MB Financial Inc. in Chicago is selling the bulk of its problem real estate and construction loans to a California investment group that has been an active acquirer of failed-bank assets.
The $10 billion-asset company, which put the portfolio up for sale earlier this month, said late Thursday that is selling $384.4 million of performing, nonperforming and subperforming loans to Colony Capital Acquisitions LLC of Santa Monica, Calif., for roughly $195 million.
MB Financial expects to take an $86 million charge in the second quarter as a result of the bulk sale, but the tradeoff is that the deal would rid the company of scores of problem loans that had been hindering its growth, said Mitch Feiger, MB Financial's president and chief executive officer. The sale, expected to close by the end of the month, would reduce MB Financial's total nonperforming loans by roughly half, to $160 million.
"The loan sale will allow is to be even more aggressive in business development and strategic transactions and is an effective way to improve credit quality and dispose of problem assets," Feiger said in a news release.
For Colony, the deal is a bit of a departure from its recent strategy of acquiring assets of failed banks. Since the start of 2010, the company has acquired at least five pools of loans from the Federal Deposit Insurance Corp. at between 24 cents and 45 cents on the dollar.