United Community Banks Inc. has agreed to sell $100 million of nonperforming loans to an asset manager in order to rid illiquid assets and create capital as the bank continues to suffer from a credit crunch, reports Dow Jones.

The Georgia-based bank, with assets of $8 billion, said last week it will sell some assets including nonperforming commercial and residential mortgage loans and other real estate properties to Fletcher International at book value without discount.

Fletcher will deposit $10 million in the bank by April 30 and pay $10 million in cash. United Community then will lend $80 million to Fletcher to fund the balance of the purchase. At that time, it will also pay $17.5 million to cover the interest and other carry costs for about three years.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry