Eighty percent of portfolio is categorized as performing loans. Merrie Duncan, marketing director for Oklahoma City-based First Financial Network Inc., tells GlobeSt.com that the pool mix includes seven gaming loans totaling nearly $66 million that will be individually offered. "That's an interesting spin on this portfolio," she says.
Thirty-seven percent of the portfolio's properties are located in Arizona, 36% in Nevada, 15% in California and the balance scattered throughout other western and southwestern states. Duncan says the portfolio will be marketed to First Financial's traditional wholesale loan buyers, commercial real estate investors and financiers of gaming properties.
First Financial has divvied the portfolio of fixed and variable rates into stratified pools. Any loan exceeding $5 million is considered a single pool. A hotel, encumbered by $16 million, is considered one pool as is an eight-loan residential package with a $2.2-million debt. "The reason this is done is to increase participation," Duncan explains. "This allows investors to select what they want."
First Financial was awarded a five-year contract with the FDIC in December 2007 to sell loan portfolios of failed institutions. Duncan says the past two quarters have been particularly active, with the number of bidders steadily increasing, more bank failures and more private sector banks looking to shed their loads. The increased activity has brought out more US-based bidders than before as traditional real estate investors, some REITs and private equity firms step into the action. "They see the opportunity obviously and are looking to these offerings as an alternative," she says.
First Financial's MO is to do a bid date and award the deals within 48 hours. Duncan says closings most often are held two weeks later depending on the portfolio size.
Shuttered in July, the locally based First National Bank Holding Co. owned the First National Bank of Nevada in Reno, which also operated as the First National Bank of Arizona, and First Heritage Bank of Newport Beach, CA. The FDIC stepped in as receiver, immediately selling its 28 branches and all deposits to Mutual of Omaha Bank. The shutdown came on a Friday; the buyer's flag went up the following Monday to allow for a seamless transition.
In the FDIC's press release about the closure, it points out that it was only the second time in two years and 10 failed institutions that all insured and uninsured deposits were acquired by another bank. As of June 30, First National Bank of Nevada had $3.4 billion of assets and $3 billion of deposits. First Heritage Bank has $254 million in assets and $233 million in deposits. The buyer also agreed to buy about $200 million of assets from the receiverships. The transactions' cost to the Deposit Insurance Fund was $862 million.
First Financial's end of the disposition is to hawk 585 loans of the failed bank. In addition to gaming and residential loans, the portfolio includes industrial, retail and office properties and SBA 504 notes.
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