Inside One Bank's Playbook For CRE Lending

For investors, that means that in many markets, the least disciplined term sheets are increasingly coming from institutions trying to "grow into" commercial lending—while more seasoned players quietly redeploy capital elsewhere.

Walking Away From Office And Frothy Downtowns

Becker's team has made a deliberate decision to avoid traditional office, even as they leaned into other parts of CRE. "From our standpoint, we look at commercial construction, a lot of warehouse activity, we do multifamily, we don't do traditional office space, we will do specialty medical space, like a dialysis center or something of that nature," he says. The preferred themes are clear: warehousing, multifamily, and specialized, needs‑driven properties.

They also stepped back from submarkets that started to overheat—well before the headlines caught up. Becker says that just a few years ago downtown Indianapolis multifamily "was almost a no man's land," but then roughly 25,000 units were delivered in about three years, quickly soaking up demand before COVID pushed residents back toward the suburbs. As more projects were still in the pipeline, the market turned soft, and he says his team "just stopped doing those loans, probably two to three years before most of the others did."

Real‑Time Data Comes To CRE Lending

One of the most striking elements to Becker's approach is how much real‑time data is now embedded in underwriting. Becker says the bank now leans heavily on continuously updated online tools and mapping data—rather than static market reports—to see what is happening in a market in real time.

The bank even uses mobility analytics to validate a site's fundamentals. "We actually have a service where we can feed in a location and it will actually track cell phone activity in the area and give you stats over time, so you know where the traffic is picking up or slowing down in a community on almost a real-time basis." That allows his team to check whether a proposed site really sits at the center of local activity, rather than accepting a glossy pitch at face value.

Skin In The Game And Stress Testing

Underwriting at First Internet Bank starts with a simple premise: the borrower must be in the deal with meaningful capital and must be able to survive a more volatile world. Becker says the bank prefers experienced sponsors over less-tested players and expects them to have meaningful "skin in the game," typically at least 10% to 15% equity, with 20% to 25% viewed as ideal, alongside debt service coverage in the 150 range.

They also assume that today's financing conditions will change—possibly sharply—over the life of a project. "We will do at least 150 to 200 basis point stress test on the deal before we do it in an upgrade environment to make sure that there's capacity on the developer side to carry an upgrade increase," he notes. That mindset flips an older pattern on its head: instead of penciling deals to today's best case, they underwrite projects to withstand tomorrow's likely shocks.

Guardrails During Construction

Becker is candid about the last cycle's failures and how they influence his current practices. "During the last kind of construction crisis and definitely in the housing crisis as developers are getting in trouble they were robbing Peter to pay call and money that was supposed to be for one project we're going to another one, and vice versa," he says. Those experiences are baked into their construction‑phase controls.

When the bank is working with a borrower it does not know well—especially one juggling multiple projects—it builds extra safeguards into the construction phase, Becker says. Rather than releasing an interest reserve and losing visibility, the bank will hold those funds on deposit so it can track how they are used throughout the build, and it relies on third‑party firms to conduct quarterly site inspections on its behalf from Indianapolis. Those inspections are tied to draw requests, allowing the bank to stay "very tight in the cash that's going out in disbursements" and verify that work is actually being completed even if the economy turns.

Even with all the analytics and controls, Becker's first question is deceptively simple: does the project address a real need in the community? "We have called four to five standards that we take a look at. One first and foremost, is there a real need for the business from the community basis, be it affordable housing, small business activity," he says. That lens has led the bank into some of its most successful projects.

Becker points to a workforce housing project just off Hilton Head Island as a case study in how the bank tries to match capital with genuine local need. A long‑time Midwest developer brought them a site at an interstate interchange a few miles from the island, where demand for affordable housing for service workers was acute and the land basis was attractive. "The economics of the deal were just, it was an absolute home run," he says, noting the sponsor put in roughly 20% equity, leased about half the units before construction wrapped, and reached around 90% occupancy within nine months. "It was right time, right place, right market, good relationship with an established developer."

Cycle‑Tested Sponsors And A New Mindset

If there is one theme that runs through Becker's perspective, it is the value of developers who have survived past downturns and adjusted their behavior. "I think the big play, what we really love, is working with developers that have been through a few cycles, as things get soft in the economy." Developers who have been through economic cycles stay much better prepared, he says.

Becker draws a sharp contrast between past and present practices in the housing market, noting that builders once routinely put up speculative homes and only later sought buyers. Today, he says, nearly all of the builders his bank works with secure a buyer and deposit before they start construction, and that end‑buyer typically takes out the construction loan directly with the bank. In his view, that same bias toward pre‑commitment and prudence has spread into commercial development, with far fewer purely speculative projects moving forward and more discipline across the board—reducing the odds that projects stall mid‑stream and "blow up" on owners or lenders.

The industry, he argues, has learned at least some of the right lessons. "The mindset of the industry as a whole is just in a much better place than it was 10-12 years ago," he says. Even so, he acknowledges that some shocks simply cannot be modeled—the sudden emptiness of class A office towers after COVID, or the deeper‑than‑expected cuts to the federal workforce in Washington. That awareness is precisely why he continues to build in buffers, insist on equity and guarantees, and walk away from markets that feel just a bit too hot.