First Chicago to Shed Problem Loans : Banking: The company will sell off half of its $4.3-billion commercial real estate portfolio.

First Chicago Corp. said Monday that it will cut its risk in the troubled real estate market by selling nearly half of its commercial real estate loan portfolio at an anticipated 54% of face value.

First Chicago, the nation’s 10th-largest banking company, said it is offering for sale $2.1 billion in problem loans out of a $4.3-billion portfolio.

The bank will take a $625-million pretax charge in the third quarter to reduce the value of the loans on its books.

An additional $150 million of existing reserves will be allocated to further reduce the carrying value of the loans, which already had been discounted by 20% by previous actions.

The problem loans encompass all the lowest-rated commercial real estate assets of the company’s flagship bank, First National Bank of Chicago, First Chicago said.

The sale reflects the company’s lack of confidence in the market, First Chicago Chairman Richard L. Thomas said.

“We have looked closely at the U.S. commercial real estate market and see no recovery in the near term. Therefore, we believe it is in the best interests of the corporation and its stockholders to aggressively reduce our exposure to real estate,” Thomas said.

First Chicago had net income of $68.2 million, or 79 cents a share, in the second quarter, compared to $57.3 million, or 73 cents a share, a year earlier. The company’s assets totaled $47.4 billion at the end of the second quarter.

Banking analyst Adam Klauber of Duff & Phelps Inc. in Chicago said the provision was “a huge chunk” compared to the company’s earnings, but he said the move will be positive in the long term.

“They’re trying to take care of their problems to allow them to concentrate on more profitable segments of their business, such as credit cards and consumer banking,” he said.

First Chicago’s stock rose $2.375 to $33 a share Monday on the New York Stock Exchange.