Jan 2 U.S. Midwestern regional bank Flagstar Bancorp Inc said it will sell a substantial portion of its Northeast-based commercial loan portfolio to CIT Group Inc for about $780 million as it looks to focus on its community banking operations.
CIT's U.S. commercial bank subsidiary will acquire $1.26 billion in commercial loan commitments of which $785 million is currently outstanding, Flagstar said in a statement.
It expects to sell majority of the assets during the first quarter of 2013.
The purchased assets consist of asset-based, commercial real estate and equipment finance loans and leases, CIT Group, led by former Merrill Lynch Chief Executive John Thain, said in a separate statement.
The Troy, Michigan-based Flagstar, which is currently fending off a lawsuit by bond insurer Assured Guaranty Ltd over mortgage backed securities, expects the sale to be capital accretive.
"This transaction is another step in renewing Flagstar's focus on our community banking operation in Michigan and our national mortgage business," Flagstar Chief Executive Michael Tierney said in a statement.
Shares in CIT closed at $39.04 on Wednesday on the New York Stock Exchange, while those of Flagstar Bancorp closed at $20.25.