Fremont General Corp. is going to sell its bank to CapitalSource Inc. The deal is worth of $170 million.
Fremont General Corporation (NYSE:FMT) is a financial services holding company which is engaged in deposit gathering through a retail branch network located in the coastal and Central Valley regions of Southern California and residential real estate mortgage servicing through its wholly owned subsidiary Fremont Investment & Loan. FIL funds its operations primarily through deposit accounts sourced through its 22 retail banking branches which are insured up to the maximum legal limit by the Federal Deposit Insurance Corporation.
Fremont ’s decision to sell its bank was based on the company’s week financial state after the subprime mortgage credit crisis.
CapitalSource is a leading commercial finance company serving the middle market. It offers unparalleled solutions to complex financial challenges, excelling in situations that require extraordinary service, creativity, flexibility, insight and speed.
CapitalSource will buy out $5.6 billion of deposits held by Fremont Investment & Loan. It will also take over Fremont 's 22 retail bank branches. It will also acquire $3 billion of cash and short-term investments from Fremont and an interest in a $2.7 billion pool of commercial real estate loans.
CapitalSource is going to lend the company $200 million. It plans to construct a new California-chartered industrial bank.
The deal requires regulatory and shareholder approval and doesn't include the sale of Fremont 's loan-servicing operations or residential mortgage assets.
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