Bidder interest is unusually strong in a USD 1bn portfolio of loans tied to the failed First NBC Bank of New Orleans, Louisiana, one of the largest FDIC cash loan sales in the past 10 years, according to a source familiar with the matter.
“As far as the market’s response and the number of phone calls, it’s probably unprecedented,” said the source, who declined to specify the prices of the offers made.
A spokesperson for DebtX, which is handling the sale, declined to comment and a spokesperson for the FDIC, the receiver for First NBC Bank, also declined to comment except to say the sale has not closed.
The winning bidder or bidders could be notified as early as today, the source said. The loans were offered in 14 pools, down from 17 pools as initially planned, according to the source.
Bids were set to be taken last month, as reported. The pools consisted of performing and non-performing loans, primarily Commercial & Industrial, real estate-backed C&I, single-family residential, and government-guaranteed loans. The loan pools were expected to range in size from individual participations to a large-balance pool with 12 relationships totaling USD 428m in unpaid principal balance.
Pent-up demand for loan sales could have driven interest as there have been fewer bank failures in recent years, according to the source. Year-to-date there have been six bank failures, compared with five in 2016, and 157 in 2010 in the wake of the financial crisis, according to the FDIC.
Last year, FDIC sales of loans that included performing and nonperforming assets fetched prices that were about 47.97% of the book value, according to the FDIC. Recent FDIC loan sales have been measurably smaller in total size, according to a Debtwire ABS review of FDIC sales data. On 29 July 2016, the Gulf Coast Bank and Trust paid USD 614,911 for two nonperforming real estate and commercial loans with a book value of USD 2.14m, according to the FDIC’s website.
First NBC Bank was closed 28 April 2017 by the Louisiana Office of Financial Institutions, which appointed the FDIC as receiver, according to an FDIC release.