economy & Finance      
Source: www.slideshare.net


Transcripts - National Builders Control, Inc. and NACAB - Fund Control for the Future

  • 1. Ken Lim President and CEO Fund Control for the Future National Association of Chinese American Bankers December 4, 2009 N ATIONAL B UILDERS C ONTROL, I NC.
  • 2. Fund Control for the Future From the present To the future National Builders Control works!
  • 3. Current Realities <ul><li>According to Foresight Analytics: </li></ul><ul><ul><li>Q2 16.3% of all construction loans held by U.S. banks and thrifts were delinquent </li></ul></ul><ul><ul><li>Q3 delinquencies rise to 18.2% </li></ul></ul><ul><ul><li>Banks face writing down loans by 50% to 80% </li></ul></ul><ul><ul><li>50% of $1.4T commercial mortgages maturing by 2014 are in trouble </li></ul></ul><ul><ul><li>Commercial next? Zell v Ross </li></ul></ul>Source: - Investors Business Daily, Nov 2009 - National Real Estate Investor, Nov 2009
  • 4. Current Realities <ul><li>Construction loan exposure for smaller banks has nearly doubled since 2004 </li></ul><ul><li>CRE defaults will occur when upfront reserves begin to run out  </li></ul><ul><li>As projects reach maturity date or remain stagnant, aggressive and complete analysis will be crucial in determining the appropriate action for each loan </li></ul>
  • 5. Management of Information San Francisco, CA Phoenix, AZ Lewisville, TX Beaverton, OR Oakland, CA
  • 6. Know Your Position NOW <ul><li>Jim Collins of Good to Great </li></ul><ul><ul><li>Get the Right People on the Bus and MOVE </li></ul></ul><ul><ul><li>Confront the Brutal Truths and ACT </li></ul></ul><ul><li>No more extend and pretend, delay and pray </li></ul><ul><li>Confront brutal truths and emerge from adversity stronger and ready to go </li></ul><ul><li>“ There is no worse mistake in public leadership than to hold out false hopes soon to be swept away.” - Winston Churchill </li></ul>
  • 7. Construction Loan Risks <ul><li>Cost-over-runs, plan changes, increased material cost, delays </li></ul><ul><li>Mechanics’ Liens and Stop Notices </li></ul><ul><li>Lower appraised value </li></ul><ul><li>Owner unable to provide additional equity </li></ul><ul><li>Insufficient funds to complete </li></ul><ul><li>Artificial optimism </li></ul><ul><li>Requests for deposits, weekly payment </li></ul><ul><li>Personnel turnover </li></ul><ul><li>General Contractor/Owner inefficiencies </li></ul>
  • 8. Loan Risk Mitigation <ul><li>Cost-over-runs, plan changes, increased material cost, delays </li></ul><ul><li>Mechanics’ Liens and Stop Notices </li></ul><ul><li>Lower appraised value </li></ul><ul><li>Owner unable to provide additional equity </li></ul><ul><li>Insufficient funds to complete </li></ul><ul><li>Artificial optimism </li></ul><ul><li>Requests for deposits, weekly payment </li></ul><ul><li>Personnel turnover </li></ul><ul><li>General Contractor/Owner inefficiencies </li></ul><ul><li>Budget review before, during, after. Estimate achievement of benchmarks </li></ul><ul><li>Manage Contractor to stay in the game </li></ul><ul><li>Know market and maturity date </li></ul><ul><li>Perform cost to complete and determine shortage and action </li></ul><ul><li>Adherence to sound controls and guidelines </li></ul><ul><li>Assess realistic goals and info </li></ul><ul><li>NO deposits and find positive cash flow Contractor </li></ul><ul><li>Hands on transition management </li></ul><ul><li>Transparency in operations, payments and solutions </li></ul>
  • 9. FDIC CLM standards <ul><li>Loan Portfolio Assessment </li></ul><ul><ul><li>Due Diligence Review </li></ul></ul><ul><ul><li>Portfolio Risk Assessment </li></ul></ul><ul><li>Asset - Level Risk Assessment </li></ul><ul><ul><li>Asset Impairment & Risk Assessment </li></ul></ul><ul><ul><li>Recommendations - Funding versus not funding a Loan Commitment </li></ul></ul><ul><ul><li>Mitigation & Workout Services </li></ul></ul>
  • 10. CLM Loan Portfolio Assessment <ul><li>Loan Portfolio Assessment </li></ul><ul><ul><li>Due Diligence Review </li></ul></ul><ul><ul><ul><li>Data Collection </li></ul></ul></ul><ul><ul><ul><li>Identify Special Issues </li></ul></ul></ul><ul><ul><ul><li>Title Report - Date down </li></ul></ul></ul><ul><ul><ul><li>Stratification - By Loan type and Funding Stage </li></ul></ul></ul><ul><ul><li>Portfolio Risk Assessment </li></ul></ul><ul><ul><ul><li>Statistical Analysis </li></ul></ul></ul><ul><ul><ul><li>Underwriting Review </li></ul></ul></ul><ul><ul><ul><li>Evaluation of Policies and Procedures & Compliance </li></ul></ul></ul><ul><ul><ul><li>Concentration of Risk - Per single Borrower or Guarantor </li></ul></ul></ul>
  • 11. CLM Asset Level Risk Assessment <ul><li>Asset - Level Risk Assessment </li></ul><ul><ul><li>Asset Impairment & Risk Assessment </li></ul></ul><ul><ul><ul><li>Assessment of Project Condition </li></ul></ul></ul><ul><ul><ul><li>Estimate Cost to Complete </li></ul></ul></ul><ul><ul><ul><li>Project valuation </li></ul></ul></ul><ul><ul><ul><li>Recommendations - Funding vs Not Funding a Loan </li></ul></ul></ul><ul><ul><li>Mitigation & Workout Services </li></ul></ul><ul><ul><ul><li>Construction Project Management </li></ul></ul></ul><ul><ul><ul><li>Review, Analyze, Approve Contractor and Bids </li></ul></ul></ul><ul><ul><ul><li>Develop and Monitor the Construction Budget </li></ul></ul></ul><ul><ul><ul><li>Construction Fund Control Services </li></ul></ul></ul><ul><ul><ul><li>Property Preservation </li></ul></ul></ul>
  • 12. Know Your Position NOW Appraise Project value Cost-to-Complete Value Determine Market value Complete, hold or sell? Complete Hold and Maintain Sell
  • 13. Move Forward Don’t go along for the ride Take control and drive
  • 14. <ul><li>1110 East Main Street </li></ul><ul><li>Alhambra, CA 91801 </li></ul><ul><li>Phone: 626.281.8883 </li></ul><ul><li>Fax: 626.281.7202 </li></ul><ul><li>Website: www.nbc-inc.com </li></ul><ul><li>Email: [email_address] </li></ul><ul><li>Twitter: www.twitter.com/nbcinc </li></ul>N ATIONAL B UILDERS C ONTROL, I NC.

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