Chela Financial To Acquire Student Loan Business Of Corus Bank

Market Wire, 20050229

Chela Financial, a leading non-profit education finance company based in San Francisco, has signed an agreement to acquire a portion of an approximately $450 million student loan portfolio from Chicago-headquartered Corus Bank (NASDAQ: CORS). Chela Financial will purchase roughly half of the loans, with the remaining 50 percent to be purchased by the Illinois Designated Account Purchase Program (IDAPP). The deal adds significantly to Chela Financial's total loan portfolio, which was $2.1 billion as of December 31, 1999.

Chela Financial President and Chief Operating Officer Carol Coffman said the Corus acquisition would firmly entrench Chela Financial in the student loan origination market, especially in California, where the company will now have an active presence in the majority of the state's colleges and universities.

"Historically, Chela Financial has been perceived as a non-profit company concentrating on California's secondary loan market," Coffman said. "This deal, coupled with our other strategic initiatives over the past year, will firmly establish Chela Financial as a player in the loan origination category. Deals such as this one have enabled Chela Financial to annually originate and purchase a half billion dollars of new student loans for the last three consecutive years."

In a related but separate agreement, Chela Financial would utilize Corus' student loan servicing center to handle loan processing and customer service. Corus Bank plans to sell its service center to IDAPP, a division of Illinois' state-run student loan program organization. Chela Financial expects to contract with IDAPP to service the loan origination portfolios it is purchasing from Corus Bank.

"This alliance with IDAPP will expand our current loan origination capabilities, and ensure that we provide excellent support to the holders of the student loans," Coffman added.

John Chandler, chief marketing and sales officer of Chela Financial, said, "This agreement is a great marriage between our front end capabilities and Corus Bank's back office. Corus is known for its experienced service staff and its strong relationships with its participating schools. Combine that with Chela Financial's Internet services, such as online applications, certification and financial aid counseling, and our servicing capabilities are becoming much stronger."

The purchase broadens Chela Financial's loan holdings geographically. In addition to increasing its base in California, the acquisition gives the company a foothold in the Midwest in such states as Iowa, Kansas, Michigan, Missouri, Minnesota, Ohio and Wisconsin. IDAPP will retain all loans held in Illinois.

Corus Bank, N.A is a wholly owned subsidiary of Corus Bankshares, Inc., a one-bank holding company headquartered in Chicago, Illinois with assets of $2.5 billion. Corus Bank, N.A. has 11 branches in the Chicago metropolitan area. In addition to various deposit products, Corus specializes in commercial real estate loans and home equity loans, as well as servicing the currency exchange industry.

The Illinois Designated Account Purchase Program (IDAPP) is a division of the Illinois Student Assistance Commission. Through the Federal Family Education Loan Program (FFELP), IDAPP offers educational loans to students through Federal Stafford Loans and to parents through Federal PLUS loans.

Chela Financial is a San Francisco-based family of nonprofit education finance companies. It is the largest nonprofit secondary market holder of FFELP (Federal Family Education Loan Program) loans in the United States. Since its inception in 1979, Chela Financial has helped more than 800,000 students achieve their education goals with more than $3 billion in loaned funds. Through scholarships, grants and community outreach programs, and its website, www.chelafinancial.com, Chela Financial promotes responsible borrowing so students may enjoy lifelong learning as well as lifelong financial security.