Loan hark: FDIC officially axes Landmark lender

news-landmarkcoverAccording to the FDIC, the most likely answer to the question the Hook posed on its cover in April just got a little murkier with the FDIC now beginning to sell off failed lender Silverton Bank's assets.

A month after it took over the operations of failed Atlanta-based lender Silverton Bank, the Federal Deposit Insurance Corporation will instead dissolve the bank as of Wednesday, July 29 and sell off Silverton's assets in a fire sale–- including the construction loan on the unfinished Landmark Hotel.

This means that now Silverton's interest in the Landmark won't be sold as part of a one-off package deal for all of Silverton's assets, but will now instead be likely be bundled with a few of the other Silverton holdings in a smaller sale.

Among those assets is Specialty Finance Group, the wholly-owned subsidiary of Silverton Bank that actually holds the $23.5 million Landmark loan. In a letter obtained by the Hook, SFG assured its borrowers that it remains unaffected by the FDIC's actions on its parent company.

"Silverton Bridge Bank [Silverton's new name under the FDIC] is separate and apart from SFG," the letter reads, "and this announcement will not affect the SFG loan portfolio."

While that's technically true, the FDIC took over all of Silverton's operations as of May 1–- including those of Specialty Finance Group. As such, FDIC spokesperson David Barr says that the government will likely attempt to sell SFG lock, stock, and barrel to another bank in the near future.

"I would imagine that with a subsidiary like SFG, we'll attempt to sell the whole thing," says Barr, "but if we have yet to sell it by the 29th, we'll continue to operate it."

The news comes after reports emerged that D.C.-based private equity firm the Carlyle Group had been interested in buying the totality of Silverton and its assets.

Should the FDIC fail to sell SFG as a whole, the next step for the Landmark Hotel loan would be for it to be sold as part of a bundle of Silverton loans to either another bank or a private investor. Just who would want to buy a loan on which the owner has [allegedly] defaulted, particularly one presently tied up in litigation in two different states? According to former commercial banker and financial pundit Hugh Hennessy, plenty of well-funded individuals.

"Usually the buyers are what you'd call 'vulture funds,'" says Hennessy. "They're usually backed by wealthy private investors like Warren Buffett or they're subsidiaries of a big financial institution like Fidelity Investments."

And while the FDIC hasn't historically had any trouble selling off a failed bank's holdings, the proliferation of so-called "toxic assets" has been so widespread throughout America's financial institutions the Treasury Department announced in March that they will be using taxpayer dollars to sweeten the deal in order to sell off bad loans.

"The Treasury will be putting up about 85 percent of the financing," says Hennessy. "Which means these vulture funds will put up about 15 percent and then reap most of the profits, and that's if the thing works out."

How this will affect Halsey Minor's ownership of the Landmark Hotel remains to be seen, but tells the Hook that he remains undaunted.

"I always finish what I start," says Minor, "even when I don't enjoy one single minute of it."

–updated June 9 at 3:12pm

–last updated June 10 at 4:40pm: "Just who would want to buy a loan on which the owner has [allegedly] defaulted, particularly one presently tied up in litigation in two different states?" (We just added the word "allegedly" to this sentence because of concerns that default may not be a unilateral process. In other words, the bank says Halsey Minor committed various acts of default, but Minor may not agree with those allegations.)–editor


If the litigation were to end to day , I still do not htink you would see a hotel on that spot in short order. Trying to get funding for this project in this economy and with its history is going to be unless Halsey is going to write the check himself, it is not going to be easy.

I predict it will probably pas through several more hands before it is open and operating for more than two years. Think back to the the old Hilton out on 29 near the airport...(I think it is a Doubletree now). Talk about an ongoing disaster of a project...with multiple bankruptcies, bank failures and a host of interested investors from pension funds to "Universities".

I'll buy it for a buck. Do I hear a buck fifty?

Once the litigation runs is course the University should consider buying the property and converting the use into student and professor housing.

If the thing goes for pennies on the dollar just watch HM come back and buy it for a song and then complete it. He'd laugh for quite some time if he pulled that one off.

The Landmark, or whatever it will end up being called, would be an excellent location for faculty and glad student housing, to second Andrew's idea. If I am UVa trying to recruit a good faculty prospect, this is where I'd put them for the duration of the campus visit, and then this is where I'd offer him an apartment at a subsidized rate (to rent)

Ohh Jeez UVA? Downtown? Let the grad students and faculty live on campus. We don;t need more uvaholes downtown they spoil it for the rest of us. Keep the uvaholes on the corner so they can get drunk and stab people there and not downtown.

Mr/Mrs/Miss Really, you don' know much about Charlottesville, do you? You need to say a little prayer each evening before retiring, thanking the Good Lord for locating the University of Virginia in our city.

You need to be more concerned with all the Northoles moving down here after retiring and trying to take over the place.

SOTLR; sounds like he is advocating the drawbridge philosophy to me.

Ah yes, another episode in the Charlottesville epic; "Halsey Minor's Failed Erection." For the record, this place stopped being an asset long ago. Whoever buys into this boondoggle will be purchasing a liability, not a performing loan. Since we, the taxpayers are putting up the financing and of course, will be the ones to take the loss, I can only say to Mr. Minor;
Thanks for absolutely nothing you arrogant little punk.

Pete Deer