MB Financial Inc. in Chicago is marketing $400 million of troubled commercial real estate and construction loans, and has hired JBS & Associates of Chicago to solicit bidders.
MB Financial Chief Executive Officer Mitch Feiger would not comment, but sources familiar with the matters said bids are due next week. The sale was first reported by Crain’s Chicago.
At March 31, MB Financial's had identified roughly 20% of its real estate and construction loans as either nonperforming or "potential problem" loans. A bulk sale would allow the company to quickly clean up its loan portfolio so it could start growing again, according to one industry analyst.
MB Financial had been an active acquirer of failed banks in 2009 and early 2010, but has backed off from doing deals as its own credit problems mounted. In an interview with American Banker in September 2009, Feiger called MB Financial's legacy commercial loan portfolio "a piece of crap."
If executed, the sale would be by far the largest bulk sale by a Chicago-area bank since the start of the financial crisis, according to Crain's. Most banks looking to unload bad assets sell them off piecemeal to avoid taking massive, one-time loan-loss provisions that can eat away at capital.
MB Financial can absorb the hit better than many banks, however, because it is very well capitalized. At March 31, its total risk-based capital ratio was 18.33%.
