New Frontier Bank Auction Yields Fraction Of Former Value

03/18/2010 05:12 am ET | Updated May 25, 2011

DENVER — An auction last month of loans from the failed New Frontier Bank generated $157 million on a portfolio once valued at more than $500 million, according to government records.

The federal government salvaged 27 cents on the dollar in the auction, underscoring the poor quality of agriculture loans that were stranded when the Greeley bank failed in April, The Denver Post reported Tuesday.

One package of notes valued at $5 million sold for $122,778 – or 2 percent of its values, the newspaper reported.

About three-quarters of the notes sold were at least 60 days past due.

Cattle Consultants LLC purchased a $15 million loan package for $5 million. Records with the secretary of state's office show the partnership is managed by Colorado Rockies team owner Dick Monfort.

A Greeley bank paid the most for loans, at $14.8 million for a portfolio, The Post reported.

However, most of the buyers appear to be out-of-state banks or limited-liability partnerships.

State Agriculture Commissioner John Stulp and other industry experts have worried that if out-of-state buyers without ties to the state farming community bought most of the loans, they could be tempted to turn a quick profit by foreclosing and cashing in any collateral.

No news of foreclosure notices has reached the state Agriculture Department or the Colorado Farm Bureau yet.

"It remains to be seen how most people will come out of this – whether they will avoid devastation," said Bob Winter, who is on the board of directors of the Colorado Farm Bureau.

The Federal Deposit Insurance Corp. liquidates closed banks' assets to cushion the blow to its insurance fund, which protects most deposits.

Greeley bankers said some borrowers avoided the auction block by reaching agreements with the FDIC to allow other banks to purchase their loans. The FDIC did not respond to questions from The Denver Post.


Information from: The Denver Post,