FDIC Nixed Private Equity Bid for Banks

The Federal Deposit Insurance Corp. turned down a private equity firm's informal bid to buy First National Bank of Nevada and First Heritage Bank days before the federal agency took control of the failed institutions.

Belvedere Capital, a San Francisco-based private equity firm, was prepared to buy the banks, which were seized by federal authorities July 25, according to a person involved in the negotiations. However, Belvedere wanted the FDIC to give it downside protection in case the loan losses reached a certain threshold.

The person declined to give specifics on the terms of the deal, but he said it would potentially have cost the FDIC less than the $862 million it lost in deciding to hold onto most of the loans and sell the $3.23 billion worth of deposits to Mutual of Omaha Bank. The source says Belvedere did not make a formal bid because the FDIC expressed no interest in a loss sharing deal, saying it didn't have time to analyze the loans. ...