CapitalSource Inc. (CSE) said that its new bank subsidiary, CapitalSource Bank, has commenced operations and completed the acquisition of about $5.2 billion of retail deposits, 22 retail bank branches and about $5.2 billion in cash and other assets from Fremont Investment & Loan.
CapitalSource said that its subsidiary is also purchasing about $2.1 billion in commercial loans from CapitalSource. The loans were given a preliminary fair value of 99.5% of par by an experienced third party valuation firm.
The loan sale proceeds were used by CapitalSource to reduce its credit facility borrowings and certain securitizations by about $1.6 billion. The remaining amount of about $500 million was utilized as a portion of the initial Bank capitalization of $921 million.
CapitalSource Bank begins operations with a Tier 1 risk-based capital ratio of more than 15.6%. CapitalSource said that it has appointed Tad Lowrey as President and CEO of CapitalSource Bank, having received the written non-objection of the FDIC and DFI, while John Delaney will serve as Chairman of the board.
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