Flagstar Sells $1.2B in Commercial Loans to CIT

Flagstar Bancorp (FBC) in Troy, Mich., is continuing to take steps to reduce risk.

The company said on Wednesday that it sold $1.2 billion in commercial loan commitments in the Northeast to a unit of CIT Group in a deal that closed Dec. 31. CIT Bank paid roughly $779 million for the portfolio, which included $785 million of outstanding loans and largely consisted of asset-based loans, equipment leases and commercial real estate loans, Flagstar said in a press release.

 "This transaction is another step in renewing Flagstar's focus on our community banking operation in Michigan and our national mortgage business," Michael Tierney, Flagstar's chief executive, said in the release.

Tierney, who became the $14.9 billion-asset company's CEO last year, told American Banker in December that he  plans to "wind down" Flagstar's operations in New England to focus on mortgages and Michigan.

Flagstar returned to profitability last year under Joseph Campanelli, Tierney's predecessor, after four straight years of losses. Flagstar is partially owned by private equity firm MatlinPatterson Global Advisors, which has invested $1 billion of the more than $1.5 billion the company has raised since 2009. 

Sandler O'Neill served as Flagstar's financial advisor. Law firms Bracewell & Giuliani and Nutter, McClennen & Fish provided legal advice.

CIT Bank, which is based in Salt Lake City, has rougly $11.6 billion in assets. CIT Group, led by John Thain, has recently been rumored as a potential seller.