Fremont General (FMT) Receives Directives From FDIC
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Fremont General (NYSE: FMT), announced today that on March 26, 2008, the Federal Deposit Insurance Corporation ("FDIC"), with the concurrence of the California Department of Financial Institutions ("DFI"), issued a Supervisory Prompt Corrective Action Directive ("Directive") to the Bank, to Fremont General and to Fremont General Credit Corporation ("FGCC"), the Company's wholly-owned subsidiary and direct parent to the Bank. The Directive requires the Bank, the Company and FGCC to take one or more of the following actions to recapitalize the Bank within 60 days, or by May 26, 2008. The Directive provides:
-- The Bank shall sell enough voting shares or obligations of the Bank so
that the Bank will be "adequately capitalized," as defined under the
Federal Deposit Insurance Act and the related FDIC regulations, after
the sale; and/or
-- The Bank shall accept an offer to be acquired by a depository
institution holding company or combine with another insured depository
institution; and
-- Fremont General and FGCC shall divest themselves of the Bank.
In the Directive, the FDIC has categorized the Bank as being an "undercapitalized" depository institution, as defined under the Federal Deposit Insurance Act and FDIC rules and regulations.
The Directive also sets forth certain limitations and restrictions on the Bank and its business. The Directive restricts the interest rates that the Bank may pay on deposits to prevailing rates paid on deposits of comparable amounts and maturities paid by other FDIC insured depository institutions in the State of California. In addition, the Bank is not permitted to make any capital distributions to the Company, FGCC or any affiliate of the Bank, or to pay bonuses or increase the compensation of any director or officer of the Bank. The Directive further restricts transactions between the Bank and its affiliates. [SM]
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