BVC Bay View Cap Cp

Bay View Capital Corporation Announces Second Quarter Results SAN MATEO, Calif., July 26 /PRNewswire-FirstCall/ -- Bay View Capital Corporation (the "Company") (NYSE:BVC) today reported a second quarter 2005 net loss of $1.5 million, or $0.23 per diluted share, compared to a first quarter 2005 net loss of $334 thousand, or $0.05 per diluted share, and a second quarter 2004 net loss of $177 thousand, or $0.03 per diluted share. Net loss for the six months ended June 30, 2005 was $1.9 million, or $0.29 per diluted share, compared to $1.1 million, or $0.16 per diluted share, for the six months ended June 30, 2004. Per share data reflects a 1-for-10 reverse stock split that was effective June 30, 2004. Second Quarter Results of Operations Record loan purchase volumes by Bay View Acceptance Corporation ("BVAC"), the Company's auto finance subsidiary, increased net interest income and reduced noninterest expense highlighted the second quarter results. However, intermediate and long-term interest rates, which had been steadily rising through the first quarter of 2005, reversed course in the second quarter. This decline in rates resulted in an unrealized mark-to-market loss of $1.1 million in the Company's interest rate derivatives for the second quarter of 2005. In addition, to support its growing portfolio of auto contracts, the Company recorded a provision for credit losses of $1.8 million during the second quarter of 2005 compared to $0.8 million for the first quarter of 2005. The Company's auto contracts held-for-investment increased by $106.5 million during the second quarter due to the record loan purchases. Net interest income increased to $4.0 million for the second quarter of 2005 from $3.4 million for the first quarter of 2005 and $3.0 million for the second quarter of 2004 on $180.6 million of growth in average earning assets for the first six months of 2005. Although net interest income expanded during the quarter, net interest margin decreased as floating rate funding costs on BVAC's warehouse credit facility rose more rapidly than yields on purchased auto contracts. Interest expense for the second quarter of 2005 also reflected the benefit of $0.6 million of savings in connection with early redemption of the remaining $22.0 million of Capital Securities in mid-2004. Noninterest income was $1.1 million for the second quarter of 2005 compared to $4.1 million for the first quarter of 2005 and $6.2 million for the second quarter of 2004, largely due to the aforementioned loss on the Company's derivative instruments and reduced leasing income as that portfolio runs off. The Company's interest rate derivatives, designated as fair value hedges, have produced quarter-to-quarter fluctuations in noninterest income. During the second quarter of 2005, the Company recorded $1.1 million of unrealized loss on its interest rate derivatives compared to $1.5 million of unrealized gain in the first quarter of 2005 and $2.7 million of unrealized gain in the second quarter of 2004. Leasing income declined by $1.8 million compared to the second quarter of 2004. Noninterest expense decreased to $5.8 million for the second quarter of 2005 from $7.1 million for the first quarter of 2005 and $9.0 million for the second quarter of 2004 primarily due to lower leasing expense on the Company's liquidating auto lease portfolio. Financial Condition Total assets increased to $605.2 million at June 30, 2005 from $423.3 million at December 31, 2004, primarily as a result of $173.6 million of growth in auto contract receivables. During the first half of 2005, the Company liquidated an additional $8.6 million of its remaining auto lease portfolio, reducing the balance at June 30, 2005 to $1.4 million. At June 30, 2005, the Company had tax assets of $18.4 million, consisting of net tax assets of $39.9 million less a valuation allowance of $21.5 million. Outstanding borrowings at June 30, 2005 included $284.1 million of outstandings on BVAC's warehouse credit facility and other short-term borrowings, and $200.5 million of securitization notes payable. Bay View Acceptance Corporation BVAC acquires retail auto installment contracts from a network of approximately 7,000 manufacturer-franchised and independent auto dealers in 32 states and 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, it offers specialized products including extended term financing and larger advances for good credit quality customers and uses these products to establish its relationships with automobile dealers. BVAC's purchases of auto contracts continued to grow, producing a new record for quarterly volume due largely to the success of its efforts to broaden its market for good credit quality customers. Second quarter purchases totaled $144.8 million, a 26% increase over first quarter 2005 purchases of $114.9 million and a 91% increase over second quarter 2004 purchases of $75.9 million. BVAC's second quarter 2005 net loss was $864 thousand compared to first quarter 2005 net income of $788 thousand and second quarter 2004 net income of $1.5 million. As previously noted, the second quarter 2005 results were impacted by the $1.1 million unrealized loss on interest rate derivatives and increased provision for credit losses. BVAC's second quarter 2005 net interest income increased to $3.9 million from $3.3 million for the first quarter of 2005 and $3.4 million for the second quarter of 2004 as a result of growth in earning assets offset, in part, by decreased net interest margin. For the second quarter of 2005, BVAC's purchased contract rate averaged 8.88% compared to 8.30% for the first quarter of 2005 and 7.86% for the second quarter of 2004 -- an increase of 102 basis points year-over-year. FICO credit scores averaged 734 for both second quarter 2005 and second quarter 2004 production. Net chargeoffs improved to an annualized rate of 0.92% of managed contracts in the second quarter of 2005 from 1.11% in the first quarter of 2005 and 1.21% in the second quarter of 2004. On June 20, 2005, BVAC secured a $450.0 million floating-rate, revolving warehouse credit facility to replace a maturing $350.0 million facility obtained in 2004. The facility is for a term of 364 days. The $100.0 million increase in borrowing capacity provides BVAC with additional liquidity and greater flexibility to manage its warehouse inventory, allowing BVAC to maintain additional auto contracts in its warehouse inventory and increase net interest income. At June 30, 2005, BVAC was servicing 33,500 auto contracts with an aggregate outstanding balance of $683.9 million compared to 29,100 auto contracts with an aggregate outstanding balance of $561.6 million at June 30, 2004. Other As discussed in the Company's first quarter Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2005, the Company indicated that it would not make a first quarter cash distribution to stockholders while its Board of Directors was evaluating whether it could better maximize stockholder value with an acquisition. The Company's Board is continuing to evaluate strategic alternatives including a possible merger or the restoration of capital distributions to stockholders. The Company will host a conference call at 2:00 p.m. PDT on July 27, 2005 to discuss its financial results. Analysts, media representatives and the public are invited to listen to this discussion by calling 1-888-793-6954 and referencing the password "BVC." An audio replay of this conference call will be available through Friday, August 26, 2005 and can be accessed by dialing 1-866-396-6268. Bay View Capital Corporation is a financial services company headquartered in San Mateo, California. Its common stock 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 June 30, December 31, 2005 2004 (Unaudited) (Dollars in thousands) ASSETS Cash $9,361 $4,447 Restricted cash 39,359 26,845 Retained interests in securitizations available-for-sale 21,244 22,636 Auto installment contracts and loans held-for-sale: Auto installment contracts 101,545 75,021 Other loans -- 902 Auto installment contracts held-for-investment, net 197,185 252,863 Securitized auto installment contracts held-for-investment, net 202,743 -- Investment in operating lease assets, net 1,426 10,041 Real estate owned, net 2,654 3,379 Premises and equipment, net 683 733 Repossessed vehicles 296 439 Current and deferred income taxes, net 18,424 16,977 Goodwill 1,846 1,846 Other assets 8,441 7,199 Total assets $605,207 $423,328 LIABILITIES AND STOCKHOLDERS' EQUITY Borrowings: Warehouse credit facility and other short-term borrowings $284,006 $298,755 Securitization notes payable 200,503 -- Other borrowings 94 1,895 Other liabilities 9,762 9,629 Liquidation reserve 8,291 8,856 Total liabilities 502,656 319,135 Stockholders' equity: Common stock ($.01 par value); authorized, 80,000,000 shares; issued, 2005 - 6,597,303 shares; 2004 - 6,597,303 shares; outstanding, 2005 - 6,595,886 shares; 2004 - 6,593,860 shares 66 66 Additional paid-in capital 109,243 109,578 Accumulated deficit (6,465) (4,585) Treasury stock, at cost; 2005 - 1,417 shares; 2004 - 3,443 shares (252) (587) Accumulated other comprehensive loss (41) (279) Total stockholders' equity 102,551 104,193 Total liabilities and stockholders' equity $605,207 $423,328 Bay View Capital Corporation Consolidated Statements of Operations and Comprehensive Loss (Unaudited) For the Three Months Ended June 30, March 31, June 30, 2005 2005 2004 (In thousands, except per share amounts) Interest income: Interest on auto installment contracts and other loans $8,276 $6,350 $4,508 Interest on short-term investments and retained interests in securitizations 844 721 704 9,120 7,071 5,212 Interest expense: Interest on warehouse credit facility 2,608 2,194 1,040 Interest on securitization notes payable 2,440 1,260 -- Other interest expense 58 224 1,123 5,106 3,678 2,163 Net interest income 4,014 3,393 3,049 Provision for credit losses 1,793 837 521 Net interest income after provision for credit losses 2,221 2,556 2,528 Noninterest income: Leasing income 1,843 2,070 3,596 Loan servicing income 472 552 852 Loan fees 193 183 224 Unrealized gain (loss) on derivative instruments (1,106) 1,480 2,717 Loss on auto installment contracts and other loans held-for-sale, and retained interests in securitizations, net (585) (449) (1,340) Other, net 279 242 115 1,096 4,078 6,164 Noninterest expense: General and administrative 5,630 6,606 6,146 Leasing expense 156 515 2,848 Real estate owned, net 24 4 (11) 5,810 7,125 8,983 Loss before income tax benefit (2,493) (491) (291) Income tax benefit (947) (157) (114) Net loss $(1,546) $(334) $(177) Basic loss per share $(0.23) $(0.05) $(0.03) Diluted loss per share $(0.23) $(0.05) $(0.03) Weighted-average basic shares outstanding 6,596 6,594 6,591 Weighted-average diluted shares outstanding 6,596 6,594 6,591 Net loss $(1,546) $(334) $(177) Other comprehensive income (loss), net of tax: Change in unrealized gain (loss) on securities available-for-sale, net of tax expense (benefit) of $77, $76 and ($24) for the three month periods ended June 30, 2005, March 31, 2005 and June 30, 2004, respectively 120 118 (38) Comprehensive loss $(1,426) $(216) $(215) Bay View Capital Corporation Consolidated Statements of Operations and Comprehensive Loss (Unaudited) For the Six Months Ended June 30, June 30, 2005 2004 (In thousands, except per share amounts) Interest income: Interest on auto installment contracts and other loans $14,626 $8,663 Interest on short-term investments and retained interests in securitizations 1,565 1,461 16,191 10,124 Interest expense: Interest on warehouse credit facility 4,802 1,933 Interest on securitization notes payable 3,700 -- Other interest expense 282 2,172 8,784 4,105 Net interest income 7,407 6,019 Provision for credit losses 2,630 521 Net interest income after provision for credit losses 4,777 5,498 Noninterest income: Leasing income 3,913 8,824 Loan servicing income 1,024 1,799 Loan fees 376 724 Unrealized gain on derivative instruments 374 2,409 Loss on auto installment contracts and other loans held-for-sale, and retained interests in securitizations, net (1,034) (1,645) Other, net 521 1,099 5,174 13,210 Noninterest expense: General and administrative 12,236 12,687 Leasing expense 671 7,515 Real estate owned, net 28 280 12,935 20,482 Loss before income tax benefit (2,984) (1,774) Income tax benefit (1,104) (696) Net loss $(1,880) $(1,078) Basic loss per share $(0.29) $(0.16) Diluted loss per share $(0.29) $(0.16) Weighted-average basic shares outstanding 6,595 6,581 Weighted-average diluted shares outstanding 6,595 6,581 Net loss $(1,880) $(1,078) Other comprehensive income, net of tax: Change in unrealized gain on securities available-for-sale, net of tax expense of $154 and $364 for the six month periods ended June 30, 2005 and June 30, 2004, respectively 238 570 Comprehensive loss $(1,642) $(508) BAY VIEW CAPITAL CORPORATION SELECTED FINANCIAL DATA (Unaudited) At June 30, At December 31, At June 30, 2005 2004 2004 (Dollars in thousands except per share amounts) Auto Installment Contracts and Other Loans Receivable: Auto installment contracts Auto installment contracts held-for-sale $101,545 $75,021 $149,637 Auto installment contracts held-for-investment, net 197,185 252,863 102,502 Securitized auto installment contracts held-for-investment, net 202,743 -- -- Total auto installment contracts 501,473 327,884 252,139 Other loans: Franchise loans -- 583 4,856 Asset-based loans -- 319 456 Total other loans -- 902 5,312 Auto installment contracts and other loans receivable (A) $501,473 $328,786 $257,451 Credit Quality (Liquidating Portfolio): Nonperforming assets - total (B) (C) $2,654 $4,282 $5,672 Nonperforming assets - franchise $2,484 $3,792 $5,045 Loans delinquent 60 days or more $-- $902 $1,418 Loans delinquent 60 days or more - franchise $-- $583 $961 Per Share Data: Book value per share (D) $15.55 $15.80 $21.12 Other Data: Full-time equivalent employees, including BVAC 111 125 128 (A) Includes allowances for mark-to-market valuation reserves and credit losses of $3.3 million, $2.7 million and $2.5 million at June 30, 2005, December 31, 2004 and June 30, 2004, respectively. (B) Consists entirely of real estate owned at June 30, 2005. (C) Nonperforming assets include mark-to-market valuation reserves of $1.2 million and $0.8 million at December 31, 2004 and June 30, 2004, respectively. (D) Book value per share is presented on a post-reverse stock split basis. BAY VIEW ACCEPTANCE CORPORATION (Unaudited) At June 30, At December 31, At June 30, 2005 2004 2004 (Dollars in thousands) Selected Balance Sheet Information: Cash $4,581 $3,278 $5,345 Restricted cash 22,490 7,540 8,440 Retained interests in securitizations available-for-sale 21,244 22,636 26,718 Auto installment contracts held-for-sale 101,545 75,021 149,637 Auto installment contracts held-for-investment, net 197,185 252,863 102,502 Securitized auto installment contracts held-for-investment, net 202,743 -- -- Advances to parent -- 3,010 -- Other assets 9,813 7,969 7,078 Total assets $559,601 $372,317 $299,720 Warehouse credit facility and other short-term borrowings $284,006 $298,755 $220,941 Securitization notes payable 200,503 -- -- Advances from parent 142 -- 2,764 Current and deferred taxes, net 6,969 6,947 7,422 Other liabilities 5,482 4,277 5,461 Total liabilities 497,102 309,979 236,588 Stockholder's equity 62,499 62,338 63,132 Total liabilities and stockholder's equity $559,601 $372,317 $299,720 BAY VIEW ACCEPTANCE CORPORATION (Continued) For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30, June 30, 2005 2005 2004 2005 2004 (Dollars in thousands) Selected Results of Operations Information: Interest income on auto installment contracts $8,276 $6,350 $4,394 $14,626 $8,307 Interest income on short-term investments and retained interests in securitizations 731 630 652 1,361 1,318 Interest expense on borrowings (5,100) (3,659) (1,688) (8,759) (3,007) Net interest income 3,907 3,321 3,358 7,228 6,618 Provision for credit losses (1,793) (837) (521) (2,630) (521) Loan servicing income 468 543 821 1,011 1,760 Loan fees 160 150 191 310 406 Unrealized gain (loss) on derivative instruments (1,106) 1,480 2,717 374 2,409 Loss on auto installment contracts held-for-sale and retained interests in securitizations (356) (520) (1,116) (876) (2,055) Other income (expense), net 51 44 (187) 95 570 General and administrative expenses (2,810) (2,822) (2,746) (5,632) (5,656) Income (loss) before income taxes (1,479) 1,359 2,517 (120) 3,531 Income tax (expense) benefit 615 (571) (1,034) 44 (1,452) Net income (loss) $(864) $788 $1,483 $(76) $2,079 Selected Production Information: Dollar value of auto installment contracts purchased $144,785 $114,879 $75,874 $259,664 $145,184 Number of auto installment contracts purchased 6,089 4,701 2,501 10,790 4,790 Average balance of auto installment contracts purchased $23.8 $24.6 $30.3 $24.1 $30.3 Weighted-average contract rate 8.88% 8.30% 7.86% 8.63% 7.88% Average FICO credit score 734 742 734 738 734 Selected Credit Quality Information: Net chargeoffs on managed contracts for period $1,525 $1,680 $1,690 $3,205 $3,429 Net chargeoffs as a percentage of average managed contracts (annualized) 0.92% 1.11% 1.21% 1.02% 1.22% Contracts delinquent 30 days or more as a percentage of managed contracts (as of period-end) 0.40% 0.41% 0.31% 0.40% 0.31% Average Managed Contracts $660,429 $598,190 $559,982 $629,313 $563,151 At June 30, At December 31, At June 30, 2005 2004 2004 (Dollars in thousands) Managed Contracts (period-end): Total outstanding managed contracts $683,899 $570,864 $561,585 Total number of contracts 33,500 28,300 29,100 Other Data: Full-time equivalent employees 93 104 104 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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