AMG ‘Works Out? Banks’ Nonperforming Property

The doctor is in, the bank doctor that is.

During his more than 40 years in the banking industry, Gaines Dittrich, former bank president and current president of Dittrich & Associates, has garnered a reputation for salvaging distressed banks.

Though no longer at the helm of a bank, Dittich has continued to work with banks across the U.S. that are dealing with real estate issues. He is currently overseeing the workout of more than $300 million in bank-owned real estate.

Dittrich, who lives in southwest Missouri, has eyed the Northwest Arkansas banking industry since 1999, watching the area’s phenomenal growth and slowdown, and consequently watching banks struggle to deal with mounting non-performing assets and past due loans.

“There were growing local problems and the subprime meltdown triggered national problems on top of that, which just compounded all of the problems,” Dittrich said. “I started to see a lot of excess and saw banks struggling to find solutions.”

In 2007, Dittrich teamed-up with Ramsay Ball, a principal with Colliers International in Bentonville, to find a way to help banks deal with troubled loans caused by changes in the commercial real estate market.

“Banks are really struggling because of real estate,” Dittrich said. “Many people in the industry haven’t dealt with these kinds of problems before and many banks are relying on their customers to solve the problems and to fix the nonperforming real estate. They just don’t have the personnel or the expertise to solve real estate problems.”

In early April, Dittrich, Ball and professionals from Crye-Leike Realtors, Streetsmart Data Services, First National Title Co., Young Development Solutions Inc., Kutak Rock LLP and Moore Stephens Frost PLC joined forces to create the Asset Service Group.

Banks in distress can contract the Asset Service Group to analyze its past due loans, nonperforming assets and acquired real estate, and provide solutions to both immediate problems and long-term issues.

“Every loan is unique and every problem is different so we will be able to assess each bank’s unique issues and needs and pull professionals from different industry to help find solutions for the problem,” Ball said. “We will essentially dissect the problem and decided what solutions are best for the situation and what people are best suited to find the solutions.”

The group charges an initial fee of $250 an hour, up to $3,250 for one property and a maximum of $2,500 per client for more than 10 properties.

Once solutions are found for each piece of property, clients will be given a written report and allowed the discretion of whether to proceed with the workout plan.

Clients will be billed for all additional work, including implementing a workout strategy on a per case basis.

Ball said recommendations for real estate problems could vary from finding outside investors for the properties, finding tenants for the property or completing construction on the property and putting the property onto the market.

The group has already received a warm reception from many area banks and has begun working with bank presidents.

By bringing in a group with workout expertise, Dittrich said, problems can be solved quicker and bank presidents can continue to focus their efforts on growing the bank, instead of solving real estate problems.