CIT Group has agreed to acquire a commercial loan portfolio from Flagstar Bank (FSB), a wholly-owned subsidiary of Flagstar Bancorp, Inc.
Under the terms of the agreement, CIT Bank, the U.S. commercial bank subsidiary of CIT, will acquire approximately $1.3 billion in commercial loan commitments, of which approximately $800 million is currently outstanding. The assets represent a substantial portion of FSB’s Northeast-based commercial loan portfolio, which consists primarily of asset-based, commercial real estate, and equipment finance loans and leases. The purchase is expected to be substantially completed during the first quarter of 2013.
“This transaction is another step in renewing Flagstar's focus on our community banking operation in Michigan and our national mortgage business," said Michael Tierney ,Flagstar’s president and chief executive officer. "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. 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."
"We are pleased to be able to acquire a pool of commercial loans that complements our existing corporate finance portfolio and will further expand our middle market customer base,” said Nelson J. Chai, president of CIT. “We will continue to look for opportunities to deploy our capital in transactions that generate good returns.”
Sandler O'Neill Mortgage Finance L.P., an affiliate of Sandler O'Neill +Partners, L.P., is acting as exclusive financial advisor and agent to Flagstar in connection with the asset sale. Bracewell & Giuliani and Nutter, McClennen & Fish are serving as legal advisors to Flagstar.
Flagstar Bancorp, Inc. is the holding company for Flagstar Bank, a full-service financial institution offering a range of products and services to consumers, businesses, and homeowners. With $14.9 billion in total assets at September 30, 2012, Flagstar is the largest publicly held savings bank headquartered in the Midwest.
Founded in 1908, CIT is a bank holding company with more than $33 billion in financing and leasing assets. A member of the Fortune 500, it provides financing and leasing capital as well as advisory services to its small business and middle market clients and their customers across more than 30 industries.