Bay View Capital Corporation Announces Third Quarter Results SAN
MATEO, Calif., Nov. 3 /PRNewswire-FirstCall/ -- Bay View Capital
Corporation (the "Company") today reported a third quarter 2004 net
loss of $1.4 million, or $0.22 per diluted share, compared to a
second quarter 2004 net loss of $121 thousand, or $.02 per diluted
share. Comparable data is not available for the third quarter of
2003 when the Company was using the liquidation basis of
accounting. The per share data reflects the 1-for-10 reverse split
on June 30, 2004. Results of Operations The Company's results of
operations reflect primarily the results of operations of Bay View
Acceptance Corporation ("BVAC"), the Company's wholly owned
indirect auto finance subsidiary. The most important components of
the Company's results of operations are its net interest income,
its noninterest income and its noninterest expense. Net interest
income totaled $3.8 million for the third quarter of 2004 compared
to $3.0 million for the second quarter of 2004. The increase in net
interest income was primarily the result of decreased interest
expense due to the redemption of the Company's 9.76% Cumulative
Capital Securities on June 30, 2004. Noninterest income was $1.5
million for the third quarter of 2004 compared to $6.3 million for
the second quarter of 2004. The decrease in noninterest income was
principally the result of unrealized losses on interest rate swaps
used by BVAC. Noninterest income for the third quarter of 2004
reflects $1.4 million of unrealized losses on interest rate swaps,
while the second quarter of 2004 included $2.8 million of
unrealized gains on interest rate swaps. This volatility is
primarily due to decreased intermediate term interest rates during
the third quarter of 2004 compared to increases during the second
quarter of 2004. BVAC employs the interest rate swaps as part of
its hedging activity designed to protect the economic value of its
warehouse inventory of auto contracts from exposure to rising
interest rates. While BVAC's hedging activity has provided an
effective economic hedge since it was commenced in the third
quarter of 2003, the unrealized gains or losses from hedging, which
are reflected in BVAC's results of operations as incurred, produce
volatility in quarter-to-quarter earnings. For the nine months
ended September 30, 2004, BVAC had $1.2 million of unrealized gains
on interest rate swaps, reflecting the increase in intermediate
term rates that occurred since the beginning of the year. Financial
Condition The Company's total assets were $390.7 million at
September 30, 2004, compared to $364.1 million at December 31,
2003, reflecting $111.2 million of net growth in auto loan
contracts, partially offset by $50.1 million payoffs on the
Company's auto leasing business. At September 30, 2004, the Company
had deferred tax assets of approximately $17.7 million, consisting
of net deferred tax assets of $39.2 million less a valuation
allowance of $21.5 million. On September 30, 2004, the Company
distributed $16.5 million in cash, or $2.50 per share, to the
holders of its stock. BVAC BVAC acquires auto installment contracts
from a network of approximately 7,000 manufacturer-franchised and
independent auto dealers in 33 states. BVAC has positioned itself
in the market as a lender for well-qualified borrowers. While BVAC
competes with other lenders for good credit quality auto loans,
BVAC offers specialized products such as extended term financing
and larger advances for high credit quality customers and uses
these products to establish relationships with automobile dealers.
As previously announced, on September 7, 2004, Prodyodth K. "PK"
Chatterjee joined the Company as President and Chief Executive
Officer of BVAC and as Executive Vice President and Director of
Retail Operations for the Company. "While PK has been with us only
a very short time, he has already begun implementation of
initiatives to improve production and enhance risk-based pricing,"
stated Charles G. Cooper, the Company's Chief Executive Officer.
BVAC's net interest income for the third quarter of 2004 improved
to $3.6 million from $3.4 million in the second quarter of 2004,
primarily due to an increased inventory of auto contracts. During
the third quarter of 2004, BVAC purchased $69.5 million of auto
contracts compared to $75.9 million in the second quarter of 2004.
BVAC attributes this decline to lower auto sales and aggressive
marketing programs launched by auto manufacturers. BVAC's purchases
of auto contracts in the third quarter of 2004 increased 3.9% from
purchases of $66.9 million in the third quarter of 2003. For the
third quarter of 2004, purchased contract rates averaged 8.06%
compared to second quarter rates that averaged 7.86%. BVAC's credit
quality indicators also improved in the third quarter of 2004. FICO
scores for the quarter averaged 742, compared to an average of 734
for second quarter 2004 production. Net chargeoffs declined to
1.01% of managed contracts in the third quarter of 2004 compared to
1.21% for the second quarter of 2004. During the third quarter and
first nine months of 2004, BVAC sold $9.3 million and $24.8 million
of auto contracts, respectively, on a "whole loan" basis with
servicing retained. At September 30, 2004, BVAC was servicing
28,146 auto contracts with an aggregate outstanding balance of
$556.8 million compared to 29,057 auto contracts with an aggregate
outstanding balance of $561.6 million at June 30, 2004. Liquidation
Activities The Company continues to dispose of the assets and
satisfy the liabilities it assumed from Bay View Bank, N.A., whose
dissolution was effective on September 30, 2003. Since December 31,
2003, $87.9 million of these assets have been liquidated and $51.8
million of liabilities have been discharged. At September 30, 2004,
remaining assets to be liquidated, including restricted cash, auto
leases, commercial loans and foreclosed real estate, totaled
approximately $65.8 million compared to $153.6 million at December
31, 2003. Remaining liabilities to be satisfied, including a $3.6
million financing secured by cash flow from remaining auto leases,
totaled $7.3 million at September 30, 2004 compared to $59.0
million at December 31, 2003. Nonperforming assets, net of
market-to-market valuation allowances, were $5.6 million at
September 30, 2004. Total loans that were delinquent 60 days or
more were $1.2 million at September 30, 2004. Other During the
fourth quarter of 2003, the Company's Board of Directors amended
the Plan of Dissolution and Stockholder Liquidity (the "Plan"),
which the Company adopted in October 2002, to become a plan of
partial liquidation. As a result, the Company discontinued its use
of the liquidation basis of accounting and re-adopted the going
concern basis of accounting effective October 1, 2003. Accordingly,
the Company is providing the following financial statements herein:
Financial Condition: Consolidated Statements of Financial Condition
as of September 30, 2004 and December 31, 2003 Results of
Operations / Change in Net Assets: Consolidated Statements of
Operations and Comprehensive Loss for the three- and nine-month
periods ended September 30, 2004 and the three-month period ended
June 30, 2004 and a Consolidated Statement of Changes in Net Assets
in Liquidation (Liquidation Basis) for the three- and nine-month
periods ended September 30, 2003. The Company will host a
conference call at 2:00 p.m. PST on November 4, 2004 to discuss its
financial results. Analysts, media representatives and the public
are invited to listen to this discussion by calling 888-793-6954
and referencing the password "BVC." An audio replay of this
conference call will be available through Friday, December 3, 2004
and can be accessed by dialing 800-489-7535. Bay View Capital
Corporation is a financial services company headquartered in San
Mateo, California and is listed on the NYSE: BVC. For more
information, visit the Company's website at
http://www.bayviewcapital.com/. Forward-Looking Statements All
statements contained in this release that are not historic facts
are based on current expectations. Such statements are
forward-looking statements (as defined in the Private Securities
Litigation Reform Act of 1995) in nature and involve a number of
risks and uncertainties. Although the Company currently believes
that the assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could prove inaccurate and,
therefore, there can be no assurance that the results contemplated
by the forward-looking statements will be realized. For information
regarding factors that could cause the results contemplated by the
forward-looking statements to differ from expectations, such as the
inability to achieve the financial goals of both the Company's plan
of partial liquidation, including any financial goals related to
contemplated asset resolution; and the Company's plan for the
continuing operation of the auto business, including the inability
to use net operating loss carryforwards that the Company currently
has, please refer to the Company's Reports on Forms 10-K and 10-Q
filed with the Securities and Exchange Commission. In light of the
significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such statements should
not be regarded as a representation by the Company or any other
person. The Company disclaims any obligation to update such
forward-looking statements or to announce publicly the results of
any revisions to any of the forward-looking statements included
herein to reflect future events or developments. Bay View Capital
Corporation Consolidated Statements of Financial Condition
(Unaudited) September 30, December 31, 2004 2003 (Dollars in
thousands) ASSETS Cash and cash equivalents: Cash and due from
depository institutions $6,724 $11,434 Short-term investments 19
129 6,743 11,563 Restricted cash 32,749 32,240 Securities
available-for-sale: Retained interests in securitizations 24,680
28,590 Mortgage-backed and other securities -- 6,139 Loans
held-for-sale: Installment contracts 129,371 165,874 Other loans
925 12,074 Installment contracts held-for-investment, net 147,703
-- Investment in operating lease assets, net 16,510 66,657 Real
estate owned, net 4,179 4,955 Premises and equipment, net 580 371
Repossessed vehicles 500 438 Income taxes, net 16,840 21,031
Goodwill 1,846 1,846 Other assets 8,098 12,340 Total assets
$390,724 $364,118 LIABILITIES AND STOCKHOLDERS' EQUITY Borrowings:
Warehouse credit facility $246,006 $138,221 Other borrowings 3,608
16,055 Junior Subordinated Deferrable Interest Debentures -- 24,784
Other liabilities 11,774 17,500 Liquidation reserve 8,377 11,626
Total liabilities 269,765 208,186 Stockholders' equity: Common
stock ($.01 par value); authorized, 80,000,000 shares; issued, 2004
- 6,593,870 shares; 2003 - 6,579,333 shares; outstanding, 2004 -
6,590,427 shares; 2003 - 6,575,890 shares 66 658 Additional paid-in
capital 124,420 156,588 Accumulated deficit (3,058) (673) Treasury
stock, at cost; 2004 - 11,078 shares; 2003 - 3,443 shares (587)
(587) Accumulated other comprehensive gain (loss) 118 (54) Total
stockholders' equity 120,959 155,932 Total liabilities and
stockholders' equity $390,724 $364,118 Bay View Capital Corporation
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited) For the Nine For the Three Months Ended Months Ended
September 30, June 30, September 30, 2004 2004 2004 (Dollars in
thousands, except per share amounts) Interest income: Interest on
loans and leases $5,217 $4,508 $13,880 Interest on mortgage- backed
securities -- 2 31 Interest and dividends on investment securities
743 702 2,173 5,960 5,212 16,084 Interest expense: Interest on
borrowings 2,147 2,163 6,252 2,147 2,163 6,252 Net interest income
3,813 3,049 9,832 Provision for losses on installment contracts 331
521 852 Net interest income after provision for losses on
installment contracts 3,482 2,528 8,980 Noninterest income: Leasing
income 2,510 3,596 11,334 Loan servicing income 720 852 2,519
Unrealized gains (losses) on interest rate swap agreements (1,433)
2,809 1,162 Unrealized losses on installment contracts and other
loans (249) (1,100) (1,354) Loan fees and charges 239 224 963 Loss
on sale of assets and liabilities, net (367) (8) (907) Other, net
68 (117) 1,168 1,488 6,256 14,885 Noninterest expense: General and
administrative 6,009 6,146 18,696 Leasing expenses 1,190 2,848
8,705 Real estate owned operations, net 109 (11) 389 7,308 8,983
27,790 Loss before income tax benefit (2,338) (199) (3,925) Income
tax benefit (917) (78) (1,540) Net loss $(1,421) $(121) $(2,385)
Basic loss per share $(0.22) $(0.02) $(0.36) Diluted loss per share
$(0.22) $(0.02) $(0.36) Weighted-average basic shares outstanding
6,588 6,586 6,583 Weighted-average diluted shares outstanding 6,588
6,586 6,583 Net loss $(1,421) $(121) $(2,385) Other comprehensive
income (loss), net of tax: Change in unrealized gain (loss) on
securities available-for-sale, net of tax expense (benefit) of
($254), $(24) and $110 for the three months ended September 30,
2004 and June 30, 2004 and the nine months ended September 30,
2004, respectively (398) (38) 172 Other comprehensive income (loss)
(398) (38) 172 Comprehensive loss $(1,819) $(159) $(2,213) Bay View
Capital Corporation Consolidated Statement of Changes in Net Assets
in Liquidation (Liquidation Basis) (Unaudited) For the Three For
the Nine Months Ended Months Ended September 30, September 30, 2003
2003 (Dollars in thousands) Net assets in liquidation at beginning
of period $409,864 $410,064 Pre-tax loss from operations (2,228)
(4,595) Changes in estimated values of assets and liabilities
(3,407) (5,995) Income tax benefit 4,664 6,252 Net loss from
operations (971) (4,338) Other changes in net assets in
liquidation(A) 921 4,088 Net assets in liquidation at end of period
$409,814 $409,814 (A) Primarily represents proceeds from stock
options and warrants exercised. BAY VIEW CAPITAL CORPORATION
SELECTED FINANCIAL DATA (Unaudited) For the Nine For the Nine For
the Three Months Ended Months Ended Months Ended Sept. 30, June 30,
Sept. 30, Sept. 30, Sept. 30, 2004 2004 2003 2004 2003 Going
Concern Basis Liquidation Going Liquidation Basis Concern Basis
Basis (Dollars in thousands) Selected Results of Operations/Changes
in Net Assets in Liquidation Information: Net interest income(A)
$3,813 $3,049 $2,463 $9,832 $9,540 Provision for losses on
installment contracts (331) (521) -- (852) -- Leasing income 2,510
3,596 8,805 11,334 32,578 Loan servicing income 720 852 1,119 2,519
3,689 Unrealized gains (losses) on interest rate swap agreements
(1,433) 2,809 (1,448) 1,162 (1,448) Unrealized losses on
installment contracts and other loans (249) (1,100) -- (1,354) --
Loan fees and charges 239 224 270 963 1,007 Gain (loss) on sale of
assets and liabilities, net (367) (8) 819 (907) 787 Other income,
net 68 (117) 193 1,168 474 General and administrative expenses
(6,009) (6,146) (7,336) (18,696) (26,338) Leasing expense (1,190)
(2,848) (7,009) (8,705) (24,421) Other expense (109) 11 (104) (389)
(463) Pre-tax loss from operations (2,338) (199) (2,228) (3,925)
(4,595) Changes in estimated liquidation values of assets and
liabilities -- -- (3,407) -- (5,995) Income tax benefit 917 78
4,664 1,540 6,252 Other changes in net assets in liquidation -- --
921 -- 4,088 Change in net assets in liquidation -- -- $(50) --
$(250) Net loss $(1,421) $(121) $(2,385) At Sept. 30, At June 30,
At Sept. 30, 2004 2004 2003 Going Concern Basis Liquidation Basis
(Dollars in thousands) Installment Contracts and Loans Receivable:
Auto installment contracts(B) Installment contracts held-for-sale
$129,371 $149,637 $122,715 Installment contracts
held-for-investment 147,703 102,502 -- Total auto installment
contracts 277,074 252,139 122,715 Other loans and leases:
Commercial mortgage loans -- -- 2,642 Franchise loans 593 4,856
23,998 Asset-based loans, syndicated loans, factored receivables
and commercial leases 332 456 2,434 Business loans -- -- 4,882
Total other loans and leases 925 5,312 33,956 Installment contracts
and loans receivable(C) $277,999 $257,451 $156,671 Credit Quality
(Liquidating Portfolio): Nonperforming assets - total(D) $5,104
$5,672 $ 11,223 Nonperforming assets - franchise $4,602 $5,045
$8,467 Loans and leases delinquent 60 days or more $925 $1,418
$1,103 Loans and leases delinquent 60 days or more - franchise $593
$961 $1,106 BAY VIEW CAPITAL CORPORATION SELECTED FINANCIAL DATA
(continued) (Unaudited) At Sept. 30, At June 30, At Sept. 30, 2004
2004 2003 Going Concern Basis Liquidation Basis (Dollars in
thousands, except per share amounts) Per Share Data: Book value per
share(E) $ 18.35 $ 21.17 N/A Net assets in liquidation per diluted
share outstanding(E) N/A N/A $ 63.60 Other Data: Full-time
equivalent employees, including BVAC 128 128 149 (A) Effective July
1, 2003, the Company adopted Statement of Financial Accounting
Standards No. 150, "Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity" and,
accordingly, dividend expense on the Capital Securities has been
reflected in interest on borrowings. (B) Excludes auto-related
operating lease assets reported separately from loans and leases
totaling $16.5 million, $27.0 million, and $86.3 million at
September 30, 2004, June 30, 2004 and September 30, 2003,
respectively. (C) Includes allowances for mark-to-market valuation
reserves and credit losses of $2.0 million, $2.5 million and $11.7
million at September 30, 2004, June 30, 2004 and September 30,
2003, respectively. (D) Nonperforming assets include mark-to-market
valuation reserves of $1.2 million, $0.8 million and $4.1 million
at September 30, 2004, June 30, 2004 and September 30, 2003,
respectively. (E) Book value per share and net assets in
liquidation per diluted share outstanding are presented on a
post-reverse stock split basis. BAY VIEW ACCEPTANCE CORPORATION At
Sept. 30, At June 30, At Sept. 30, 2004 2004 2003 Going Concern
Basis (Dollars in thousands) Selected Balance Sheet Information:
Cash and cash equivalents $5,226 $5,345 $6,928 Restricted cash
9,768 8,440 5,394 Retained interest in auto loan securitization
24,680 26,718 29,855 Installment contracts held-for-sale 129,371
149,637 122,715 Installment contracts held-for-investment, net
147,703 102,502 -- Other assets 8,215 7,265 5,982 Total assets
$324,963 $299,907 $170,874 Advances from parent $4,220 $2,764
$100,982 Warehouse line 246,006 220,941 -- Other liabilities 12,247
12,915 10,335 Total liabilities 262,473 236,620 111,317
Stockholder's equity 62,490 63,287 59,557 Total liabilities and
stockholder's equity $324,963 $299,907 $170,874 BAY VIEW ACCEPTANCE
CORPORATION (Continued) For the Nine For the Nine For the Three
Months Ended Months Ended Months Ended Sept. 30, June 30, Sept. 30,
Sept. 30, Sept 30, 2004 2004 2003 2004 2003 Going Concern Basis
(Dollars in thousands) Selected Results of Operations Information:
Interest on auto contracts $ 5,170 $ 4,394 $ 2,450 $13,477 $ 8,638
Interest on investment securities 638 652 677 1,956 2,319 Interest
expense on borrowings (2,177) (1,688) (1,126) (5,184) (2,924) Net
interest income 3,631 3,358 2,001 10,249 8,033 Provision for losses
on installment contracts (331) (521) -- (852) -- Loan servicing
income 712 821 1,038 2,472 2,828 Unrealized gains (losses) on
interest rate swap agreements (1,433) 2,809 (1,448) 1,162 (1,448)
Unrealized gains (losses) on installment contracts held-for-sale
181 (1,100) 1,077 (924) 1,082 Loan fees and charges 204 191 208 610
673 Loss on sale of assets, net (863) (16) (218) (1,318) (363)
Other income, net 50 (187) 962 126 1,060 General and administrative
expenses (2,668) (2,746) (2,949) (8,324) (9,550) Income (loss)
before income taxes (517) 2,609 671 3,201 2,315 Income tax benefit
(expense) 166 (1,070) (280) (1,359) (967) Net income (loss) $(351)
$1,539 $391 $ 1,842 $ 1,348 Selected Production Information: Dollar
value of contracts purchased $69,474 $75,874 $66,879 $214,658
$212,107 Number of contracts purchased 2,364 2,501 2,316 7,154
7,470 Average balance of contracts purchased $29.4 $30.3 $28.9
$30.0 $28.4 Weighted-average contract rate 8.06% 7.86% 8.12% 7.94%
8.45% Average FICO credit score 742 734 734 737 731 Selected Credit
Quality Information: Net chargeoffs on managed contracts for period
$1,409 $1,690 $1,543 $4,838 $5,308 Net chargeoffs as a percentage
of average managed contracts (annualized) 1.01% 1.21% 1.07% 1.15%
1.18% Contracts delinquent 30 days or more as a percentage of
managed contracts (as of period-end) 0.30% 0.31% 0.40% 0.30% 0.40%
Average Managed Contracts $557,744 $559,982 $578,962 $561,332
$601,257 At Sept. 30, At June 30, At Sept. 30, 2004 2004 2003
(Dollars in thousands) Managed Assets: Total managed contracts
$556,802 $561,585 $573,114 Total number of contracts 28,146 29,057
32,040 Other Data: Full-time equivalent employees 101 99 105
DATASOURCE: Bay View Capital Corporation CONTACT: John Okubo,
+1-650-294-7778, for Bay View Capital Corporation Web site:
http://www.bayviewcapital.com/
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