TROY, Mich. – As part of a renewed focus on the Michigan area, Flagstar Bancorp Inc. has entered into a definitive agreement with a wholly-owned subsidiary of CIT Bank for CIT to acquire $1.264 billion in commercial loan commitments from Flagstar.
Under the terms of the agreement, CIT will acquire $1.264 billion in commercial loan commitments from Flagstar’s Northeast-based commercial loan portfolio, $785 million of which is still currently outstanding.
The loans sold consist primarily of asset-based loans, equipment leases and commercial real estate loans. According to a release, Flagstar expects the total purchase price to be roughly $779 million and that the vast majority of the assets will be sold during the first quarter of 2013.
The commercial loan sale is expected to be capital accretive to Flagstar.
“This transaction is another step in renewing Flagstar’s focus on our community banking operation in Michigan and our national mortgage business,” Michael Tierney, president and CEO of the bank, said in prepared remarks.
“Flagstar is the largest bank headquartered in Michigan, and we are focused on being a best-in-class national mortgage lender and leading super-community bank,” added Tierney. “We remain deeply committed to improving the quality of our earnings within a disciplined lending framework, and today’s transaction helps us decrease our risk profile while improving our balance sheet flexibility.”