First impressions: a conversation with First National’s new B.C. commercial team leader

  • First National Financial LP

As part of a long-term commitment to expand our presence on Canada’s west coast, First National appointed Michael Yeung as Regional Vice President, Commercial Lending, British Columbia in February 2019. Michael is a well known and respected commercial lending professional with 25 years of experience in the B.C. market earned while serving four banks. Now, a half year later, we check in with Michael to see how the market and our team are progressing.

Michael, you joined the B.C. team with a mandate to grow. How are things going so far?

Tremendously well. It’s been a very active and rewarding period. During the first 60 days, we began with an environmental scan which, for me, included getting to really understand the First National culture and how things are done here in B.C. What I found is we have a very strong and experienced team on the ground. My colleagues possess deep technical skills and competencies. This gives them the ability to analyze and successfully complete complicated, large-scale transactions. They’re very collaborative and committed to our stakeholders. They deliver high-touch service as advisors. I’m also pleased to note that we’re surrounded with top-notch professional business partners. Lawyers, quantity surveyors, appraisers and insurance consultants are part of our extended team and they play key roles in helping us to meet our mandate of achieving efficient, timely service for borrowers and risk-managed growth for First National and our institutional funding partners. I couldn’t be more pleased with our capabilities and prouder of being part of First National. 

Can you describe the leadership style you’re embedding?

I’m a big believer in leading by example. I roll up my sleeves, seek to experience the challenges our team addresses every day, understand our gaps and work to fill them. I think this is part of First National’s broader leadership culture. We don’t stand on ceremony, we get involved, build trust with our own experts in the field and celebrate our successes together.

Speaking of successes, have you had any?

Absolutely. Volumes have been very strong, particularly in construction financing. To signal our pride in serving our borrowers, we’re starting to place the First National logo on building sites around Vancouver, so you’ll start to see how active we are. While I’ve spent time focused on internal processes, the B.C. team has continued to identify, originate, underwrite and fund a number of great deals and not only in construction. For example, we just closed a very large transaction on a rental property in Vancouver involving a term loan of over $120 million. This is for a well known and respected local developer who selected First National because of our track record of meeting our promises. I believe about 70% of success in financial services is due to execution and the other 30% relates to creative problem-solving. We try to give our stakeholders 100% on every deal we do. That’s how we differentiate ourselves from competitors.

You are well known in the BC market having served it for over 25 years. How have clients responded to your presence at First National?

The response was overwhelming. In the first week after First National announced my appointment, I had over 500 views on my LinkedIn profile. Clients I worked with in my previous life were very positive about the move. They think I have more tools on my belt to help them and they’re right.

How so?

When I was a banker, I had to worry about single client limits on funding. If my limit was say $50 million per borrower and I reached it, it meant I was maxed out on helping that client. Because of First National’s deep institutional funding model, I don’t have this artificial cap, which is very positive for my client relationships. There’s also no cap on product type. Sometimes banks put a limit on how much land financing you can do or how much construction financing is permitted. That is not the case here at First National. First National also lends across the risk spectrum. So I can be of much greater service and clients are responding to that. It’s been a very positive response from the market.

How are you letting B.C. borrowers know that First National is open for business?

First and foremost, we’re letting everyone in B.C. know what we have to offer. For example, First National is the largest CMHC lender in the country. Insured lending is a core competency. We dominate that space and we’d like to continue dominating it, so we make that known. Thinking about asset and project types, we are committing to growing in construction financing, including financing of purpose-built apartments and market-condo developments. To show we’re serious about capitalizing on that opportunity, we created and introduced a B.C. construction lending manual this past spring. It sets out our risk parameters and ensures they are finely tuned to today’s market realities.

Speaking of market realities, how is the B.C. commercial property market performing?

The market slowed as a result of what some people call self-inflicted wounds. The introduction of measures to cool demand like speculation taxes and foreign buyer taxes created headwinds. And that in turn caused the local media to publish a daily barrage of negative stories about the property market. It’s gotten to the point where investors call me and say, ‘Michael, should we still lend in B.C.?’

What answer do you give?

The answer I give is, yes but it’s important to be selective. My role is to give our investors complete transparency, to provide them with a good sense of where the true risk and true opportunities lie; to quantify risk and to mitigate it through deal structure. This is why it’s so important for us to have boots on the ground here and a team with tremendous technical skills. It makes First National far more valuable and the knowledge we bring to the table allows borrowers and investors alike to make calculated, smart-risk decisions.

It’s hard to imagine that the B.C. commercial property market will stay down for long.

You’re right, there are many positive underlying factors at work creating demand. The first of which is continued population growth and limited housing supply. About 40,000 people continue to come to B.C. every year and they all need places to live. It’s not that demand is faltering. We continue to see less than 1% apartment vacancy in the Lower Mainland and rental rates continue to climb, which demonstrates disequilibrium in demand and supply. It’s just that investors and developers are hesitant to pull the trigger on apartments and condos right now because of the uncertainty created by the additional taxes I mentioned. This manifests itself in longer sales cycles for certain products. I think this is temporary and if anything, measures to cool the market are likely going to create even more pent-up demand, which will be a problem down the road. In the meantime, capital that was previously in the residential market is flowing to office and industrial assets and that’s where the growth is right now in B.C.

Are you active in B.C. office and industrial property markets?

Very much so, yes. We like those sectors based on several fundamentals. One, vacancy rates are low, two rental rates in both are increasing and three, neither sector is affected by new speculation taxes.

What’s driving that growth?

I would say the proliferation of ecommerce. The number of ecommerce firms operating here and their expansion have had a very positive impact on commercial property demand and on the B.C. economy generally. The expansion of the airport in Vancouver has been another tremendous positive as it has driven demand for warehousing and industrial space. The flow of trade to Asia is also keeping the ports in Delta and Vancouver busy and again stimulating demand for industrial properties.

In B.C., what differentiates or distances First National from other commercial lenders?

We’re a growing, publicly traded company with a market value of over $2 billion. We’re Canada’s largest commercial mortgage lender, Canada’s largest CMHC lender and we lend across a broad spectrum of real estate assets and with both conventional and insured products.  We have a national distribution platform with local commercial origination and underwriting experts across Canada. That means when I want to get things done for investors and borrowers coast to coast, or I want another perspective, I just pick up the phone. Our resources are second to none. The difference is depth, breadth and expertise.

First National has been actively lending in the B.C. market for decades. How Vancouver-centric is it?

My office is in Vancouver but we lend on the Island, throughout the Lower Mainland and in Kelowna. That said, we do have a bias for metropolitan areas. We know them well and our investing partners favour them for risk management and liquidity reasons. We always follow our clients.

What's ahead for First National in British Columbia as an organization?

We want to increase our profile and our brand awareness with borrowers. We want to continue to build our team on the ground by adding underwriters to manage the demand we’re experiencing and we’re now in hiring mode. And we want to connect more deeply with our investors; give them the insight and transparency they want and deserve. It’s about empowerment for us, our partners and borrowers.

Have you had success in your recruitment efforts so far?

Yes, we’ve made a couple of recent moves to strengthen our analytics and origination capabilities. In February, Kyle Pawliuk joined our underwriting team. Kyle started his career in engineering in Kingston and moved to First National several years ago in Toronto where he developed an extensive resume working across our operations. Most recently, we welcomed Jesse Selles as a Director, Commercial Financing. Jesse is a six-year First National veteran who served as an analyst working on Dru McAuley’s team in Toronto. We’re excited that Jesse also decided to make the cross-country move to join our full-service origination team. With his deep knowledge of First National’s processes, products and investors, he will make a significant contribution to our B.C. clients. As an organization, we give priority to promoting from within, so I’m proud of these appointments and very excited about the enthusiasm and energy Kyle and Jesse have brought with them.

Final thoughts?

I travel extensively and I can say without hesitation that B.C. is the best place in the world to live.  That’s been validated by the growth in our population and that grow drives demand for all product types. I’m optimistic about the future.

Michael Yeung is recognized for his expertise in real estate financing including high-value commercial construction lending. With an undergraduate degree in Finance & Economics from SFU, an MBA from Dalhousie, and professional designations (Personal Financial Planner and Specialist, Trust Institute), Michael is passionate about sharing his expertise. If you would like to speak to Michael or any member of our B.C. commercial team, you can do so by calling 778.887.8433 or emailing Michael at