CIT will continue looking for opportunities to deploy capital, says CEO Chai.

NEW YORK CITY-CIT Group‘s commercial bank subsidiary, CIT Bank, is acquiring $1.264 billion worth of commercial loan commitments, mainly in the CRE space, from Flagstar Bank, the two companies announced late Wednesday afternoon. The total purchase price will be approximately $779 million; the deal is expected to be substantially completed during the new year’s first quarter.

Just under $800 million of the Northeast portfolio that Troy, MI-based FSB is trading to CIT is currently outstanding. The portfolio being sold to CIT consists mainly of asset-based loans, equipment leases and CRE loans. It represents a substantial portion of FSB’s Northeast-based commercial loan holdings.

“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,” CIT president Nelson Chai says in a statement. “We will continue to look for opportunities to deploy our capital in transactions that generate good returns.”

For FSB, the loan sale to CIT represents “another step in renewing Flagstar’s focus on our community banking operation in Michigan and our national mortgage business,” Michael Tierney, president and CEO of the company, says in a release. “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.”

Tierney adds that FSB is “deeply committed to improving the quality of our earnings within a disciplined lending framework,” and that the sale to CIT “helps us decrease our risk profile while improving our balance sheet flexibility.” The two companies entered a purchase agreement on the final day of 2012.