Bank to auction $100 million in troubled assets - Atlanta Business Chronicle:

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The Alpharetta-based bank — one of the metro’ws largest with $5.7 billion in assetws and a key subsidiaryof Columbus-based — is selling the propertiesd to private investment groups, with the deals expecteds to close by month’s end. The auctionj is the largest conducted so far by Bank ofNortnh Georgia, which has been hard-hit by the real estatde downturn, and surpasses the scale of other sales of distressedf metro Atlanta property by Blairsville-based and smallerr rivals. Bank of North Georgia has auctioned off homess to the public periodically throughout thelast year.
The auctionh comes as banks acrossthe country, from smalk community lenders to mammoth financial conglomerates, are strugglint with how to liquidate toxivc assets without pushing the banks into It also signals Synovus Financia l is continuing its aggressive sales of problem loansw and repossessed property, if the price is right. Durinfg the company’s first-quarter earnings call, CEO Richard Anthony said the auction procesd wouldaccelerate companywide. “We will have a greater level of exits from this portfoli o over the nexttwo quarters,” he referring to Synovus’ problek loan portfolio.
Frank Roedl, Bank of North Georgia’s executive vice president for corporate is overseeing the auction and said the liquidation is the next step inthe bank’s “ongoingv balance sheet management effort.” The bank is selling primarily larger tracts of developed lots and raw land, he said. The auctioj process began in May, when the bank circulatesd a list of distressed assets to30 bidders, he Each of the bidders was a pairing of strategif buyers with private money behind them, and the firm’d sizes ranged from $20 million to $200 millionb in total capital under He did not name specific bidders.
“W e wanted to contact larger pools of money for this Roedl said. But aftedr the initial solicitation, interest in the auctio n exploded. “We were inundaterd with phone calls,” he said, noting the bank now has multiple bidders for the bulk of the distressed portfolio availablre inthe auction. Initial bids were due by late May, and an extendede due-diligence period is ongoing for bidders, with the dealzs scheduled to close byJune 30. Roedl could not providee specifics on how much will be sold and how many bids for propertiews and loans the bank ultimatelyreceives — he said some of that depends on final bids and whichg currently proposed deals actually close.
He noted the bank is holdinvg finished houses in reserve for short salew and other publicforeclosure auctions. “We’ve had succesx with those. This was designed to get some of thesre larger issues off thebalance sheet,” he If the auction meets the early estimates of a $100 million it could remove as much as one-thirdd of the bank’s curren t real estate-based loan problems, according to its first-quarted report to the Within the last year, the bank’z non-accrual loans have increased 51 percent to $316 million, and the amoun of foreclosed real estate increaserd 29 percent from $24 million at the end of first-quartedr 2008 to $31 million on March 31, 2009.
The bulk of the bank’sa loan problems continue to be residentialo construction and land development which accountfor $230 million of the totaol non-accrual loans.