CapSource Buying Assets of Fremont Sub

CapitalSource Inc., Chevy Chase, Md., is acquiring the deposits, the assets, and the branch locations of Fremont Investment & Loan, the industrial bank subsidiary of Fremont General Corp., Brea, Calif. However, rather than acquiring FIL itself, CapitalSource is filing an application with the California Department of Financial Institutions and the Federal Deposit Insurance Corp. to create a de novo state-chartered industrial bank. CapitalSource said it is paying a 2% premium on the deposits and a 3% discount on FIL's participation interests in commercial real estate loans. It will also pay Fremont $58 million in cash. The sale, which does not include Fremont's loan servicing operation or residential mortgage assets, allows Fremont to comply with a Supervisory Prompt Corrective Action Directive issued by the FDIC. "We have long sought deposit funding as a way to further diversify and strengthen our funding platform.... Forming the new bank and acquiring branches with $5.6 billion in deposits will enhance CapitalSource's liquidity profile, increase our profitability, and improve our capital efficiency," said Thomas A. Fink, CapitalSource chief financial officer. "Our business plan envisions the sale of approximately $2.5 billion of CapitalSource loans to the new bank, making this transaction immediately accretive."