FLEET/NORSTAR BANKS ENTERS INTO PROGRAM TO REPURCHASE LOANS FROM
FEDERAL DEPOSIT INSURANCE CORP.
BOSTON, Nov. 21 /PRNewswire/ -- Fleet/Norstar Financial Group's banks in Massachusetts, Connecticut and Maine expect to purchase certain commercial loans, all classified but current, from the Federal Deposit Insurance Corp. (FDIC), it was announced in Boston today by Terrence Murray, Fleet/Norstar's chairman and chief executive officer.
All of the loans Fleet/Norstar expects to purchase are currently being managed for the FDIC by Boston-based RECOLL Management Corp., the Fleet/Norstar subsidiary created earlier this year to service the classified assets of the former Bank of New England banking franchise on behalf of the FDIC. Fleet/Norstar acquired the BNE banking franchise from the FDIC in July.
Murray said the loan purchase will be completed over the next 120 days. Fleet/Norstar's decision to buy certain classified loans, he said, "reflects our confidence in the long-term prospects for New England's economy, our belief that many of the loans we purchase from the FDIC as receiver have a good chance of succeeding in a banking environment where we can work closely with the borrowers, and our sincere desire to help businesses survive the economic recession."
Murray commented that the FDIC as receiver "clearly deserves a great deal of praise for their willingness to support this transaction, which enables these borrowers to return to the banking system. I know they want to preserve jobs in New England and are committed to doing everything they can to help stimulate the economy."
Under the terms of Fleet/Norstar's loan purchase agreement with the FDIC, loans will be purchased under the following guidelines:
-- All loans, regardless of size, must be current or less than
30 days past due;
-- Fleet/Norstar will purchase as a block all small C&I (commercial
and industrial) loans, defined as those in which the principal
balance is less than $250,000, currently managed by RECOLL;
-- Larger C&I loans (principal balance greater than $250,000), and
all commercial real estate loans greater than $100,000, will be
reviewed on an individual basis, with Fleet/Norstar purchasing
those that meet the following criteria:
-- Current or past due less than 30 days;
-- In senior collateral position;
-- Collateral securing the loan is at least 75 percent of the
balance owed, based on current market value appraisal;
-- No litigation is pending or likely and there are no
-- The borrower and/or guarantor must not have a related
loan in the special asset pool;
-- The prospects for the loan remaining current are strong;
-- Commercial real estate loans under $100,000 that are not
associated with an operating business will be excluded.
As part of the agreement, Fleet/Norstar may put back to the FDIC any of the loans it purchases if they become delinquent; litigation concerning the loan is started; or a related credit goes into the FDIC pool of assets serviced by RECOLL.
In addition, Fleet will have the right to transfer back to the asset pool on July 12, 1994, any loans that have been purchased from the pool, regardless of the paying and performance status of the loans at that time, so long as Fleet during its period of ownership does not violate certain restrictions.
"The key point to bear in mind," Murray said, "is that all of these loans are classified -- in other words, they are substandard for one or more reasons. They would not have been put into RECOLL if they had not been substandard. Therefore, this loan purchase program is not a panacea -- it will not resolve all of the substandard or other problem loans in RECOLL's portfolio.
"Nevertheless, both we and the FDIC hope that borrowers of the loans we do purchase will be able to continue to meet their loan obligations, and we'll work closely with them in an effort to make that happen. Undoubtedly, some of the loans will have to be put back into RECOLL for a variety of reasons, but we intend to do everything we can to keep that number to a minimum," Murray said.
Fleet/Norstar Financial Group is a diversified financial services company listed on the New York Stock Exchange. Fleet/Norstar has approximately 1,300 offices nationwide. Its lines of business include commercial and consumer banking, mortgage banking, consumer finance, assset-based lending, trust banking, student loan processing and investment banking.
/CONTACT: Robert W. Lougee, Jr, 401-278-5879; or Charles T. Conway, Jr., 401-278-6240; or Bruce P. Crooks, 401-278-6241; or Thomas L. Lavelle, 617-573-7733, of Fleet/Norstar/
(FNG) CO: Fleet/Norstar Financial Group ST: Massachusetts, Rhode Island IN: FIN SU: SH -- NE005 -- 5801 11/21/91 10:35 EST