Gerald J. Ford, a Texas investor who has bought and sold banks, thrifts, and mortgage lenders since the 1970s, is taking over the remains of Fremont General Corp. to build a new lending business.
In a brief interview Tuesday, he gave few details about his plans, but he hinted that he could follow the same playbook that he used to build Golden State Bancorp. That playbook involved building critical mass in several California markets, largely through acquisitions, and then selling to Citigroup Inc. in 2002 for $6 billion.
Though he is "sorting out" what Fremont would do, "we have an idea," Mr. Ford said. "My background pretty much dictates what we'll do."
Later, in an apparent nod to the fact that Fremont is operating under a cease-and-desist order from federal regulators, he said, "We would only do things that would be consistent with regulatory best practices."
Fremont said Tuesday that an investor group led by Mr. Ford had agreed to buy a minority stake. In return for the investment, Fremont would install him as the chairman, Carl Webb as its chief executive, and J. Randy Staff as its chief financial officer. Mr. Webb and Mr. Staff worked for Mr. Ford at Golden State.
Mr. Ford said Fremont's investment bankers brought the opportunity to his attention a month ago.
Also Tuesday, Fremont said that it had agreed to sell its profitable commercial lending unit to iStar Financial Inc. of New York for $1.9 billion. The Santa Monica, Calif., company previously announced a deal to sell its ailing subprime home lending business to the hedge fund Ellington Capital Management LLC.
Both deals are subject to regulatory approval. After the commercial and subprime businesses are sold, Fremont would be left with an industrial bank, Fremont Investment and Loan, which has roughly $10.7 billion of deposits, 73,000 banking customers, and about 22 branches in Central and Southern California.
In a press release, Fremont General's current CEO, Louis J. Rampino, said Mr. Ford "intends to build new lending businesses around Fremont's existing retail deposit business."
Fred Cannon, an analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc., who worked at Golden State under Mr. Ford, said, "It would appear that they are interested in using this as a platform to build again in California."
The plan to hire Mr. Webb and Mr. Staff shows that the investment is "not just a purely financial transaction," Mr. Cannon said.
Chuck Muckenfuss, a partner at Gibson, Dunn & Crutcher LLP in Washington, who has represented Mr. Ford in the past, said the investor "has been successful through many cycles" since cutting his teeth on the Texas banking and thrift crisis in the 1970s.
"The reason he has survived is because he was a careful, conservative banker who was well-regarded by regulators," Mr. Muckenfuss said. "Clearly, the timing and price were right in this situation for him to do something significant."
Though it was also unclear whether Mr. Ford would return Fremont to its roots in subprime lending, he has operated in that business before, having bought Triad Financial Corp., a Huntington Beach, Calif., subprime auto finance unit of Ford Motor Co., in 2005.
In 1994 he teamed up with the financier Ronald O. Perelman to buy another Ford Motor unit: First Nationwide Bank, the San Francisco thrift that eventually became Golden State through a series of subsequent deals.
(Mr. Ford is no relation to Henry Ford or former President Gerald Ford.)
In 1997, Mr. Ford told American Banker, "There's nothing any of us can do, in my view, that makes as much money as a cost-reduction effort in in-market consolidation."
Fitch Inc. said Tuesday that Mr. Ford's investment in Fremont "will provide some additional equity capital and a seasoned management team" that will help it endure the challenges of operating under the Federal Deposit Insurance Corp.'s cease-and-desist order.
The rating agency also said it "believes that this investment is the first step in a broader recapitalization plan to sustain Fremont's deposit franchise and launch new products."
Mr. Ford's group agreed to pay $80 million for preferred stock in Fremont's industrial bank that can be exchanged for Fremont stock at $8.44 a share. The group also would receive warrants for 7.1 million shares, for a term of 15 months at a strike price of $8.44 each. An additional 4 million shares would be granted, subject to shareholder approval, at a price of $9 each, bringing the total stake to 20%.
Jay Sugarman, the chairman and CEO of iStar, said Fremont's commercial lending business would add "hundreds of new high-end customers and an experienced team that has historically been strong in construction and senior lending."
