WASHINGTON - The Federal Deposit Insurance Corp.'s use of the Internet to sell assets inherited from failed banks is attracting more buyers and netting higher proceeds.

Holding its third online asset sale Wednesday, the agency auctioned auto loans made by a failed bank in Mississippi. While the results of that sale were not available, FDIC officials claim two previous sales have been successes.

"The results of the first two Internet sales do indicate that the sales are getting a higher percentage of expected value compared with the last two years, when we were selling these assets under traditional means," said Bruce Brown, assistant director of franchise and asset marketing for the FDIC.

In its second open online auction, held Feb. 21-22, sources said the FDIC netted as much as $1.5 million more for 12 nonperforming loan portfolios than it expected and attracted a number of new participants. Those loans came from Bank of Honolulu, which failed in October.

In the FDIC's first online sale in December, the agency sold $11.9 million of nonperforming subprime home equity loans for $5.1 million. Those loans came from Goldome bank in Buffalo, which failed in 1991.

Attracting more bidders and bringing in more revenue will reduce the cost of several recent failures, though FDIC officials declined to say by how much.

"The more people we have submitting bids online, the higher return we will have on the product we are selling," said Jeff Conwell, a supervisory asset marketing specialist for the FDIC. "We could see that our customers logged on to the site at midnight or two in the morning, so it was clear they were excited about it."

For last week's sale for Bank of Honolulu assets, the agency had 23 active participants - half of whom had never participated in an FDIC sale before. And the action was vigorous, those 23 bidders placing a phenomenal 1,362 bids. The December auction attracted 22 participants, and they placed 1,687 bids.

Interested companies sign up with the agency and then gain access to a site that describes the assets being sold. For example, the sale of mostly real estate loans from the failed Bank of Honolulu was divided into 10 portfolios. A potential buyer could view images of loan and collateral documents, as well as appraisals on the portfolio's value.

"The customer could sit down at their desk and do complete due diligence at the site," said Richard Salmon, supervisory asset marketing specialist for the FDIC. "It gets back to personal convenience. We wanted to provide all the information for the customer."

The agency sold nonperforming loans with a book value of $10.6 million for approximately $5 million, which officials said was a good price for these types of assets.

The main advantage for the FDIC comes during the bidding process itself.

Unlike the traditional method, in which participants submit sealed bids, competitors can see both the bid amount and the name of the company that has made the highest bid. Just like E-Bay, agency officials said they had hoped that going online would increase the competition for the portfolios and yield a higher return.

Online auctions could become a model for most of the agency's asset sales, officials said.

"This site is much more than just a mechanism to place bids," Mr. Brown said. "It is providing extensive imaging and analysis tools that investors can take advantage of. The site allows you to customize your own analysis with different yield assumptions and place your own cash flow projections."

The move to online asset sales is part of a trend for the agency, FDIC Chairman Donna Tanoue said Wednesday. The agency conducted its first sealed online auction for a failed bank on Feb. 2 and has been actively putting rules and regulations for comment on its Web site.

"We're constantly looking at ways to make the FDIC more effective and efficient," Ms. Tanoue said in a press statement.


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