Flagstar Bancorp, Troy, Mich., is selling 22 retail banking branches in Indiana to First Financial Bancorp, Cincinnati, for a 7% premium on $328 million in deposits. The deal should result in a one-time gain of $23 million.
No loans are being sold in the deal.
Investors reacted positively to the news, driving Flagstar's stock up over 13% at one point in late morning trading Wednesday.
Joseph Campanelli, chairman and chief executive of Flagstar, said the deal allows the bank to concentrate on the areas with the biggest growth potential—its retail and commercial banking divisions in Michigan and its New England commercial banking business.
"Our ultimate goal is to grow our retail and commercial lines of business to complement our strong market presence in national mortgage banking," he said in a press release.
So far in the third quarter, its mortgage banking business has seen "significant improvement" due to low rates driving refinance business, Campanelli said.
Gain on sale for July was $20 million or 113 basis points, well above what had been the pace in the first half of the year.
It had $2.9 billion in rate lock commitments in July and has already topped that total this month, he added.
