<PAGE>
Rule 425
Filer: Greater Bay Bancorp
Issuer: Greater Bay Bancorp
Commission File Number: 0-25034
--------------------------------
<TABLE>
<CAPTION>
For Information Contact
- -----------------------
<S> <C>
At Greater Bay Bancorp: At Financial Relations Board:
David L. Kalkbrenner, President & CEO Christina Carrabino (general information)
(650) 614-5767 Stephanie Mishra (analyst contact)
Steven C. Smith, EVP, CAO & CFO (415) 986-1591
(650) 813-8222
At Bank of Petaluma:
Walter E. Bragdon, President & CEO
(707) 769-7610
</TABLE>
FOR IMMEDIATE RELEASE
---------------------
GREATER BAY BANCORP AND
BANK OF PETALUMA ANNOUNCE AGREEMENT TO MERGE
PALO ALTO, CA; March 21, 2000 -- Greater Bay Bancorp (Nasdaq:GBBK), Palo Alto,
California, and Bank of Petaluma (OTC Bulletin Board:BPLU), Petaluma,
California, announced today the signing of a definitive merger agreement. Upon
completion of the merger, Bank of Petaluma will operate as a wholly owned
subsidiary of Greater Bay Bancorp.
In the merger, Greater Bay Bancorp will issue shares of its stock in a tax free
exchange for the shares of stock of Bank of Petaluma for an estimated value of
approximately $41 million, depending on the market price of Greater Bay
Bancorp's stock at the time of the merger closing. Based on Greater Bay
Bancorp's closing price on March 21, 2000 of $39 3/8, Bank of Petaluma
shareholders would receive a price equating to a multiple of 17.8 times Bank of
Petaluma's last 12 months earnings and 2.76 times Bank of Petaluma's book value
at December 31, 1999. The merger, which will be accounted for as a pooling of
interests, is expected to be completed in the third quarter of 2000.
Greater Bay Bancorp anticipates the transaction, including cost savings, to be
approximately 1% accretive to 2000 earnings per share. Greater Bay Bancorp has
not included any anticipated revenue enhancements that may be realized from the
merger, even though Greater Bay Bancorp's prior acquisitions have resulted in
significant revenue growth.
Bank of Petaluma, founded in 1987, is situated in the growing area of the San
Francisco Bay Area's northern market known as the "Telecom Valley." This area
includes start-up and seasoned companies specializing in the burgeoning
telecommunications industry. Bank of Petaluma maintains four banking offices in
Petaluma, Point Reyes Station and Valley Ford, California and serves the small-
to mid-sized business community and retail banking clients. As of December 31,
1999, Bank of Petaluma had total assets of $194.7 million and deposits of $162.2
million. For the year ended December 31, 1999, net income was $2.3 million, a
10% increase over net income of $2.1 million in 1998.
<PAGE>
Greater Bay Bancorp and Bank of Petaluma Announce Agreement to Merge
March 21, 2000
Page 2
David Kalkbrenner, President and Chief Executive Officer of Greater Bay Bancorp,
stated, "Bank of Petaluma meets our merger criteria of a high performing bank
with strong management located in a high growth area. On several occasions,
Greater Bay's Venture Banking Group has participated in loans in the Telecom
Valley and will continue to pursue those opportunities with the strong foothold
Bank of Petaluma has developed in its market area." Mr. Kalkbrenner added, "We
look forward to becoming active members of the North Bay community through the
support which the Greater Bay Bancorp Foundation will provide to community and
philanthropic organizations in the area. When the merger closes, we will also
be pleased to welcome Daniel G. Libarle, Chairman of Bank of Petaluma, to our
Board of Directors."
"We found the super community banking philosophy of Greater Bay Bancorp uniquely
attractive," said Daniel G. Libarle, Chairman of the Bank of Petaluma. "This is
a proven successful formula which preserves the name of Bank of Petaluma, our
Board and our management while providing the expanded resources of Greater Bay
Bancorp."
Walter E. Bragdon, President and Chief Executive Officer of Bank of Petaluma,
commented, "We have developed a loyal client base over the years among the
agricultural and small business communities in our markets. Bank of Petaluma
will continue to focus on real estate, business and consumer lending and our
clients will benefit from the increased lending limit and expanded services Bank
of Petaluma will be able to offer as part of the Greater Bay family. We also
believe the merger is in the best interests of our shareholders, as they will
receive greater liquidity in a stock that is a component of the Nasdaq
Financial-100 Index."
Greater Bay Bancorp previously announced the execution of definitive agreements
to merge with Coast Bancorp and Bank of Santa Clara. When these mergers and the
Bank of Petaluma merger are all completed, Greater Bay Bancorp would have had,
on a pro forma basis as of December 31, 1999, total assets of approximately $3.7
billion, total shareholders' equity of approximately $253 million, total loans
of approximately $2.5 billion and total deposits of approximately $3.3 billion.
Greater Bay Bancorp's net income (before merger expenses, nonrecurring costs and
extraordinary items) on a pro forma basis as of December 31, 1999 would have
been approximately $51 million.
With the addition of Bank of Petaluma, Greater Bay Bancorp will have banks
located in the North Bay, San Francisco Peninsula, South Bay, East Bay and
Coastal regions of the Greater San Francisco Bay Area.
Terms of the Merger
The terms of the agreement provide for the shareholders of Bank of Petaluma to
receive shares of Greater Bay Bancorp stock. Bank of Petaluma currently has
approximately 1.4 million shares of common stock outstanding. If the average
closing price of Greater Bay Bancorp common stock is between $37.91 and $46.34,
each share of Bank of Petaluma stock will be exchanged for 0.685 shares of
Greater Bay Bancorp stock.
<PAGE>
Greater Bay Bancorp and Bank of Petaluma Announce Agreement to Merge
March 21, 2000
Page 3
If the average closing price of Greater Bay Bancorp common stock is greater than
$46.34, the exchange ratio will decrease by dividing the average closing price
into $31.74 plus one-third of the amount by which the average closing price
exceeds $46.34.
If the average closing price of Greater Bay Bancorp common stock is less than
$37.91, Greater Bay Bancorp may elect to exercise a top up option. In that
case, the exchange ratio will equal the quotient obtained by dividing $25.97 by
the average closing price of Greater Bay Bancorp stock. If Greater Bay Bancorp
does not elect the top up option, Bank of Petaluma may either terminate the
merger agreement or accept an exchange ratio of 0.685.
The merger is subject to certain conditions, including the approval of the
shareholders of Bank of Petaluma and regulatory approval. Upon consummation of
the merger, former Bank of Petaluma shareholders will own approximately 4.7% of
Greater Bay Bancorp's outstanding shares, assuming completion of the previously
announced Greater Bay Bancorp mergers with Coast Bancorp and Bank of Santa
Clara.
Greater Bay Bancorp through its seven subsidiary banks, Bay Area Bank, Bay Bank
of Commerce, Cupertino National Bank, Golden Gate Bank, Mid-Peninsula Bank, Mt.
Diablo National Bank and Peninsula Bank of Commerce, along with its operating
divisions, serves clients throughout Silicon Valley, San Francisco, the San
Francisco Peninsula, and the Contra Costa Tri Valley Region, with offices
located in Cupertino, Danville, Fremont, Hayward, Lafayette, Millbrae, Palo
Alto, Pleasanton, Redwood City, San Francisco, San Jose, San Leandro, San Mateo,
San Ramon, Santa Clara, and Walnut Creek.
Safe Harbor
Certain matters discussed in this press release constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These forward looking statements relate to future financial performance
and condition and pending acquisitions. These forward looking statements are
subject to certain risks and uncertainties that could cause the actual results,
performance or achievements to differ materially from those expressed, suggested
or implied by the forward looking statements due to a number of factors,
including, but not limited to, when and if the proposed mergers are consummated,
the success of Greater Bay Bancorp in integrating the new banks into its
organization and other risks detailed in the Greater Bay Bancorp reports filed
with the Securities and Exchange Commission and Bank of Petaluma reports filed
with the Federal Deposit Insurance Corporation, including their Annual Report on
Form 10-K for the year ended December 31, 1999.
Greater Bay Bancorp will file a registration statement on Form S-4 with the SEC
in connection with the proposed merger. The registration statement will include
a prospectus/proxy statement which will be sent to shareholders of Bank of
Petaluma seeking their approval of the proposed merger. When filed, the
registration statement can be obtained at the Internet World Wide Web site
maintained by the SEC at "http://www.sec.gov."
For investor information on Greater Bay Bancorp at no charge, call our automated
shareholder information line at 1-800-PRO-INFO (1-800-776-4636) and enter code
GBBK. For international access, dial 1-201-432-6555.
# # #
